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Parliamentary Works Sponsor Body: Annual Report

Volume 816: debated on Tuesday 16 November 2021

Motion to Take Note

Moved by

That the Grand Committee takes note of the report from the Parliamentary Works Sponsor Body Annual Report and Accounts 2020-21 (HC Paper 472).

My Lords, as the Lords spokesperson for Parliament’s restoration and renewal sponsor body overseeing this mighty project, alongside the noble Lords, Lord Carter of Coles and Lord Deighton, and the noble Baroness, Lady Doocey, it falls to me to open this important debate. I follow in the footsteps of the noble Baroness, Lady Scott of Needham Market, who was our spokesperson from April 2020, when the sponsor body became a statutory organisation. I pay tribute to her diligent and committed work and am delighted that she will be contributing later to this debate.

My job is to draw attention to our annual report and accounts, but I know that such reports and accounts are seldom priority reading for any of us and I am sure this debate will cover wider matters. Indeed, I intend to refer to one such issue—an urgent one—myself. I must begin by underlining the critical need for the wholesale restoration and renewal of the Houses of Parliament. Noble Lords will be aware of the scale of this task, but it bears repeating. Our 150 year-old building, a UNESCO world heritage site, is vast; it has a floorplan the size of 16 football pitches, with well over 1,000 rooms, 100 staircases and four floors on 65 different levels. Beneath us, there are three miles of passageways and 250 miles of wires and cabling. The building has 4,000 original windows, 3,800 of them in bronze, and it houses 11,000 artefacts.

Shockingly, however, this iconic Palace is falling apart faster than it can be fixed. There is a growing backlog of repairs. The cost of maintenance has doubled in three years to £127 million a year and, if left alone, will no doubt double again. The heating, drainage, gas, mechanical and electrical systems all need replacing, as does the sewerage system, which dates back to 1888. After the last war, the building was packed with harmful asbestos, and of course falling masonry is a serious hazard. After decades of patch and mend, and despite the very best efforts of our excellent in-house maintenance and repair teams, whose recent work has included installing new fire safety systems, we are doing little more than managing the continuing decline of the building.

If noble Lords have not done so, I encourage them to book a place on one of the tours of the labyrinthine basement—the sponsor body will be organising the next round of these in the new year—to see what lies beneath: over half a mile of jumbled pipes and cables, with no one knowing where in the Palace half of them end up. There are photos of all this in the modest exhibition on display today in the Royal Gallery as part of the ongoing work of consulting Members and staff. The alternative to restoration is demolition, but Parliament, recognising that this landmark building is known the world over and is much loved by the British people, has determined that it should be restored. This exercise will of absolute necessity be extremely costly, but the public—as our sponsor body board has discovered from surveys of thousands of people of all ages and in all four nations this year—have real pride in the Palace and they want it renewed.

Nevertheless, the public also want to see value for money, and this has to be at the heart of the R&R programme. While resisting the temptation to downplay and underestimate costs, and to be overoptimistic when presenting the business case, we must be ever mindful that all our spending really is essential. I am grateful to the noble Lord, Lord Vaux of Harrowden, as chair of the Lords Finance Committee, for his attention to the detail of our spending, which will help to ensure we keep on the straight and narrow.

The annual report and accounts show that this has been an important period for the R&R initiative, with valuable progress in this planning phase. Substantial progress has been made with our delivery authority in considering the requirements from all sides, preparing designs, undertaking extensive surveys of the Palace, working on the decant proposals for the House of Lords and for the heritage assets, while preparing for numerous contracts which will create jobs, skills and social value throughout the UK.

Since the annual report and accounts were published, the programme’s survey work has been stepped up with 50 specialists spending nearly 5,000 hours investigating the building, examining 2,343 rooms and spaces, recording thousands of defects, including cracks in stonework and widespread water damage. Acoustic experts are considering how to improve audibility within the building and have run 300 sound tests in 80 rooms, taking 2,000 measurements. Intrusive surveys will be done over the Christmas Recess and archaeologists will be studying the ground beneath the building.

This work has already engaged people from across the country: ecological and door specialists from Manchester, window surveyors from Glasgow, architects and engineers from across London, historic surveyors and specialists from Cambridge, Suffolk, and Hampshire. When building works begin, materials will be sourced, and training, apprenticeships and skills will be supported for thousands throughout all parts of the UK.

As the annual report and accounts make clear, post Covid the programme has concentrated on those works which are essential for saving the Palace for future generations, with the emphasis on efficiency and economy, using industry-standard benchmarking methods to ensure value for money. We are learning from other major heritage programmes including the Canadian Parliament, Manchester Town Hall and King’s Cross station. The programme has adopted governance and assurance functions as recommended by the Treasury, the National Audit Office and the Infrastructure and Projects Authority.

I can testify that all this has not been easy: there are strong and conflicting views on the priorities for R&R, always with the desire for more to be achieved and less to be spent. There are myriad external interested parties, from the Westminster planning authority and English Heritage, to the Port of London Authority and the Environment Agency in respect of creating access from the riverside, to the Department for Levelling Up, Housing & Communities, which owns the QEII Centre, which we need for the Lords decant. Satisfying everyone may not be possible, but the sponsor body team, and the delivery authority that we oversee, are making steady progress toward a comprehensive plan that will be fully and realistically costed and ready for Parliament to consider in 2023.

Once the plan is agreed, building work can commence on the decanting accommodation. With a fair wind, these adaptation works will be concluded by the end of 2027 and this House would then decant to the QEII —although I rather suspect that we will not be moving before 2028.

Before we can complete our proposed plan for presentation to both Houses in 2023, a prior decision must be taken on a key question. Those representing the House of Commons have expressed a strong desire for that House to retain a continued presence in the Palace during restoration. We have commissioned work to consider the feasibility and costs of this staying-put proposition and will make a recommendation accordingly in the next few weeks.

What we know already is that a decision for the House of Commons to remain in situ, first in one Chamber and then the other, would hugely increase the costs for the taxpayer and more than double the time taken. During this extended period, the public would not be able to visit the Palace, and Parliament sees 1.25 million visitors in a normal year and 300,000 children. The other House will have to operate in the midst of the probably largest restoration project in the world, facing all the hazards of fire, asbestos, noise, dust and vibration. There will be a high additional cost of security for MPs in and around the Palace. Since the underground plumbing and power will be out of action, temporary systems and generators will be needed in the courtyards, occupying space which is also needed by the contractors.

However, it is not for me, as the Lords spokesperson, to comment on what is best for those in the House of Commons, but an insistence on retaining a continued presence within the massive building site would have significant implications for the House of Lords too. Our House has accepted the necessity—however inconvenient—to decant to other premises in order to expedite the restoration, with the assumption that the House of Commons would do the same. This means a move for us to the QEII building, which obviously has significant downsides as a working environment. If the Commons is to be accommodated in the Palace throughout the building works, the move to the QEII by your Lordships’ House would be for twice as long as originally expected, twice as long operating from a less satisfactory environment and twice as long detached from the rest of Parliament. This is bound to have wider implications for us.

Decisions will need to be made on this hugely important matter in the next few months. It is entirely understandable that those representing the Commons should want Parliament to continue to operate out of the Palace, but the implications in terms of cost, time and convenience illustrate the dilemmas and complexities of this whole gigantic project. The sponsor body is the creature of Parliament and will accept whatever decision Parliament takes, but, speaking entirely personally and for myself alone, I sincerely hope we will not be asked to proceed with the requirement of a continued presence for the other House throughout the restoration and renewal of this extraordinary building.

I conclude by thanking my fellow members of the sponsor body board, chaired so expertly by Liz Peace. I am delighted to present, on the board’s behalf, our annual report and accounts for the last year, as a record of good progress, and although I have shared my concerns on the current issue of a continued presence for the House of Commons, I congratulate the extremely professional and talented new teams serving the sponsor body and our high-powered delivery authority. I look forward to hearing the views of noble Lords. I beg to move.

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.

My Lords, first, I congratulate the noble Lord, Lord Best, on securing this debate. It is a pleasure to follow the noble Lord, Lord Deighton, who covered many of the points so eloquently.

This is a good moment to review where we are and, more importantly, where we might go in the coming months. As the noble Lord, Lord Deighton, said, we—the noble Lord, the noble Baroness, Lady Scott, and me—have been involved in trying to make sense of what we do in this for some 20 years of our time. When we started, we thought that it would be difficult. That has absolutely been confirmed. It is a very difficult and complex project. As we look at it, the key thing we need to do is get decisions made at the right moment in time.

Despite Covid-19 and many impediments, there has been quite a lot of progress since the 2019 Act was passed. If you think about it, we are spending £100 million a year trying to find out what we should be doing. If you look at that, it is a complex task. Other noble Lords have referred to this being probably the largest restoration project in the world. As we go through this, we have to stick to the three questions we should always ask ourselves. First, why are we doing it? Secondly, what are we going to do? Thirdly, how are we going to do it?

The “why” is straightforward. The Palace is falling down, is dangerous and is costing a lot of money. We are spending £120 million a year more than we would normally spend to keep an ordinary building running. We are spending money looking into it. What we need is to move forward and make some decisions.

The question of what is to be done is a great deal more controversial. As the noble Lord, Lord Deighton, said, scope is always one of the most difficult issues in a major building project because if you do not get that clear and freeze it, what you get is creep; you then lose confidence because it is not nailed down. We are trying to take a 160 year-old building and turn it into a modern, publicly accessible workspace, so we have a rather irreconcilable dilemma between the needs of a heritage site and the need for a modern office block.

Above all, we want to preserve the valued traditions of both Houses. However, that means that there will be trade-offs and compromises. When these projects start, everybody gets a wish list. In the initial stages, people go around listing things then, gradually, one works one’s way through it. They might include decent working conditions, access, sustainability—the idea of this being a zero-carbon building is somewhat optimistic, I would suggest—better security, better visitor access, et cetera. All those things pose a challenge. We cannot have them all, nor to the maximum degree.

How we arrive at those choices, which we will have to make, needs to be informed by accurate costs and a clear spelling out of the interrelationship between these things. For example, if you have more of that and less of this, how will it fit together? On a simple matter, if you think about the QEII, what will the working conditions be going forward? One matter of particular concern is whether we use cellular offices or go to open plan. What are our compromises prepared to be to move this forward?

What we need is correct, accurate and, above all, validated information. As the noble Lord, Lord Deighton, noted, it is better to get it right at the beginning and fight for it there and then rather than constantly undermining the project by going back with revisions. As they say, three profit warnings do not do you any good, so we must learn how to do that.

Both those things are difficult, particularly the scope, but they can be done. The most pressing issue is how we are going to get on with it. This is the crux. If we think back, the 2019 legislation was based on the work that the Joint Committee did. It recommended a full decant and, critically, it envisaged that both Houses would be out for seven, eight, perhaps 10 years. During that time, it was the aspiration that Members in the other place would serve at least part of their time in the old Chamber or the new Chamber, so there was to be a sense of continuity. I suppose that would have been easier if the commitment to fixed-term Parliaments were more fashionable, but there we are.

Since the 2019 election, clearly there has been a change of sentiment, and the other place has been very clear that it wishes to maintain a continuing presence. To paraphrase Keynes, I suppose that, when faced with changing facts, the sponsor body has had to change its approach and get to work to determine what the cost would be. At this moment, possibly unlike others, I think that the sponsor body needs to adopt a neutral position until it sees the facts; the facts will be produced. The key is the money. At this point, we should probably draw comfort from Luke, chapter 14, verses 28 to 29:

“Suppose one of you wants to build a tower. Won’t you first sit down and estimate the cost to see if you have enough money to complete it? For if you lay the foundation and are not able to finish it, everyone who sees it will ridicule you”.

I do not think we—the Government, the House authorities, the Speaker, the Lord Speaker, et cetera—are in the business of being ridiculed.

So how do we get these things right? That is how we are spending £100 million a year. People are trying to go through and not make mistakes. We have out there a glaring example of a mistake. It was estimated that it would cost £18 million to restore the Elizabeth Tower and Big Ben. It now looks like it is going to be £80 million. That is a microcosm of the challenges. What have we found? We found gas mains in the wrong place, stone that crumbles, cables in the wrong place and rotten lead. If we look at that, to start on this without drilling down and finding out what we are starting out with, not just what the scope should be based on, would be foolish. Looking at it, early in 2022, the first of the questions we need to address should be answered—that is, is it a total decant, is the other place going to remain or are the Government going to kick the can down the road? I will return to that in a moment.

As others have reminded us, this is the largest refurbishment programme in the world, and the critical thing is that it is the work of professionals. This is a job for professionals, not amateurs. We all have building experience; I think that some of the more entertaining moments in our time on this have been the eccentric suggestions that we, as a committee, have received, helpful or unhelpful. Sometimes I felt it was a bit like the suggestion that we should reduce the whole of the power system in England to steam again. We have to look forward and find a way of doing this.

Critically, what we have to do—the question is: who is the “we” in this?—is be confident in our argument and settle what we are going to do, then move on to get the OBC to understand absolutely safely what the money is, stick to it and trust our professionals. That does not mean that we should be weak on governance. We should be absolutely clear that we want to see value for money and we want to scrutinise it. Those responsible do that, as does the noble Lord, Lord Vaux. These questions are welcome because this is a unique project and we need all the insight we can get to take it forward.

Coming to where we are now, in the new year, we will see the proposals either for total decant or for continued presence—or we might see the proposal not to do anything. However, what is critical is that we reach a decision on what we are going to do, we go on and cost it, and we build a case through Parliament to take to the people. According to a recent survey—I think it was in the Daily Mail—71% of the public support the Prime Minister’s £1-trillion climate change programme, but only 16% of them would spend a fiver a week for it. Our polling suggests that there is a great public support for the rebuilding of Parliament, but we have to convince more than 16% of the population that it is worth while.

Where does responsibility for this sit? First, it sits with the sponsor body. Then it sits with the parliamentary authorities in both Houses; it sits with the Speaker and the Lord Speaker. Above all, it sits with the Government, because a Government with an 80-seat majority will determine what is going to happen. Therefore, they need to decide. Without a decision, or if the decision is to kick the can down the road, we will be faced with a catastrophe at some point. Whether it is this Government or the next Government, it will be hard to explain to the British public why this issue was not faced up to. We have the means in place to make those recommendations; I just hope that we can move on. I sometimes think that we, but particularly the Government, are all a bit like the famous dog watching television—he can see it but he does not get it. What we have to do now is get everybody to get the importance of this and move on rapidly in the new year.

My Lords, I want to say at the start that I am completely supportive of both getting on with the R&R project quickly and a full decant. My noble friend Lord Best eloquently described the situation, and I wholeheartedly endorse his description of the critical need for wholesale restoration and renewal. As some of my comments will raise questions about elements of the R&R process, I wanted to make sure that that was clear at the outset. I do not want to derail the process, just ensure that it goes well. I also put on record my appreciation for the work that the noble Lords who sit on the sponsor body do— especially my noble friend Lord Best, the Lords spokesman. I suspect that this is a rather difficult and thankless task; they all deserve our gratitude.

I will restrict my comments to the information that is set out in the annual report and accounts for the year 2020-21—I am probably one of the few who has read it, as my noble friend mentioned—and a few other public announcements, tempting though it is to stray into wider matters such as the continued presence. I should stress that I am no expert in heritage restoration; I am one of the amateurs just referred to. I am just an accountant who has taken a reasonably close look at the figures.

My first comments are about value for money during this first investigatory phase—not the actual building phase, just this stage. I am afraid that, despite the various claims in the annual report about

“a rigorous approach to value for money”


“a relentless focus on identifying savings and efficiencies”,

I have real concerns that that is not clearly demonstrated by the figures. Let me provide some examples. Staff costs appear extremely high. The 122 employees have a total cost of £13,751,000, which is an average cost per head of £122,713. That is very high by anyone’s standards. The 36 permanently employed staff—this in that first year—cost on average £100,250 each, while the 52 seconded staff are a bit cheaper, at an average of £72,173 each. The 34 other staff, who I believe are interim, cost a staggering £187,912 each. These are extremely high numbers.

On top of the employee costs, there are huge consulting costs. Between the sponsor body and the development authority, a total of £51.6 million was paid to consultants during the year for project management fees, design services and other unspecified services provided by the integrated delivery partner. That is nearly four times the cost of the employees. There is no more detail in the report and accounts about what they were doing, or what sort of rates they are being paid, but this kind of reliance on consultants is always going to make the costs higher than they might otherwise be. There is no detail about how this is controlled. In my experience, there is a risk that excessive use of consultants can become self-fulfilling: consultants identify additional needs that they can then fill, and they become self-feeding entities. Without stringent controls on every single engagement—that is, asking, “Do we actually need to do this now, and could it be done more cheaply?”—this can quickly run out of control. These numbers raise those sorts of questions, especially as, as we shall hear later, little actual survey work was carried out during the year.

Then we have IT costs. If we include the £5.2 million of IT costs that have been capitalised, which has the net effect of reducing the headline total expenditure by £4.5 million, a total of £22.9 million has been spent on IT, comprising £7.2 million of equipment and £15 million on maintenance, development and support. That is a quite extraordinary £187,705 per employee. Some £59,000 on equipment on average has been spent for each employee.

The report and accounts point out that the IT expenditure has been benchmarked by a company called Proxima, and found to be

“in line with value for money expectations.”

I am afraid I have a rather cynical view of benchmarking. It is entirely dependent on what you benchmark against and the question you ask. If you choose the right comparators, you can justify anything. As an example, let us assume that I am looking to buy a new car. My neighbour on one side has a Ferrari, the neighbour on the other a Lamborghini, so the McLaren that I rather fancy looks like a completely reasonable choice and entirely justifiable to my wife. Actually, I just need a car to get me to the station in the morning—a second-hand VW Polo would do the job. In my experience, there is always a good enough solution at a much lower cost. I wonder whether those good-enough solutions were fully explored. We should be spending only what is essential at this stage, not what is nice to have.

So I have my concerns about how much money is being spent and whether it truly represents good value for money but, as my predecessor as chair of the Finance Committee—the noble Baroness, Lady Doocey —will I am sure confirm, one of the biggest reasons why so many of our large projects have gone over budget and over time is because we have not spent enough time and money up front on detailed intrusive surveys and preparatory work to make sure we really understand the scale and scope needed. I therefore agree wholeheartedly with those who say that we must spend enough now in this preparatory phase to ensure the success of the final project. As the noble Lord, Lord Carter, said, we must get it right in the beginning. Money properly spent now should lead to savings in the future, and as the report and accounts rightly say with respect to the current year budget:

“This investment will improve the chances of success of the Programme and create value in the future by … Understanding better the state of the building by carrying out an extensive range of surveys”.

Perhaps that is what all this money, especially the consultancy fees, has been spent on. If so, I would be generally happy. Value for money is just as much about what you spend the money on as about how much you spend. But I am afraid not. Despite the slightly misleading headline in the

“What we have delivered this year”

section of the report, which says

“Important progress on the Palace of Westminster surveys and options”

and the statement

“We have made good progress with intrusive and non-intrusive surveys”,

when you read a bit further you discover that in fact not a single intrusive survey was carried out in the year. The report states:

“The bulk of the intrusive work will take place next year”—

in other words, during this current financial year. But even that has not happened. My noble friend Lord Best has pointed out and the sponsor body has put out a press release that says that over 50 specialists have, since the start of this financial year, carried out nearly 5,000 hours of detailed surveys. That sounds good, but let us put it into context. That represents only 13 days’ work for each of those specialists. That does not include the essential intrusive surveys, which, according to the latest press release in October, will now take place over the winter and next year. That is apparently somewhat delayed compared with the claim in the report and accounts that the bulk will take place in the current year. I understand that that has been further delayed since.

Sitting suspended for a Division in the House.

I was just saying that the intrusive surveys that were supposed to take place in the current financial year have now been delayed until the next financial year. That begs the question: what we have been spending all this money on? According to the report and accounts, the current year budget totals £155.6 million. Let us assume that these 50 specialists who have been carrying out the 5,000 hours of surveys are consultants charging—let us be generous and think of a number—£300 an hour. That is just a guess; I hope it is much lower than that in reality. If so, then so far this year just £1.5 million would have been spent on surveys, which is only 1% of the total budget. I confess that I find that difficult to understand, and it really does not seem consistent with the statement I quoted about the budget being an investment in understanding better the state of the building by carrying out an extensive range of surveys.

Importantly, it appears that serious decisions may be made before the essential intrusive surveys are carried out, including the continued presence decision referred to by my noble friend Lord Best. As we know from past projects, including the Elizabeth Tower, as the noble Lord, Lord Carter, mentioned, decision-making on large complex projects that is not based on full detailed surveys is a recipe for disaster. We must have a full and clear picture of the scale of the problems before we can make informed decisions around how we go ahead. It is not at all impossible to imagine a decision on continued presence being taken based on incomplete information, and it then being very difficult to row back from it if subsequent surveys throw up something that might have led to a different decision if known about up front.

As I said at the start, I remain convinced that we need to save this building and that we need to get on with it quickly, probably with a full decant. Although I have raised concerns about how well the money has been spent, I would be delighted to be proved wrong. We need to spend substantial amounts up front to ensure the success of the project. My concerns are more about how the money is being spent rather than the amount, and whether efforts are really being concentrated on the essential tasks, such as surveys. If this is not to be a disaster, our decisions must be based on full, intrusive and necessarily expensive surveys, not just on the consultation and desktop modelling that appears to be where most of the time and money has been spent until now. I will continue to want to be convinced that the phase 1 spending is only on what is essential to allow proper decisions and to make the actual restoration phase a success, and that we are not wasting any taxpayers’ money on non-essential items or unnecessary gold-plating.

My Lords, I joined the sponsor board only in September this year, so I am not yet as familiar with the issues as my sponsor board colleagues around the Room. However, for the past four years I chaired the House of Lords Finance Committee, during which time the focus of our work was overseeing the delivery of 15 very large projects, ranging from Big Ben to the refurbishment of Westminster Hall. The committee scrutinised these projects on multiple occasions and in some detail, so I have a very good understanding of the challenges that carrying out work in this Palace entails.

It seems to me that three key principles weigh heavily on the board as we undertake the planning of this major project. The first is to ensure that the Palace of Westminster is preserved for future generations. This Palace is at the centre of our national and democratic heritage. The second is to achieve value for money for today’s taxpayers as we ask them to stump up the cost of these works. This, for me, is critical. The third is to be transparent about the difficult choices before us, to share as much information as possible and to draw on the experience we already have of undertaking essential renovation of this building. We know, for example, that the cost of repairing and refurbishing Big Ben has rocketed, despite the fact that that was a very well-managed project. This model cannot be repeated.

The noble Lord, Lord Best, outlined the array of problems with this building, which has never been properly maintained and has been held together with an array of sticking plasters. Another challenge is that there are no proper plans of the building, and those plans that do exist are often inaccurate or incomplete. The mechanical and electrical plant is the stuff of nightmares and would be condemned by the authorities if it were in any other building. Added to this is the catastrophic consequences were the Palace to catch fire. So restoration and renewal is essential but, however the project is executed, it will be very complex and take many years.

The sponsor board is currently working on a comprehensive plan for the work that will be required, and we are told that this has so far involved 5,000 hours of surveys. I cannot emphasise enough that this preparatory work is essential because proper, intrusive survey work is critical to the success of any project. In my experience, the key factors that result in cost and time overruns time and again are: surveys and advance investigations being too limited in scope, leading to inaccurate costings; work not being fully defined and quantified from the outset; and budgets that always hope for the best, rather than prepare for the worst. So transparency is key, and it is essential that all relevant information and lessons learned from major parliamentary projects are shared between Parliament, the sponsor board and the delivery authority. If a proper system of information sharing is not set up and strictly adhered to—I emphasise that last part—costly mistakes will be repeated and the public will be right not to forgive us.

On cost and practicalities, there is no doubt that the quickest and most cost-effective way of getting from where we are now to where we need to be is for both Houses to move out of the Palace to temporary accommodation. The sponsor board is very aware of the fact that a lot of Members have real concerns about moving out, but Members’ concerns will be as nothing compared to those of taxpayers if we proceed to make this costly restoration project slower and much more expensive than it needs to be. We must remember that we are merely custodians of this building. It is not ours. We have no divine right to occupy it during our time as legislators. Our responsibility is to protect it for those the public send here next.

As the sponsor board makes difficult decisions and puts forward its proposals to both Houses, we must have a clear eye not on what is convenient or comfortable for us now but on how our decisions will be viewed 100 years from now. I only hope that, in exercising their influence over this process, Members of both Houses will bear that in mind.

My Lords, let me begin by saying how impressed I am by the contributions of the noble Lord, Lord Best, and his colleagues on the sponsor board as well as how lucky the House is to have them on the job. We thank them for their dedication; we are truly grateful for their skill and expertise.

As we all know, a British Parliament has existed on this site for more than 700 years. We all know the story of how a fire destroyed most of the buildings on this site in 1834—let that be a warning to us—but parliamentarians then did not hang around. Within two years, a new building was commissioned. A year later, new building works began. The last piece in the jigsaw—the Elizabeth Tower—was completed a little over 20 years later. The design was a sublime partnership between Sir Charles Barry and Augustus Pugin.

Pugin’s story is brilliantly captured in Rosemary Hill’s page-turner biography; I heartily recommend it to anybody who has not read it. Pugin was the son of a Huguenot asylum seeker fleeing the French Revolution. He was a passionate and precocious genius who won a competition to design the King’s furniture when he was just 16 years old. With his father, who was an architectural historian, he spent his summers touring European cities. Together, they made drawings of medieval buildings—this was before the age of photography—which were published and widely bought. Pugin was deeply hostile to the plain simplicity of the prevailing Georgian architecture of the period and proselytised for a romantic Gothic revival. He was only 24 when he and Barry won the commission with this neo-Gothic design. The Lords Chamber is his particular masterpiece, in my view.

Unsurprisingly, the enormously ambitious Westminster Palace project went over time and over budget, costing £2.166 million. However, our Victorian forebears invested not just in a forum for their day but in one of the most iconic buildings on the planet, for ever a symbol understood the world over of all that is best in this cradle of democracy. Those parliamentarians invested in the future. Some 160 years later, we are truly beholden to their vision and wisdom.

It goes without saying that the 21st-century restoration is utterly unavoidable. I think we all agree on that, given the parlous and dangerous state of the fabric. The 21st-century restoration should match the quality of the 19th-century building and carry us through the next period of our history. Of course, the works should be carried out as economically as possible, but let us not pretend that it is feasible precisely to budget the restoration of a building of this age and condition. In the 1840s, it was discovered during construction that the site of the Victoria Tower was in fact quicksand and that it would have to be supported on piles. I know from painful personal experience that, however much you assess it in advance, renovating an old building comes with a litany of unexpected and unwelcome surprises.

The noble Lord, Lord Vaux, has been extremely busy with his calculator; I listened keenly to what he said. It had many echoes from the whole of my career. I have not been responsible for a major building project but I have been responsible for innumerable large and complex projects of various kinds. Listening to him, I thought: what is my takeaway about how you run it? The noble Lord, Lord Deighton, gave us the value of his own considerable wisdom on the subject, but what would be my experience of what is needed to run a successful project?

The first condition is that you absolutely must have around you people of real experience and expertise, who have done it before and know what it is like. The second condition is that you have to have a completely open environment because all these projects become mired in small-p politics, wherever they happen and in whatever kind of organisation. It is absolutely vital not to let small-p politics get in the way; you must have an honest and open exchange of information. If something is not right, you must find out about it straightaway. Because you have to problem-solve on the way through, you need expert and speedy problem-solving as you progress.

All these things will be necessary in this project, so yes, let us manage the project with high professionalism. I am absolutely certain that we will and that some of that high professionalism is in this Room. However, let us not pretend that we can hold those responsible to a budget calculated to three decimal places. Let us at all times remember that we are making a capital investment that will pay back over a century or more. I hope that those preparing the investment case look at the two options: what is the net present value of continuing to maintain this building over time as against the net present value of a proper and professional renovation?

Let us also renounce any thought that either the Commons or the Lords Chambers should continue to be utilised while the works are under way. That appears to be common ground today. Such a move would absolutely guarantee huge extra delay and expense, as well as complete misery for parliamentarians and builders alike. Frankly, if I am to use slightly unparliamentary language, it is a completely barmy idea. Let us rather, as parliamentarians, make the sacrifice of leaving this building together until it is fully restored. Let us remember, as the noble Baroness, Lady Doocey, said, that we are but custodians of this glorious Palace at one moment in time and that, as our forefathers did, we are investing in the very future of our nation.

My Lords, I thank the noble Lord, Lord Best, for his introduction and his kind words to me.

It is interesting how much we can get accustomed to things over time. We turn up to this building and almost do not see the ever-encroaching scaffolding, the netting that was installed to stop masonry falling on us, the portakabins and the piles of rubbish that fill the historic courtyards on the ground floor. Despite this never-ending maintenance work, at a cost of around £2 million a week, the building is getting worse. We expect many of our staff to work in poky offices, some of which have little or no natural light, inadequate ventilation and poor temperature control. Colleagues with mobility issues struggle with stairs, steps, small lifts and heavy doors.

It is worth pausing sometimes to look at the faces of the tourists who look at our building, even in these rather difficult times. They cannot believe what they are seeing; frankly, I find it embarrassing that we have allowed the building to get into this state. On the other side of the building, hidden away, is a medieval cloister. It is reputed to have been the entrance that was used by Henry VIII when he came to the Palace. It has been virtually derelict for years. In these Houses, we make laws to protect buildings. We enforce them and expect other people to look after buildings to a standard that we ignore ourselves. This simply will not do.

I have been along to the small exhibition in the Royal Gallery. Pride of place is given to a small piece of masonry. It looks a bit theatrical, actually—it looks like a piece of polystyrene or something—but when you pick it up, then remember that it fell from the building, you realise, without being too apocalyptic, that it would have killed someone who was underneath it. I understand the justifiable concerns, particularly of Members of the House of Commons, about the expense of this project. I have much less sympathy with the unwillingness to leave this building, but it has resulted in the situation we see today.

Optimistic as I am, I really thought that we were getting somewhere when both Houses overwhelmingly supported the resolutions a couple of years ago. It was clear that there was to be a full decant of both Houses, and the sponsor body/delivery authority model was established. There was recognition that Parliament itself does not have the skills that are needed to undertake a project on this scale. This seemed a good way forward to me, so I supported it; I was pleased to join the sponsor body when it was formed. I put on the record now that every individual I worked with on the sponsor body was completely committed to this place. They brought skill and enthusiasm to their roles. We are lucky with the non-executives who have chosen to give their time to this project. They work well above their contracted hours and play a really important part.

However, personally, I am really worried about the future of this project—never more so than now. Although the sponsor body is intended to act as the client, it is of course Parliament that makes the key decisions. From the point of those resolutions to the point where the outline business case comes, it is the political leadership of Parliament, through these rather mysterious bodies called the commissions, which is calling the shots.

The noble Lord, Lord Deighton, and others have talked about the trade-offs; I think he talked about scope, schedule and cost. Of course these trade-offs are clear, but what troubles me about the model we have set up is that it enables some people to outsource those difficult decisions to the sponsor body. It has enabled them to say, “Just go away and make this happen. We don’t like these choices, so you go and sort it out”. I find this deeply troubling.

I am reassured that the Lords commission has been steadfast in its support for the approach in the resolutions, whereas the Commons has not been. I am perhaps not as warm-hearted as the noble Lord, Lord Carter. I understand that things change in the political world, but the problem with the timescales of this refurbishment is that there will always be a point when a new Parliament comes in. If we do not remain steadfast at some point, we will never progress.

At a point when the sponsor body should have been able to narrow down options for investigating and costing, it has had to add back in the option for a continued presence for the House of Commons, despite the fact that every individual and organisation that has looked at this for well over a decade has counselled against this approach on the grounds that it will cost more, take longer and introduce massive uncertainty. This was confirmed by last year’s strategic review, yet the Commons commission has added it back in. If this were to end up as the preferred choice of the Commons, I find it hard to believe that it would pass any of the value-for-money tests required by the Treasury. We would therefore have further extensive delays while that was negotiated and resolved.

The continued presence would be for the Commons only. I suspect that it neither knows nor cares about what happens to the House of Lords operationally or the impact it would have on costs. A full decant, or even a partial decant, is contingent on having somewhere to go. In the case of the Commons it is Richmond House, which is not under the control of the sponsor body; it is under the remit of the House of Commons. Could the noble Lord, Lord Best, say what progress the Commons is making on a possible decant to Richmond House? My fear is that, if it does not get on with that, we will end up defaulting to a continued presence because it has nowhere else to go. The nightmare scenario is that picked up by the noble Lord, Lord Vaux, which is that, if the faults with the building turn out to be far worse than we think, the Commons would be committed to a continued presence in a building that is in a far more parlous state than we could have thought.

As well as these well-documented potential additional costs and risks with a continued presence, there are significant potential security risks with having hundreds of contractors working in the building while MPs are sitting. I understand that this is a sensitive area, but I hope that ways can be found to make the full security implications of this option crystal clear to those making the decisions.

The decant option for the Lords is, as we have heard, the Queen Elizabeth II Centre. It is owned by the Government, but it is a building that itself needs some considerable work on its core services, as well as to bring it up to the requirements for temporary accommodation for the Lords. A consequence of the Commons pushing on with a continued presence will be to lengthen considerably the amount of time the Lords will need to be in the QEII. I would have thought that would further add to the costs, because a building that is converted to a standard for five years might have to be rather differently dealt with if we are going to be in it for 10 or 15. Despite issues around commercial sensitivity, these costs again must be spelled out.

I am worried that the very real consensus that emerged across both Houses and all parties when we voted on the resolutions is now in danger of collapse under all sorts of competing pressures. I may be wrong, but I find it hard to believe that this House would ultimately vote for an option that it knows would cost considerably more, add risk to the project, and consign it to an extended period in temporary accommodation.

As we have heard, this will be the biggest restoration project undertaken anywhere in the world. It is an opportunity to preserve this building for the generations to come and to create a better working environment for the staff. I absolutely understand that the people who are answerable directly to an electorate in a way that we are not have real reservations about trying to make a case for spending money on this building, but the problem is that they are not doing it for themselves or for us. We could limp on somehow or other, but the building cannot limp on indefinitely. We owe it to future generations of parliamentarians, staff and the public to get on and deal with this now.

My Lords, I thank all noble Lords for their very rich contributions to this debate. I am very grateful to all of them for their support for the line that the sponsor body is taking. I also thank Clementine Brown, the parliamentary liaison officer, who is behind me as I play this part of make-believe Minister just for the day. I have discovered how difficult it is to be the Minister in this position, when excellent notes are passed to you but you do not have time to absorb them and set them out in an orderly fashion. I am grateful for that presence behind me.

What a lot of wisdom has been added to this debate, beginning with the noble Lord, Lord Deighton. It is great to have somebody who really knows how it is to set up a new delivery authority and be part of that whole process, having done this with the 2012 Olympics. Having that knowledgeable insider among us has shown us the way. We have also engaged people from that Olympics experience in our staffing team. It is powerful stuff to have this group around us. We have recruited some very high-powered people to the team.

The noble Lord, Lord Deighton, made a whole series of important points. I shall not go over them all again, but I picked out one or two that particularly impressed me. He was glad to be able to say that, in our phasing-in of this whole system of a sponsor body and a delivery authority, in this first period, he felt that we had been getting it right. He was pleased to give the whole sponsor body a commendation. If he says that we are on the right track, that is powerful stuff.

The noble Lord pointed out that three-quarters of the cost of what is coming down the track and will have to be paid for will be just to satisfy the core engineering, and only a quarter of the funding that we will need will be available to satisfy all the other demands and the things that people want. We need to be realistic up front, recognising how much of this is the fundamental stuff at the back of it. The noble Lord made the point that whatever number we finally announce as the likely cost of the project, there will be shock and awe, and probably horror, around the country. We will need to weather a storm. It will cost an awful lot of money. We will have to be determined, grit our teeth, recognise that and stand up for it.

The noble Lord, Lord Carter, who has also been on the case from the very beginning, recognised that some compromises will have to be made. He pointed out the interrelationships of the different demands. We need accurate, up-to-the-minute, accessible and useful information —that is the key. We are spending £100 million a year getting there, but it is really important not to make the same kind of mistakes, as the noble Lord pointed out, as have been made in estimating the costs in relation to the Elizabeth Tower—Big Ben and all that—running from a hoped-for £18 million at the beginning to something nearer £80 million today. We need to get things right at the beginning. He also made the point that the public at large need to understand the importance of the whole project. We need to work on that; maybe quoting St Luke somewhere along the way would help.

The noble Lord, Lord Vaux, was kind enough to say that he is utterly supportive of the project and wants to see it go ahead, but he raised a number of points. We are really grateful for having the noble Lord performing this role and keeping us on our mettle. That will be a continuing process that I think we will appreciate a lot. We need it to help us see the wood for the trees and understand what is going on.

The noble Lord’s comments added up to telling us not to gold-plate the whole operation and to spend only what really needs to be spent. That is a message that we have to keep before us all the time. He was worried about the high staff costs. They have been high, but that is because of having to recruit, train and retrain a highly skilled programme group with the necessary leadership, engineering skills and infrastructure knowledge and understanding. These are expensive people who have had to be drawn in and attracted by the proposition. It does not look the most secure job to take and costs have been high. Of necessity, we have also had to use a lot of consultants. Their costs, as the noble Lord, Lord Vaux, pointed out, can be four times as much as having your own staff, but that is changing: we are now getting to the position of being able to replace the external consultancies with an in-house team, which will make a significant difference.

The noble Lord, Lord Vaux, was worried about the surveys that have not been undertaken. I mentioned the ones that have, and there has been a lot of work on doing these, but the intrusive surveys where you really poke about have had to be put back. This is partly due to Covid, because it has been more difficult to get access to all the places, and partly because the Palace authorities want us to keep clear when the House is sitting and things are operational. Perhaps parliamentarians are going to have to get used to the fact that having people poking around, inconvenient as it is, is a necessity. Those intrusive surveys are now all organised and contracts for them are being placed as we speak. They will be very detailed and will, I fear, discover all kinds of other things that we did not know about: that is bound to happen and will be the next stage.

The noble Baroness, Lady Doocey, as a newcomer, brought fresh insights with experience of handling other major projects elsewhere. That is going to be important and helpful to us. She emphasised that we need to be very transparent and share the details of all the costs. This is a common undertaking. We do not want to worry that there are commercial decisions going on here: we have to be outgoing in showing what things really cost. We must avoid the hazard of underestimating costs to try to keep them down as low as possible: that, of course, will create critical problems later on.

The noble Lord, Lord Birt, brought us the lessons of history and the details of Pugin’s extraordinary life, reminding us that the first time around, it went, I think, four times over cost and took three times as long to complete. It is so important to get the facts and figures and make the assessments in advance, so we are not caught out in those kinds of ways. He also made the important point that we need to recognise what we are saving each year in the capitalised costs that we put in. The net present value of maintaining the Palace will soon be £200 million a year: what is it worth spending to save £200 million a year? That is a lot of money just to break even, so there is that decision to take.

The noble Baroness, Lady Scott, brought up the rear, and we are all grateful to her for her initial input, so important in the formation of this great enterprise. She was the first, I think, to mention falling masonry— I am not sure that I had added that to my list. It is a pretty important issue. We have to fix everything: all the stonework has to be inspected. There are hairline cracks and potential dangers there. The place is increasingly unsafe but her call to us was to remain steadfast. She expressed particular concern about the “continued presence” concept, which I think was reflected by almost everyone who spoke. We need to be mindful that the decision is only weeks away. It will have to be taken within a very short space of time and will affect everything that happens thereafter. It is a crucial moment.

I will go away further resolved to get on with the job. Everyone who spoke was supportive of us not delaying things, of making progress and of not accepting the difficulties that are out there, and that support is very much appreciated. The Committee has reinforced our eagerness to get on with the job and, to quote the noble Lord, Lord Birt, to remember that what we are doing is investing in the very future of our nation.

Motion agreed.

Committee adjourned at 5.14 pm.