§ Ms. Gordon
To ask the Secretary of State for the Environment if he will give the name of the main contractors for any development, including infrastructure and building works, for each site sold by the London Docklands Development Corporation since July 1981.
§ Mr. Trippier
Appointment of contractors by developers of sites sold by the LDDC is a matter for the developers.
§ Ms. Gordon
To ask the Secretary of State for the Environment (1) if he will give the name of the main contractor, the value of the contract and the date when the contract was signed for each site where the London Docklands Development Corporation has let a contract for infrastructure works, including land reclamation and the provision of drainage or other services, since July 1981;
(2) if he will name the purchaser for each site sold by the London Dockland Development Corporation since July 1981.
§ Mr. Spearing
To ask the Secretary of State for the Environment if he will place in the Library a copy of any letter written to the London Docklands Development Corporation by Messrs Robson Rhodes concerning the annual accounts of the corporation, together with any respective responses which have been made.
§ Mr. Trippier
[pursuant to his reply, 2 March 1988, c. 579]: The Department has examined the management letter sent by Messrs Robson Rhodes in relation to the LDDC's 1985/86 external audit, and the corporation's response and has consulted Messrs Robson Rhodes and officers of the corporation on both. Having considered the results of these consultations carefully I have reached the following conclusions:
(i) Management letters, which are the formal means by which external auditors draw the attention of the audited body to various aspects of that body's systems of internal control, do not deal with matters of substance which materially affect the annual accounts. Such matters are properly dealt with by qualification of the accounts. Robson Rhodes made it clear that none of the issues raised in its letter was of such substance in relation to the 1985/86 accounts.
(ii) None of the issues raised in the management letter alleged or implied irregularity or impropriety by the corporation, or misuse of public funds.
(iii) The auditors accept that the corporation's use of financing mechanisms was not improper or 308W irregular. They pointed out, however, that such mechanisms are generally complex, somewhat open to misinterpretation and if multiplied in future years could increasingly press against the legal constraints by which the corporation is bound. Such timely advice is one of the purposes and benefits of external audit.
(iv) On consultancy appointments, I am satisifed that LDDC has in fact operated within the current guidelines laid down by the Department for ensuring proper competition. Robson Rhodes' main concern was that, under the internal approval procedures for appointment of consultants, full documentary evidence of the competitive process that had been carried out was not always immediately available to those ratifying appointments. LDDC has made it clear, however, that such evidence was always available for inspection, and has agreed to review supporting documentation more thoroughly.
(v) Where the award of a consultancy contract is based on a comparison of competitive rates (as distinct from the submission of tenders) there should be a full and explicit definition of the criteria used for selection. The Department will discuss this further with LDDC, and agree revised procedures as necessary.
(vi) Proper procedures were employed by LDDC in awarding consultancy appointments to three former employees of the corporation. In view of the comments made by Messrs Robson Rhodes, however, the corporation accepts that additional arrangements are required to fully demonstrate propriety in all such cases. The corporation has therefore reviewed its procedures, and now requires that all such cases should go to the board for approval.
(vii) Messrs Robson Rhodes suggested that the corporation should obtain clarification from the Department on competition requirements and how they should best be satisfied. My officials are reviewing the existing guidance to the corporation on this and will bring forward revised proposals.
(viii) The other issues raised in the management letter related to negotiated land disposals, reporting and seeking approval for project overspends, and actioning internal and external audit recommendations. I am satisfied that LDDC has taken appropriate follow-up action in each case and, where necessary, has revised and strengthened its procedures.
My Department's primary concern is that the LDDC should always respond fully and effectively to the matters raised in management letters. These letters are intended to raise issues which require detailed consideration by the body under audit and the Department and to lead to agreement on ways in which procedures could be further improved or adjusted to meet changing circumstances. But I should add that the unauthorised disclosure of such letters undermines their effectiveness for this purpose.
I am satisfied that in relation to the 1985–86 letter that the corporation has paid proper attention to the issues raised, and that a full and effective response has been made.