Service Accommodation (Hansard, 10 February 1995)

§ Mr. Soames

In his written answer of 4 July 1994, Official Report, column 85, my predecessor, my right hon. 466W Friend the Member for Richmond and Barnes (Mr. Hanley), described the audit work that we had set in hand on official service residences following the discovery of significant overspends on the refurbishment of Haymes Garth, currently the residence of the Air Officer Commanding-in-Chief Personnel and Training Command. He undertook to make a full report at the conclusion of this work.

The external investigation of circumstances surrounding Haymes Garth was carried out by Ms Sheila Masters of KPMG Peat Marwick, building on earlier work by the Ministry's internal auditors. Her report establishes the sequence of events, identifies the failures of control which occurred, and makes recommendations for the future. The latest estimate of expenditure on Haymes Garth is £380,000. It is our intention to dispose of the property as soon as practicable, subject to the availability of suitable alternative accommodation for the AOCinC.

Internal auditors have, as my right hon. Friend indicated, also been conducting a wider examination of expenditure on official service residences, covering a selection of properties in each of the three services.

The general conclusion is that management of a majority of residences was generally satisfactory, but there were significant failures of control in some cases, including Haymes Garth. The Ministry's established procedures for the devolution of budgetary powers and responsibilities did not always operate as intended. The reports make it clear that this was partly due to lack of agreed standards for official service residences, which meant that too much was left to subjective judgements. There was also evidence that some staff have an incomplete understanding of the relevant procedures. Obligations to consult were sometimes ignored. This is not acceptable.

There are no findings of illegality or culpable impropriety, but failures of control imply individual failures in management and responsibility. The reports we now have, call into question the judgment of a number of individuals to a degree which may require action by the appropriate authorities. This is in hand.

Meanwhile, budget holders have been reminded that normal budgetary disciplines apply to expenditure of this kind, and that financial oversight at senior level should be maintained at all times. Steps to remedy the system defects which have come to light are being vigorously pursued. The effect will be to define most closely the standards of provision for residences and their furnishings and to ensure improved reporting of actual expenditure. Residences are provided to enable the occupant to do his job; provision should be limited to what is necessary for this purpose.

Beyond this, as I reported to the House on 18 October 1994, Official Report, columns 159–60, it was felt appropriate that the wider question of representational entertainment in the armed forces should be examined, and Sir Peter Cazalet agreed to carry out the investigation. As well as examining the requirement for senior officers to entertain, he is considering whether there are most cost-effective ways of doing so than the use of official residences and similar quarters, and in the light of that whether any properties can be sold. Future policy on the use of official service residences including Haymes Garth will be formed in the light of his recommendations.

467W

I am placing a paper concerning the financial management of official service residences in the Library of the House.