14 February 2002 Richard Rogers Partnership



The Presiding Officer:

I have accepted a request from the leader of the opposition to ask the Minister for Finance, Local Government and Communities an urgent question under Standing Order No. 6.31.


The Leader of the Opposition (Ieuan Wyn Jones):

Will the Minister make a statement on the arbitration action between the National Assembly and the Richard Rogers partnership? (EAQ15866)

I had not made this information known previously because adjudication is a confidential process between two parties, and participants are required to refrain from publishing details. I am only releasing these details now because they have been released from another quarter, although I am not suggesting that they came from Lord Rogers. Members will recall that in answer to WAQ12863 from Alison Halford in July 2001 concerning projected fees to be paid by the Richard Rogers Partnership, I stated that it was necessary to conclude a settlement with RRP due to the termination of its employment. However, in order to protect the Assembly’s position, the details needed to remain confidential. 
In December 2001, RRP served a notice of adjudication on the Assembly for outstanding fees totalling £530,000 for work undertaken on the National Assembly’s building project. Adjudication is a fast-tracked, binding form of dispute resolution, which is prescribed by law in construction contracts. It is a confidential process between the two parties, common in such a dispute. The adjudication was not about the National Assembly’s decision to dispense with the services of RRP but a dispute about the payment of fees to RRP. Once RRP’s claim was made, we had no choice but to enter into the adjudication. In order to attempt to protect and/or to recover public moneys, the Assembly mounted the best defence it could against these claims. It argued that RRP was not entitled to the sums claimed and that the building as designed was never deliverable within a reasonable margin of the cost plan prepared by RRP. As a result, the Assembly’s losses exceeded the sums claimed by RRP. 
The adjudicator, who is independent and is appointed by the Construction Industry Council, delivered his decision on 7 February 2002. The Assembly believes that RRP’s claims for fees were too high. The adjudicator agreed with the Assembly in that he has reduced RRP’s entitlement from £530,000 to £432,000. In coming to his decision, the adjudicator confirmed that RRP did significantly underestimate the cost of constructing the Assembly building. 
The cost identified in the adjudication process confirmed the grounds on which the Assembly decided to suspend the project and part company with Richard Rogers Partnership. The adjudicator also confirmed that RRP must hand over all project documents, which it previously withheld, to the Assembly. He also confirmed that the Assembly owns the copyright of the building’s design. Unfortunately, the adjudicator was not satisfied at this stage that there is sufficient evidence to justify a finding of negligence against RRP. Accordingly, he found that although RRP effectively got it wrong, the Assembly is not due any damages or repayment of fees. 
As regards what will happen in the future, the Assembly must now pay the amount found to be due. I hope that this will end the matter and that the Assembly can proceed in appointing the right professionals to complete the building’s design and construction.

Ieuan Wyn Jones:

 Many issues arise from your statement today. I would like you to address them. You have already said that an arbitration case is a confidential matter between the parties involved. However, as this is such a public mater, on which a number of statements have been issued in the past, a statement such as this was expected. Do you believe that it would have been advantageous for the Government to have published the outcome of the ruling, if not the ruling in full, so that we could then form a balanced opinion?
Secondly, as the issue is in the public domain, will you now publish the adjudication in full? We thank you for the information provided in the press release and in the letter that you sent to Members. However, in order for us to effectively assess the information, we need a copy of the adjudication in full. Therefore, I ask you formally to place a copy of the adjudication in the National Assembly Library.
You also say in the letter that you sent to Members, and have restated today that:
‘Once RRP’s claim was brought we had no choice but to enter into the adjudication.’  
Such a step could only have been taken on the basis of legal advice stating that it is possible to defend RRP’s claim. Will you ensure, therefore, that the legal advice that you used to take action in that case be made public, either by placing it in the National Assembly Library or by giving it to the project management team members, which includes Members from more than one party in the Assembly? 
It is also necessary, Minister, for us to know the extent to which these matters, which everybody acknowledges are a major embarrassment to the Assembly Government, have been discussed within the Assembly Cabinet. The First Minister’s failure to give any lead whatsoever on the matter stands out in the whole Assembly building debacle. He has stayed on the sidelines, taken no responsibility whatsoever, and has once again been found to be lacking in leadership. Minister, will you now ensure that the next time that discussions are held on the Assembly building that the First Minister is present to answer these questions?

Edwina Hart:

I will answer the questions in order. I assure the Assembly that I have had the full support of my Cabinet colleagues in dealing with issues arising from the building project. The First Minister and I have engaged in several discussions about the issues regarding the building and I have always enjoyed his total support. Arbitration is normal in these circumstances. This is the real world; this is what happens when disputes about buildings take place. I took this issue through the Assembly as part and parcel of the work in my portfolio. It would be advantageous for this administration if I could publicise a whole host of facts. However, I am not looking for Government advantage; I am trying to be a sane and sensible Minister with responsibility for finance in charge of a difficult project within ground rules that neither I nor the Assembly originally set down. In an ideal world, I would love to do what you have requested.
On the publication of the adjudication report, the report is confidential. That is a condition of the Construction Industry Council rules under which adjudication was considered. I must abide by that.
10:35 a.m.
Legal advice must remain privileged to protect the Assembly’s position. This might not be the end of the road. I must consider how I can protect the Assembly. It is difficult for me because, as a politician, I want to protect myself and the administration from attack. However, the attacks in this case are groundless. This is the normal process that you go through in the construction industry. The unnecessary spin put on this in the media has been unhelpful. Ieuan, I appreciate how you have dealt with these questions. Your party has always been committed to the concept of a new Assembly building. That is why I am pleased that Dafydd Wigley is still involved in the policy steering group. I will see what additional information I can make available to policy steering group members for further discussion.

Glyn Davies:

Thank you for a helpful and clarifying answer. However, we are dealing with the issue of judgment and competence. I want to pursue the First Minister’s involvement in this matter. As you know from previous questions that I have asked you, I believe that he has left you swinging in the wind to take all responsibility for this issue, and has been found lacking in that respect. What was the First Minister’s involvement in judging that it was appropriate not to pay fees until forced to do so by arbitration? What was his personal involvement in judging that the contract allowed a claim for several million pounds—£6.8 million is what I am told—only for the arbitrator to publicly slap down the National Assembly because that was not the case? What discussions took place with the First Minister and the Cabinet? Why must Members like myself, who regard this as an incredibly important issue, depend on receiving information from other sources? Sacking Lord Rogers was a difficult and dramatic step for you to take. However, because of its controversy, do you agree that it would be much better for us to receive information about this issue from you, rather than from various other sources? The only reason that you made a statement today is because somebody else provided the information. Getting information from this Government is like drawing teeth. Do you not think that this is terribly undignified for a public body such as ours?

Edwina Hart:

You have dealt with this issue in a more undignified way than anyone. Do not mask your dislike of the decision to have a new Assembly building and the politics that you have played on that issue behind concern about public resources and the use of public money. I will not answer questions in the manner that you have tried to draw this to everyone’s attention. It is unfortunate that matters are leaked. I have never leaked anything with regard to this issue; I have always abided by the rules on how to deal with such matters. I have tried not to indulge in criticising anybody, including Lord Rogers. I have tried to keep this on an even plane because I recognise that this is a difficult issue, not only for the National Assembly, but also for the Richard Rogers Partnership. 
The First Minister is aware of all actions that I have taken. However, as is the case with every other ministerial portfolio, you have to do things as a Minister that you do not necessarily refer to him. However, I have the full support of the First Minister and of my Cabinet colleagues on all these issues. The First Minister is up to speed on developing issues concerning the adjudication report and supports my comments today.
On statements to the National Assembly, I have tried to keep Members involved via the policy steering group. However, as a party, you have chosen not to be part of that process. That is your decision. Do not try to make out that you are guardians of the public purse when, in straightforward politics, you do not want a new building and are not keen on the new democracy in Wales.


Ron Davies:

 I wonder whether Edwina will accept these comments from me, as someone who is interested in the new democracy in Wales, who wants the new Assembly building and who admires her commitment to bringing that about. However, does she accept that it is inconceivable that matters of this nature could remain confidential? I understand her need to protect the confidentiality of the legal advice. However, we were involved in a dispute, alleging damages of around £7 million against the Richard Rogers Partnership, which, in turn, was making a claim against us for fees of about £500,000. It is inconceivable and improper for such matters to remain confidential. It is not only the party leaders who you, rightly, might have tried to get involved; many other Members have a pressing and legitimate interest in these decisions.
We must accept that this is a major embarrassment to the National Assembly. We fought and lost on two cases. To some extent, it was self-inflicted, and that is regrettable.
However, I agree that we must now move on. I refer particularly to the sentence in your letter where you say that we must now bring this matter to an end and get on with appointing the right professionals. I do not know whether the Richard Rogers Partnership is involved in any discussions you may be holding on the appointment of a new partnership. However, will you give a clear and unequivocal commitment to the National Assembly that, if the Richard Rogers Partnership were to be involved in any future discussions, this episode would not prejudice its future involvement in bringing the project to a conclusion?


Edwina Hart:

I have always made it clear that, as the project is taken forward, we must have the best people to ensure that the building is delivered. It is incumbent upon me to ensure that we have the highest standards for the building in terms of the materials, and other issues, including the integrity of the design. That is clear. I thank you, Ron, for the way in which you raised those issues with me. Legal advisers are currently considering the decision, and will advise me on the scope of any further action by the Assembly or by Lord Rogers. I hope that we can draw a line under this matter as quickly as possible because I must get on with the important matter of constructing the building.
I do not quite agree with you, Ron: it is not a question of winners and losers. There was a hearing where one side said that it wanted a certain sum of money. We disagreed and counterclaimed with legal advice. We have come to the position where, instead of £530,000, the sum is £432,000. That is what was decided in the adjudication. We must be clear about these processes; they are about sorting out matters in the construction industry. As we know, these disagreements and issues regularly arise in construction. If you know anything about the construction industry—as I know you do, Ron—that is quite normal.

Michael German:

 It would be easy—and I know that there are Members in the Chamber who do find it easy—to sensationalise a fairly standard business procedure. In order to help us with this matter, I would be grateful if you could explain to the Assembly—for those who do not know about these matters and who are obviously on the sidelines—what the procedures are in respect of adjudication. Clearly, there are Members who do not understand how these procedures work and the obligations on either side. Is it not the case that those who are whingeing from the outside do not want to be involved, and are using this for their own political gain, rather than getting the building built? 
The real issue, and I hope you agree, Minister, is that the Assembly, on behalf of the people of Wales, gets the building that it desires, which it has voted upon many times, and that it gets the best financial deal in that process. That is now in train. Have we not dispensed with the services of RRP because of the gross underestimate of the cost of the building? Through this adjudication process, we have sought to pay off its outstanding fees and, in return, have received all the work that it had done for those fees. We can now find a new contractor who will be able to complete the work, based on the original designs, for what we hope will be a better financial deal. Those designs belong to us. Is it not time for the Conservatives, who continually say that they have no information, to realise that that is entirely in their own hands? They have chosen to stand outside this process. They could be a part of the steering group and receive the information. They have chosen to be outside; that is their fault. However, they should be clear about it: they are continuing their opposition to the Assembly, to a landmark building, and to the symbol that the National Assembly represents for Wales.


Edwina Hart:

At the end of the day, it is important that we concentrate on what we have agreed to do: to build a landmark building. This process is unpleasant, difficult and potentially embarrassing. However, the core issue is that we want a building. It had to be resolved through arbitration. It is a clear process, which we were asked to enter into. We then had to respond to it and we have had the appropriate ruling at the end. I must, therefore, accept it. We are clear as to where we are. We have gone through the process. The end game is to get the building up, and that is the most important consideration for me in all these discussions.


The Presiding Officer:

Before I call the leader of the Welsh Conservatives to speak, on behalf of the Assembly I extend to you, Nick, our condolences on your recent bereavement.
10:45 a.m.

The Leader of the Welsh Conservatives (Nick Bourne):

 Thank you, Llywydd, and I also thank other Members for their condolences.

I will focus on the main issue of the arbitration, rather than the Assembly building. That decision has been taken; we did not agree with it, but it has been taken. Is it not the case that the parties to this arbitration are the Richard Rogers Partnership and the National Assembly for Wales? As you made clear in your statement, it is not arbitration between the Government of Wales and RRP. It involves all Assembly Members. We are a corporate body. Following on from Ron Davies’s helpful comments, which were more helpful than those of the leader of the Liberal Democrat group, is it not appropriate to put this judgment in the right arena so that all Assembly Members can see what liabilities we have as a corporate body? I cannot agree with the leader of the Liberal Democrat group who inferred that this was some kind of success and that this kind of arbitration is a matter of course, and that you are bound to lose such cases. That is not the case. This is bad news for the National Assembly—let us not forget that—because it involves legal liability on us and a diminution of resources. Will she also confirm that that we have lost a counter claim of some £6 million? That is not clear from the statement. I do not doubt that the statement is accurate, but it is selective in that it does not give us the full judgment. I will focus on that main issue. Will you please put this judgment in the right arena so that all Assembly Members—and not all Assembly Members, even from the other parties, sit on this steering group—are aware of this decision? I appreciate that you may need to take legal advice, but I have little doubt that that legal advice will be to publish, because this involves liability on all of us.

Edwina Hart:

The advice that I have received to date is that the adjudicator’s report is confidential, as I indicated, according to the Construction Industry Council rules under which the adjudication was considered. On the issue of fees, until all transactions are concluded, I cannot say what the final legal fees will be. I will inform Members as soon as that work has been completed. However, in light of today’s comments, I will take further legal advice about the areas on which I can give further information and details to Members.

Alison Halford:

 I am angry about this—this is one building that I wanted. We are attacking the wrong person. Edwina Hart was given a poisoned chalice by someone long before the present First Minister became involved. If you go back and read the Auditor General’s report, you will find that the mistake was not made by our current First Minister or Edwina Hart. The person who should be pilloried and who should be hanging his head in shame is Lord Rogers. His building did not even fit the plot, it had no crèche facilities and it was not suitable for disabled access. He had to go away and reconsider it. We want this project. Edwina has worked hard to remedy what was an impossible situation. We have been badly let down, not by Edwina or the First Minister, but by Lord Rogers, who designed a building that was probably not workable in the first place. Let him hang his head in shame, not Edwina Hart.

Edwina Hart:

 Thank you, Alison.


One Comment

  1. RobenaMorgan03229…

    14 February 2002 Richard Rogers Partnership | Alison Halford, Councillor…

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