T Y N W A L D C O U R T O F F I C I A L R E P O R T

R E C O R T Y S O I K O I L Q U A I Y L T I N V A A L

P R O C E E D I N G S

D A A L T Y N

HANSARD

S E L E C T C O M M I T T E E O F T Y N W A L D O N T H E K I R K M I C H A E L L A N D E X C H A N G E A G R E E M E N T

B I N G V E A Y N T I N V A A L M Y C H I O N E C O A R D A I L C O O N R E Y T H A L L O O I N S C O I L L S K Y L L E Y M A A Y L

Douglas, Thursday, 7th June 2012

PP85/12 KMLX, No. 2

All published Official Reports can be found on the Tynwald website www.tynwald.org.im/Official Papers/Hansards/Please select a year:

Reports, maps and other documents referred to in the course of debates may be consulted on application to the Tynwald Library or the Clerk of Tynwald’s Office. Supplementary material subsequently made available following Questions for Oral Answer is published separately on the Tynwald website, www.tynwald.org.im/Official Papers/Hansards/Hansard Appendix

Published by the Office of the Clerk of Tynwald, Legislative Buildings, Finch Road, Douglas, Isle of Man, IM1 3PW. © High Court of Tynwald, 2012 SELECT COMMITTEE, THURSDAY, 7th JUNE 2012

Members Present:

Chairman: Hon. S C Rodan, SHK Mrs B J Cannell, MHK Mr J R Turner, MLC

Clerk: Miss H J Paisley

Business Transacted Page

Procedural ...... 25

Evidence of Hon. W E Teare MHK, former Minister for Education and Children and Mr S Dobson, Chief Executive Officer, Department of Education and Children...... 25

The Committee sat in private at 11.38 a.m.

______24 KMLX SELECT COMMITTEE, THURSDAY, 7th JUNE 2012

Select Committee of Tynwald on the Kirk Michael Land Exchange Agreement

The Committee sat in public at 10.00 a.m. in the Legislative Council Chamber, Legislative Buildings, Douglas

[MR SPEAKER in the Chair]

Procedural

The Chairman (Hon. S C Rodan): Good morning and welcome to this public meeting of the Select Committee on the Kirk Michael School Land Exchange Agreement. I am Steve Rodan, Chair of the Committee and the Members are Mrs Cannell and Mr Turner. Heather Paisley is 5 clerking the Committee for us this morning. If I could ask everyone please to switch off mobile phones – not simply putting them on silent, because they interfere with recording equipment. Also for the benefit of Hansard, I shall be making sure we do not have two people speaking at once, as far as possible. This Committee was established by Tynwald in February 2012 with the following remit: 10 ‘That Tynwald appoints a Committee of three Members with powers to take written and oral evidence pursuant to sections 3 and 4 of the Tynwald Proceedings Act 1876, as amended, to investigate the Kirk Michael School Land Exchange Agreement between Heritage Homes, Pinecrest Investments Ltd and the Department of Education and Children; whether by January 2011 access to the land had been secured, as was stated at that time, by the Hon. 15 Member for Ayre; the manner in which the negotiations were conducted; and the value for money achieved; and to report with recommendations by May 2012.’

We issued a call for evidence in March and are grateful to all members of the public who have responded. On 10th May, we heard oral evidence of the former MHK for Michael, Mr David 20 Cannan and the current MHK for Michael, Mr Alf Cannan. This is our second public meeting and today we are hearing from two distinguished witnesses, the Hon. Eddie Teare MHK and Mr Stuart Dobson. Thank you very much gentlemen for meeting with the Committee this morning, and welcome to you.

25

EVIDENCE OF HON. W E TEARE MHK AND MR S DOBSON

Q63. The Chairman: If I could begin, Mr Dobson, just for purposes of clarification on the 30 roles and responsibilities within the Department. Following our last hearing, there was some confusion, I do not think on our part, but in various quarters about the role and responsibilities within the Department, as to who was the Director of Education at the time of the agreement. Could I just ask you, for the record, Mr Dobson, to clarify matters?

35 Mr Dobson: Yes, sure. Until 31st December 2010, my predecessor, Mr John Cain was Director of Education. On his retirement the post changed to Chief Executive Officer, which is the post I now hold. So I took up post on 1st February 2011 and I had covered in the meantime. Since then, in terms of securing the future of the Department, we have changed the name of a post, but not the grading or salary – I wish to put in – and we have created the post of Director of 40 Education from the old Senior Adviser post. This is because for my post, there is no requirement for there to be an educational background and it was a way of securing an educational background into the top management of the DEC. Martin Barrow now holds that post, which is what caused the confusion, because Martin, who has never had anything to do with the Kirk Michael land exchange, was named in the newspaper. 45 Q64. The Chairman: Thank you. During the period Mr John Cain was Director of Education, until 2010, you were Deputy Director?

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Mr Dobson: Part of the time of this, but I came to the Isle of Man in November 2005, and for 50 most of the time held the post of Senior Adviser in the Schools Quality Assurance Division.

Q65. The Chairman: Yes, thank you. But ultimately you were Deputy Director.

Mr Dobson: I was the Deputy Director for just over a year. 55 Q66. The Chairman: That is fine, thank you very much, which covers the period in question. Could I ask you to describe the division of responsibilities between the Minister and civil servants, officers of your Department, in putting together this Agreement – who was responsible within the Department? 60 Mr Dobson: Within the Department, a number of officers are there to advise the Minister in the decision-making processes. The usual course of events is that the Department collectively would make any decisions on the future. My job, yes, currently, as Chief Executive Officer, is to make sure that the advice given to Ministers is as good as we feel it can be. We are not in a 65 position to impose advice, but what we can do… If I ever thought advice was not being taken, I would register that fact in writing. I have not had cause to do that. We do have an Estates Director, who was very much more closely involved over the entire period on this – that is Mr Richard Collister, who is named in many of the papers.

70 Q67. The Chairman: And the Estates Director, his name was?

Mr Dobson: Richard Collister.

The Chairman: Richard Collister. 75 Mr Dobson: Was and is.

Q68. The Chairman: And during the period in question, he advised the Director and the Minister – 80 Mr Dobson: Yes, that is his role.

Q69. The Chairman: – in the lead-up to the… Would he be the lead officer of the Department – 85 Mr Dobson: On Estates, yes.

The Chairman: – on Estates, as far as any negotiations were concerned?

90 Mr Dobson: Mr Collister was involved in the meetings – in some of the meetings, anyway – with Pinecrest and Heritage Homes. To the best of my recollection, I do not think I was involved in any of them.

Q70. The Chairman: Thank you very much. 95 Just turning to the Agreement itself, Minister, if I perhaps, could invite you…? Do you wish to make any opening statement? Thank you for your written evidence and the written evidence from the Department and just to confirm we have closely looked at that and do thank you for that. Is there anything by way of opening statement, Mr Teare, you wish to make at this stage? 100 The Minister for Education and Children (Mr Teare): There is nothing that I wish to add, Mr Chairman, to my original statement, but just to thank the Committee for reorganising this public hearing. It is very much appreciated.

105 Q71. The Chairman: Thank you. In that case Minister could I perhaps begin by asking you, what was your motivation to undertake this particular deal with Heritage Homes? Was the motivation right and proper?

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Mr Teare: Right. There were two main motivations. The first was potential damage limitation 110 to the school and the impact of the development on the school and the second one was to secure the best possible arrangement for the taxpayer, knowing full well that they already had alternative access.

Q72. The Chairman: In May 2007, Mrs Craine, your predecessor told the Keys that the 115 potential disadvantages to Kirk Michael outweighed the possible benefits to the school in terms of the deal, the offer that was on the table at that time. You clearly took a different view. Why was that?

Mr Teare: I took a view from the overall financial advantages to the taxpayer. 120 Q73. The Chairman: Could you elaborate on that?

Mr Teare: There are two aspects to it. The first is the additional land gain; and secondly, the opportunity, if there was further development in the area, for the taxpayer to participate in the land 125 value.

Q74. The Chairman: So you reached a different conclusion from Mrs Craine on the value to the school and the community of Kirk Michael. She clearly believed that the overall advantage to the Kirk Michael community was to leave things as they were. The public meetings that were held 130 at that time over the question of development of the land behind the school – she obviously felt that the matter should be put to bed and any question of a land swap just put to one side.

Mr Teare: Since her announcement, the developers had gained alternative access. They had secured property on the south side of the land, going onto the Douglas Road, and additionally I 135 was having a look at the overall impact upon the taxpayer, and I feel that this deal has and will deliver very significant financial benefits to the taxpayer as well.

Q75. The Chairman: As to the motivation for the deal, in terms of protecting the school, could you say something about how you felt this land swap would protect the interests of the 140 school?

Mr Teare: There would be a considerable investment in new play facilities in the area. Also, the development would move further back from the boundary wall of the school, because whilst these matters are determined by planning issues, it would give us more certainty by entering into 145 this land swap.

Q76. The Chairman: Yes. What I am really getting at… What was the threat to the school, in terms of future development in the fields surrounding it, that this land swap was designed to avoid? 150 Mr Teare: Building right up to the boundary wall.

Q77. The Chairman: What would the effect of that have been on the school itself?

155 Mr Teare: There is always the risk of neighbours complaining – we really need to have an adequate boundary between a house and the school playing facilities – and also this enabled the Department to gain an additional 1.1 acre of land.

Q78. The Chairman: Why was that important? 160 Mr Teare: Because it gives extra play area for the children. It also gives extra room, should it ever be required, for the school to expand. The current Member for Michael did say it is important – in terms of a Question he put down – for schools to have as much play area as possible.

165 Q79. The Chairman: In terms of the threat to the school, of development going right up to the boundary of the school, do you not believe that the planning process itself, with the requirements for creation of open space and neighbourliness, would itself have taken account of that possibility and there would have been planning conditions set down to ensure that there was no adverse impact of the school on the development and vice versa? ______27 KMLX SELECT COMMITTEE, THURSDAY, 7th JUNE 2012

170 Mr Teare: I did say that that was a planning matter, sir, certainly in my earlier answer, but I also mentioned that the deal brought certainty.

Q80. The Chairman: On the question of the potential for expansion of the school, could I ask you to make comment? We have been given evidence on the history of building at Kirk Michael 175 School. In 2002, when the school roll was 138, two new classrooms and a new sports hall were opened that had been in the Department’s programme for a number of years, with the object of providing for future development in the village; in 2002, two new classrooms, community room, sports hall facility. Given that, what was the compelling need to provide for future expansion?

180 Mr Teare: It was because I cannot accurately forecast for the future. It is always better to have plan B arranged.

Q81. The Chairman: The history over the last 10 years or so has been one of declining school roll down to 128,10 years later, and as you advised in Tynwald in March 2011, you confirmed that 185 those two classrooms were empty at that time and had been offered to the Ramsey Group Practice as possible doctors’ facilities in Kirk Michael. Given that for 10 years, then, the provision had been made for the school for extra classrooms and they were not needed, were they? So why was it considered important, given that, to make even more provision?

190 Mr Teare: I think really, these two threads are getting interlined, but basically, when I made the proposal that perhaps there could be a GP surgery sited there, it gave the opportunity for the demand for a GP surgery in Kirk Michael to be established. It had not been established beforehand. There was a very strong, local, vocal case for it, but the actual physical demand had not been established, so on a temporary basis for a period of years, we did have the capacity there. 195 But I am sure that the Committee will recognise that, in the latest census, there has been a surprisingly high increase in the number of primary-age children who are now coming forward into the school system, and my understanding is that, if they all came in, we would need to deliver an additional five primary-school classes.

200 The Chairman: Mrs Cannell.

Q82. Mrs Cannell: Yes, thank you, Mr Speaker. Can I just ask you, though… You were Health Minister at the time and you recognise that there had been expansion of Kirk Michael School to provide, as Mr Speaker has said, but including two 205 classrooms which at that time and today are still unoccupied. So there is room, would you not agree, for the school to expand now? They have two empty classrooms there, and on top of that, of course, we have evidence that the school roll has fallen from 138 to 128. Accepting what you have just said, that the census does predict an increase in births and therefore primary age children over the next three to four years, it does not actually differentiate in terms of which area there is going 210 to be the greatest demand; it is just the census figure is an overall Island census figure. Are you suggesting, therefore, that not only the two empty classrooms as at present, but further classrooms will be required at Kirk Michael School because you are suggesting that there is going to be a baby boom there? Is that what you are saying?

215 Mr Teare: What I am saying is that we always need to plan ahead and not just look at the next five or 10 years – we need to look firmly ahead. Could I respectfully draw the Committee’s attention to an issue which has happened in Ballaugh? The development has completely surrounded the school now, and if there was any additional development in the area it would put the Department of Education and Children in a 220 very difficult position because they would not be able to accommodate a substantial increase in the number of children in that school, so the children would either have to go to Jurby or Sulby. So we need to plan ahead, and that is the point I am making: we need to plan ahead on a long-term basis. I would just go back to something which you said, Mrs Cannell. You said that the census predicts increase in births. It does not. The census is based on actual facts: the births are here. 225 Q83. Mrs Cannell: Yes, okay, thank you for correcting me. If I can just have another question for the present time – you said that your reasons why your motivation was so strong, in terms of keeping this deal, or resurrecting this deal after a previous Minister put an end to it all, was that you wanted to increase and provide new play facilities. You 230 were concerned that the developer might build up to the boundary wall. If this deal goes ahead and ______28 KMLX SELECT COMMITTEE, THURSDAY, 7th JUNE 2012

the school acquires the additional land, there is nothing to prevent the developer from building up to that boundary wall, is there? So that is not really sufficient enough reason, is it?

Mr Teare: I think it is and – 235 Mrs Cannell: You think it is?

Mr Teare: – really, what we are talking about here in many areas is a subjective view and I acknowledge that. I felt that this deal was good for the taxpayer overall. 240 Q84. Mrs Cannell: So it was a financial consideration, rather than a community consideration.

Mr Teare: That was part of it. It was the wider issues and, once again, if I could draw the Committee’s attention to events which happened down in Ballasalla, the Isle of Man Government 245 was held and was required to make a financial recompense for a ransom strip down there. I did not want us to be in a similar position in Kirk Michael. I think that Government as a whole, needs to learn from things that have gone on in the past.

Q85. The Chairman: Thank you. 250 Can I just follow up on the motivation, the protection of the school’s interests, just to be clear. When you, in 2010, came into the Department and the deal was resurrected, what were the Department’s projections and figures for school population expansion in Kirk Michael, on which you based the decision that the Department could not afford to see the school landlocked, notwithstanding two existing classrooms, not used, lying empty for eight or nine years and not 255 required? What were the figures before you that led you to conclude that, notwithstanding that, provision still had to be made for expansion of the school?

Mr Teare: If I could go back to something I said before, we were planning on a long-term basis, to get our contingency plans in place. Certainly there was not any predicted growth in the 260 short term – and I acknowledge that – but we had to take a long-term view.

Q86. The Chairman: And what was the predicted growth, in the longer term, on which you made the decision?

265 Mr Teare: That was my subjective view.

Q87. The Chairman: So there were not particular figures –

Mr Teare: No, there were not. 270 The Chairman: – before the Department that led you to conclude that we must strike a deal here to protect the school, notwithstanding we had already made provision for growth that has not been utilised, there has been no need for it? Are you saying it was purely guesswork as to what the future might hold? 275 Mr Teare: I said it is subjective and we need to plan for the future to cover all possible contingencies. I did say, earlier on, that this brought immediate financial benefits as well, in terms of an additional fully serviced play area, fully drained, up to modern standards, up to standards which the Department of Education would be seeking. 280 It does bring considerable overall advantages not only for the future, sir, but for the present as well.

Q88. The Chairman: We will come back to the playing field. Mr Dobson, do you want to come in? 285 Mr Dobson: Yes, just that we do not completely go on guesswork on numbers, but one thing… When housing developments happen, they have a different educational output, depending on the type of houses that are being built, and even within Peel, we can zone it to say the larger detached houses do not actually turn out that many children, not for primary age; whereas, when it is first- 290 time buyer housing…

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One of the problems we have with this kind of projection… As a rule of thumb, on 100 houses we would be looking at four-point-something children per year group, but only after the fifth year, so there is a time lag because basically people are mortgaged up to the hilt and they do not have children until their personal economy catches up. 295 I have not found it to be as easily predictable as other areas that I have worked in, and what we have got to do in the Isle of Man is look at the effect of similar developments, and the closest similar development is the one in Peel, which has indeed given us… Approximately, it is now coming out at 10 to 15 children per year in addition to what we always had in Peel. So it is a best guess, I admit that. It would be lovely to have the capability – not personally, but 300 just across the Department – to have firm predictions, but until you actually get a clear indication of exactly the types of housing that are going to be there – whether it is first-time buyer or what it is going to be – it is quite an inexact science; but we do look at numbers and we can predict broadly that eventually this would put about 40 extra children in –

305 Q89. The Chairman: If 100 houses had gone ahead, what were the – ?

Mr Dobson: Forty. We would predict over a 10-year period, we would have at least 40 more children – (The Chairman: Forty?) into the primary school.

310 Q90. The Chairman: So the school roll would be expected to go up from 128, possibly to –

Mr Dobson: To 170.

Q91. The Chairman: To 170. For which two classrooms that had been built, would have 315 adequately provided?

Mr Dobson: Well, yes, I think that Kirk Michael is an interesting school, because it is a mix of a very old building and a new extension. The new extension is fully used, or it was when I was there. The classrooms that are less used are on the front of the building by the car park and closest 320 to the main road. Having said that, Michael School does not have some of the things that other schools do have. They do not have a separate eating facility, they do not have a library, and so on.

The Chairman: So the motivation was to protect – 325 Mr Dobson: It is not an ideal school, is what I am saying to you.

Q92. The Chairman: Not an ideal school. There were two motivations to provide for the future physical expansion of school buildings, beyond what you have got, and that was on a long- 330 term belief that that would be needed; secondly, in the interests of the taxpayer, to have improvements made to the existing – or to replacement – playing field. Could you say something a bit more, Minister, about that? How was the future playing field with its improvements, how would that compare with the existing playing field on the present site?

335 Mr Teare: Thank you, Mr Chairman. It would give the playing field more resilience in bad weather conditions, it would be properly drained and also it would be properly fitted out for modern sports facilities. We are looking at total investment – not by the taxpayer, I have to add – of between £300,000 and £400,000 in actually delivering a purpose-built sports facility for the school. 340 Q93. The Chairman: Turning back to the improvements to the playing field that were to be made by Heritage Homes. In the file notes of August 2010, Mr Collister, Director of Estates, following a discussion with Heritage Homes, the file note says that Heritage Homes:

345 ‘acknowledge that this [the deal on the table] was a lesser deal than was previously on the table. They confirm that since they have now secured the alternative route at significant exceptional cost, the money was no longer in the development appraisal to offer the new drained pitch, playground, fencing, walling, access, steps, ramps, etc previously negotiated.’

350 It does not appear… Did events – ?

Mr Teare: Events moved on, sir. ______30 KMLX SELECT COMMITTEE, THURSDAY, 7th JUNE 2012

The Chairman: Events moved on from that.

355 Mr Teare: Because there was a critical time towards the end of July, beginning of August 2011. I was putting pressure on them to improve their deal and they were given 24 hours to improve it, otherwise we would walk away from it. So we got a better deal and I think that is confirmed by the opinion we got back from the Government Valuer.

360 Q94. The Chairman: What is wrong with the existing playing field and sports facilities?

Mr Teare: Like everything else, it could be better and this was an opportunity to make it better.

365 Q95. The Chairman: So it was of overriding importance to strike a deal that improved the playing fields for the benefit of the Kirk Michael community; but clearly, your predecessor felt that the Kirk Michael community’s interest was better preserved by stopping… not doing a land swap to allow the development to go ahead?

370 Mr Teare: The important thing that should be remembered, I would respectfully say, is that the circumstances have changed – or had changed, because the developer had spent a significant amount of money improving the access off the Lhergy Vreck road. They secured an option and they paid virtually double the market price for a bungalow on the north side of that road to give them the visibility. 375 Q96. The Chairman: We will come on to the alternative access shortly. Perhaps to conclude this discussion we are having about the background to and the need for the Agreement, the Agreement was signed on 16th August 2011 and the House of Keys was dissolved on the 18th. Is there any significance in the Agreement being signed at a time when the Keys was 380 about to be dissolved?

Mr Teare: None at all, but I was conscious that the Department had spent a considerable amount of work on it and I did not really want this to go on to the next administration. It was just a case of ‘let’s get this resolved and we can then move on.’ Nothing more than that. 385 The Chairman: Thank you. Can I invite Mr Turner. We want to talk a little bit now about the alternative access and whether, by January 2011 – the time of the Tynwald debate – the alternative access, which was motivating and driving forward the negotiations, had been secured. 390 Mr Turner.

Q97. Mr Turner: Thank you, Mr Speaker. Mr Teare, you said, in Tynwald on 18th January, that ‘access to the lane has been secured’, which you have just indicated – 395 Mrs Cannell and the Speaker: The land.

Mr Turner: Sorry, ‘to the land has been secured’, by the properties. You said:

400 ‘That is a done deal and, subject to the planning process, development will occur.’

Do you still stand by that statement?

Mr Teare: I stand by it, yes, I do, because the developer had made a major investment – some 405 would say a speculative investment, bearing in mind that they only had an option over this land, so it was a very bold move, I would suggest, on their part.

Q98. Mr Turner: When did you become aware that this potential alternative access was available? 410 Mr Teare: Not long after I came into the Department and the issue was raised with me.

Q99. Mr Turner: Who made you aware of that, can you recall? ______31 KMLX SELECT COMMITTEE, THURSDAY, 7th JUNE 2012

Mr Teare: If I could just wind back a bit, I was involved in a constituency planning matter and 415 one of the parties – the constituent’s architect – happened to be the same architect who was acting for Pinecrest. We just had a general discussion. The subject came up: ‘now there has been a change in administration at Education, would the Department be prepared to have a look at the deal again?’ I said, ‘Well, if you want to try, fine.’ They then came back through my Director of Estates at the time. 420 Q100. The Chairman: The timeline of events, which you have helpfully put in as part of the Department’s evidence, indicated, before you took office, that in November 2008 the landowner approached the Department to gauge the appetite for purchase of land adjacent to the school. Can you just confirm that there were, in fact, other discussions going on by the Department with the 425 developer when Mrs Craine was still the Minister?

Mr Teare: I am not able to do that, sir, because I was not the Minister and I have not gone back that far.

430 Q101. The Chairman: I could ask the Director of Education the same question.

Mr Dobson: Sorry, could you just clarify what the question was about.

Q102. The Chairman: Yes, what happened, of course, was that in early 2007, Minister Craine 435 announced that she had declined the proposal for the land exchange, because of the potential disadvantages to Kirk Michael. She was in office until April 2010, but during her period as Minister, I am asking you to confirm that the Estates Director and the Department was in continuing discussion with Heritage Homes?

440 Mr Dobson: This shows the level of my recall that the landowner’s daughter approached the Department, as far as I recollect, the landowner’s daughter approached again and it is as described in November 2008, approached the Department to gauge appetite for purchase of the land, but the valuation was so high, the Director of Estates considered it so high, he confirmed that there was no interest in purchasing the land. My recollection is that the discussion around that was it was about 445 selling a piece of land to the school.

Q103. The Chairman: Yes. So, in 2008 and 2009, there were meetings and discussions by the Department with the landowner. (Mr Dobson: Yes.) This is in the evidence from the Department.

450 Mr Dobson: Yes, yes, the numbering.

Q104. The Chairman: So that was going on against the background that the then Minister had drawn a line under any future development.

455 Mr Dobson: Yes, it was a separate approach.

Q105. The Chairman: So it was a separate approach, and this is before Mr Teare came in.

Mr Dobson: Before Mr Teare came in, yes. The dates are pretty clear. 460 Q106. The Chairman: Therefore, who initiated those approaches, discussions, with – ?

Mr Dobson: The landowner.

465 The Chairman: So the landowner –

Mr Dobson: Approached the Department.

Q107. The Chairman: And who did they deal with in the Department? 470 Mr Dobson: They would have dealt with the then Minister and the Director of Estates, who would have advised the Minister on that.

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Q108. The Chairman: The then Minister being Mrs Craine. Is there evidence that Mrs Craine 475 was involved in those discussions?

Mr Dobson: The only source I would have of that is to go back to the Department minutes for that period, to look at those, and I am sorry but I do not have those with me. I can supply you with that information. 480 Q109. The Chairman: We have a note that, in December 2008, the Department confirmed that the Estates Director would progress dialogue (Mr Dobson: Yes.) regarding purchasing the 1.95 acres, so the Department had sanctioned those discussions to take place.

485 Mr Dobson: I would have to go back –

Q110. The Chairman: And in January 2009, shortly after, the Estates Director and Government Valuer met with the landowner to discuss the valuation of the land and a potential way forward. 490 Mr Dobson: Yes, ‘Not forthcoming – dialogue stalled.’ I think it just ended. It just petered out. My recollection is that it petered out, but I was not involved, so I have personal recollection.

Q111. The Chairman: The then Director of Education, would he have been involved? 495 Mr Dobson: He would have been advising the Minister, yes.

Q112. The Chairman: He would have been advising the Minister, and Minister Craine, having made the statement that the land swap was off the table… I am just trying to reconcile that 500 with the continuation within the Department of discussions.

Mr Dobson: Okay, I am just reading the notes, but this is a different thing, isn’t it? This is about, rather than a land swap, which initially was there and that was… I think we are saying this is the access into the development, this is simply from Pinecrest, purchasing another area of land. 505 In the original dialogue, when this was first raised and dismissed by the then Minister, it was obvious that if they still could gain additional land and a better playing field, then they would be willing to do that and there was obviously an interest there, otherwise there would have been no interest in the first place. My reading of this is that this is a separate issue, which was just ‘does the Government or Department on behalf of the school wish to purchase that strip of land?’ 510 Q113. The Chairman: Right, so it was purely concerned – (Interjection) Just to clarify, it was nothing to do with a potential exchange at that point –

Mr Dobson: That had been rejected. 515 Q114. The Chairman: Yes, the Department was strategically interested in purchasing 1.95 acres, I think it was, of land – for what reason?

Mr Dobson: Improving the playing fields. 520 The Chairman: To improve the playing fields.

Mr Dobson: And improving facilities for parking –

525 The Chairman: Right. Mr Turner.

Q115. Mr Turner: Thank you. Were there any discussions in the Department? The Minister at the time, Mrs Craine, turned down the land swap for what I refer to as the ‘triangle’ of the playing field, which was to be the proposal of what the developer required, because of the disadvantages to 530 the village. Was she referring…? Is there any recollection of discussions in the Department? Was the disadvantage the fact that the triangle was going to be given up, or the fact that there was a development, because if the proposals had been rejected, why was this triangle so important and going to be so detrimental to the village? Do you recall any discussions?

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535 Mr Dobson: I think I would be hypothesising if I said anything. You have to remember that, at the time I was head of the improvement service and therefore would only have been in part of Department meetings. I am sorry. I am not hiding behind this; I am just saying I was not there and I do not know.

540 Q116. Mr Turner: Because obviously, the whole purpose that it was turned down was because of the disadvantages to the village, so it just strikes me that there is much importance being given on this triangle, whereas permission was then granted to go and discuss purchasing the land, when on the face of it there was an option to get that land for free in return for the triangle. It was what importance was given to this triangle of land? 545 Mr Dobson: My recollection is that, during the original discussions, there was a public meeting with the various plans displayed in Kirk Michael School, which I attended as a resident. The public opinion which came after that – and I believe was co-ordinated by the Commissioners – was that public opinion was, at that time, not hugely a majority, but was against that going 550 forward. My recollection is that Mrs Craine’s view at the time was that therefore we will not pursue this at this time.

Q117. Mr Turner: Sorry, the land swap would not go forward, or was it that they just did not want the development? 555 Mr Dobson: The land swap just… The debate, as I recall it – as I say, from a slightly removed position – was about the land swap, and thereby access.

Q118. Mr Turner: What was the motivation for that – that the reality was that they just did 560 not want the development and to object to the land swap was a way of thwarting the development? What was the opinion of the meeting?

Mr Dobson: Do you want me to talk about the conversations in Kirk Michael that I have heard, or do you want me to talk about what I heard in the Department? 565 Q119. Mr Turner: I am just trying to work out the motivation for the objection – whether it was objecting to the school swapping the land, or whether the real reason was that they objected to the development.

570 Mr Dobson: There was strong resistance to the development of the land, I would say. That would be my view.

Q120. Mr Turner: And objecting to the school land swap deal was a way of stalling the development. 575 Mr Dobson: It would have had that effect, yes.

Q121. The Chairman: Thank you. Just moving on, Mr Teare, you were appointed in April 2010 and in your evidence, you have 580 told us that you were approached by the landowner to discuss possible land swap options. I just want you to tell us a little bit more about those discussions and what was different, what had changed. We touched earlier upon the fact that Heritage Homes was now claiming an alternative access and that therefore the ransom strip that the Department previously held and the very strong financial card they were in a position to play… The situation now changed, and yet a land swap 585 was back on the table. Just give us the background to that, if you would.

Mr Teare: Yes, I will, but before doing so, I think it is interesting to reflect that the Department was trying to obtain additional land for the school before I arrived, before I became Minister. The transaction that was finally agreed gave us that land at no cost. I think really, that 590 that is a significant factor overall. If I could go back, Mr Chairman, you did say that Heritage Homes were claiming that they had alternative access, and it was already in the public domain through deeds which had been filed at the Deeds Registry that they had alternative access.

595 Q122. The Chairman: Was that access capable of translating into an approved traffic access? ______34 KMLX SELECT COMMITTEE, THURSDAY, 7th JUNE 2012

Mr Teare: That was a planning matter, but basically, we were working to get clarification from the Department of Infrastructure and before the transaction was actually signed, we had confirmation that they had agreement from the road traffic authorities that they had got access for just under 100 units, served by that access. 600 Q123. The Chairman: Right. There are two aspects, I think to this then. There is the acquisition of properties to make Lhergy Vreck and there were options to purchase and they had taken place. Knock y Tholt and land at the rear of Greystones had been purchased in December 2008 and July of that year Heritage Homes had purchased Westlands, therefore in the discussions, 605 you were given to understand that the necessary purchase of properties had taken place to allow alternative access. Can I ask what you did to check that out? Did you check the veracity of the claim of the property ownership to permit a new access?

Mr Teare: It was public knowledge, sir. It was recorded in the Deeds Registry and I have 610 supplied copies of the – I think I have anyway – certificates of registration.

Q124. The Chairman: Okay, when in February 2012, following the inquiry, Heritage Homes put out a press release saying, ‘We were required by Minister Teare to provide irrefutable proof that we could access the land to the rear of the school via an alternative access.’ What form did 615 that requirement take? What was the ‘irrefutable proof’ that they were asked to provide?

Mr Teare: We got confirmation from the road traffic authorities confirming that that was acceptable, albeit for a limited number of units to be serviced by that access. Also, if I could reflect, the options and the purchase occurred, subsequent to my predecessor’s decision not to 620 proceed, so the whole situation had changed.

Q125. The Chairman: Because of the alternative access that would have allowed development to take place and Mr Turner’s question about you saying in Tynwald on 18th January 2011, access to the land has been secured; that is a done deal; development will occur, i.e. the 625 alternative access.

Mr Teare: Correct, sir.

Q126. The Chairman: I am just trying to, just want to know whether you took the 630 Department… you took Heritage Homes’, the developer’s word for it, or did you check out that they did have this alternative access?

Mr Teare: I prefer to do my own research, sir.

635 Q127. The Chairman: And what form did that take?

Mr Teare: Basically, check it is public knowledge – anybody can go to the Deeds Registry and check.

640 Q128. The Chairman: So the Department checked with the Deeds Registry?

Mr Teare: We check, but we check again, before we actually sign any agreement. You check to make sure and that is the important thing, I would respectfully suggest, during the course of negotiations: you discuss matters, one party will make assertions and then, as you move closer to 645 finalising the agreement, you go back and check again.

Q129. The Chairman: So you carried out due diligence, as far as you and the Department were concerned?

650 Mr Teare: You have to, yes.

Q130. The Chairman: So you were satisfied that the properties were shown in the Deeds Registry and the Land Registry, that they had been acquired by Heritage Homes. In your written evidence, you say that, in November and December 2010, telephone 655 conversations with Highways regarding access to the site from the Lhergy Vreck Road… Can you tell us more about those conversations and were they followed up in writing? ______35 KMLX SELECT COMMITTEE, THURSDAY, 7th JUNE 2012

Mr Teare: I had various conversations with them and I have to admit it was difficult to get them pinned down to exactly what their reaction would be, but certainly before we signed the Agreement we had clarity on what their reaction would be. 660 Q131. The Chairman: Did you have anything in writing from the Highways department to confirm that the access at Lhergy Vreck had their approval, they were satisfied?

Mr Teare: Before we signed the Agreement. 665 Q132. The Chairman: Did you have that in writing? Were your telephone conversations followed up in writing?

Mr Teare: No, sorry, we are getting crossed paths here. Before the Agreement was signed, 670 these were the initial discussions with the traffic authorities: ‘is this acceptable for access into the site?’ They were working on it, we clarified it with them and we got their confirmation before the Agreement was signed.

Mr Dobson: In April, I think it was. 675 The Chairman: Mr Dobson.

Mr Dobson: I think it was in April we got the… There is a written record of the fact that Highways had approved for I think it was up to 100 dwellings. 680 The Chairman: In April –

Mr Dobson: 2011.

685 Mr Dobson: That is the piece of written evidence I can find.

Q133. The Chairman: In April 2011. That was after the Tynwald debate of January 2011, when your Minister informed Tynwald that access to the land had been secured. How could it have been secured, if Highways did not give written confirmation until April 2011? 690 Mr Teare: Basically, because of the fact that they had purchased these and had options over these properties at the entrance to the Lhergy Vreck Road. They had access and that was confirmed in the same debate by the previous Member for Michael, it is on Hansard.

695 Q134. The Chairman: But at the time of the debate you did not have irrefutable proof that there was a highway-approved access?

Mr Teare: I did not have irrefutable proof, but as I said before, we had written evidence and written confirmation, I would say, before the Agreement was signed. 700 Mr Dobson: In April, I think it was.

The Chairman: Mr Dobson.

705 Mr Dobson: I think it was in April we got the… There is a written record of the fact that Highways had approved for… I think it was up to 100 dwellings.

The Chairman: In April –

710 Mr Dobson: 2011. That is the piece of written evidence I can find.

Q135. The Chairman: In April 2011. That was after the Tynwald debate of January 2011, when your Minister informed Tynwald that access to the land had been secured. How could it have been secured, if Highways did not give written confirmation until April 2011? 715

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Mr Teare: Basically, because of the fact that they had purchase these and had options over these properties at the entrance to the Lhergy Vreck Road. They had access and that was confirmed in the same debate by the previous Member for Michael, it is on Hansard.

720 Q136. The Chairman: But at the time of the debate you did not have irrefutable proof that there was a Highway-approved access?

Mr Teare: I did not have irrefutable proof, but as I said before, we had written evidence and written confirmation, I would say, before the Agreement was signed. 725 Q137. The Chairman: Can I draw your attention… You will be familiar, of course, with the inspector’s written report following the inquiry, the one that went to the Council of Ministers and the statement within it, paragraph 114. Referring to the alternative access, the inspector in his written report said: 730 ‘The present proposals explored such an access at Cass a Lergy where Heritage Homes Ltd purchased Douglas Road properties backing onto the southern end of the site. The company was, however, unable to obtain control of sufficient frontage to satisfy the Highway Authority’s visibility requirements.’

735 It was on the deficiencies in the access at Douglas Road corner, of course, in which the planning application, in large part, failed, but what this is talking about is the alternative access. The inspector clearly said that there was not control of sufficient frontage to satisfy the Highway Authority. Was the inspector wrong?

740 Mr Teare: Yes, and I would respectfully say that he was, because, in a letter sent by Heritage Homes to the Chief Secretary on 2nd March 2012 Heritage Homes says and I quote: ‘This is fundamentally incorrect.’

Q138. The Chairman: So the inspector, in saying that, had basically got it wrong? 745 Mr Teare: That is what Heritage Homes are saying and I repeat again, ‘This is fundamentally incorrect.’

Q139. The Chairman: They said that, but was that supported by proof, written evidence from 750 the Highways department that there was an access? It is two diametrically opposed things here.

Mr Teare: It is, but we got evidence in April 2011 that the Highway Authorities had agreed to it. We had that written evidence and I would say that that evidence probably was not before the independent inspector, so he would not be aware of it. 755 I am quite happy to share a copy of this letter with the Committee, if you think that will be helpful, sir.

The Chairman: Thank you very much. Mr Turner. 760 Q140. Mr Turner: For clarity, Mr Chairman, was it the case then that the planning inspector’s comment regarding insufficient frontage was based on an application for a higher number of properties – that was what the planning inspector was dealing with – whereas Highways subsequently came back and said there was sufficient access at that point for the lower number of 765 dwellings, which of course was not before the planning inspector for consideration? How did you view the fact that there was this risk that the alternative access could be made available if they re- jigged their plans? Was it still a risk that the Department’s position was somewhat weakened?

Mr Teare: It was undoubtedly weakened. The fact that they had spent a considerable amount 770 of money, well in excess of market rates, to acquire access, or to acquire a wide visibility splay there, did materially impact upon the Department’s position and as I said at the outset, part of my action really, was damage limitation.

Q141. Mr Turner: So the impact to the Department really, would be the same, whether there 775 were 100 or 150 dwellings – the fact is there would still be a development and you would still not have the extra land?

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Mr Teare: We would not have the extra land that the Department, through previous negotiations, when I was not the Minister, was anxious to secure. As I say, this was damage limitation and it gave us the option to acquire the land and also to improve the facilities available 780 for our young people.

The Chairman: Thank you. Mrs Cannell.

785 Q142. Mrs Cannell: Yes, thank you. Going back to what you said before that the inspector was wrong and Heritage Homes were right: if it is viewed that the inspector’s report was wrong, why did the Council of Ministers accept it and concur with the conclusion of the inspector and give refusal to the planning application?

790 Mr Teare: Firstly, let me make it abundantly clear, because of my involvement with this, I absented myself from the Council of Ministers’ decision. I withdrew from the chamber and had no involvement whatsoever in this decision. But the Council of Ministers would be decided, would be influenced by the inspector’s recommendation right at the end. As the inspector goes through his Report, he builds up his case 795 for the recommendation and then it is up to the Council of Ministers to focus on that recommendation and to decide, do they accept it, or do they not accept it? Heritage Homes: I have quoted from Heritage Homes’ letter and Heritage Homes are saying that this statement in clause 114 is fundamentally incorrect.

800 Q143. Mrs Cannell: Yes, they are saying that, but I am just exploring your readiness to accept what they say, as opposed to a high-ranking, highly qualified planning inspector who presided over a public inquiry. I am just curious to see why you would prefer to believe what Heritage Homes said, because prior to that Mr Speaker was exploring with you the press release that was issued by Heritage Homes. That was in February 2012, and it said: 805 ‘Prior to entering into the agreement with the Department of Education, we were required by Minister Teare to provide irrefutable proof that we could access the land to the rear of the school…’

You did not really give us a clear indication of what irrefutable proof, other than you do your 810 own checks, you said, and these things are done, but then, just lately, you have said that you did not receive…

‘I did not have irrefutable proof at the time of the planning inquiry.’

815 You have confirmed that and Mr Dobson has confirmed that because you only had a formal letter from Highways dated April 2011, which came after the fact.

Mr Teare: No, it did not, because, with respect, the planning inquiry was held towards the end of 2011, and yet on 15th April 2011, we had written confirmation from Highways that the access 820 was acceptable to them.

Q144. Mrs Cannell: If that was the case, why was that not submitted as part of the submission to the inquiry?

825 Mr Teare: I did not submit evidence to the inquiry.

Mrs Cannell: But the Department did.

Mr Teare: The Department was not seeking the planning consent; the developer was. 830 Q145. Mrs Cannell: So are you suggesting, then, that the written confirmation coming from Highways dated April 2011 was only in the possession of the Department of Education and had not been shared with the developer the Department was very keen to go into negotiation with?

835 Mr Teare: No, the developer –

Mrs Cannell: To come to an agreement with.

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Mr Teare: Sorry, it is up to the developer to present their own case as they feel fit. It would be entirely inappropriate for any Government Department to interfere with it, I would suggest. This is 840 an independent process that stands outside Government.

Q146. Mrs Cannell: Minister, accepting all of that, you said earlier that you put a lot of pressure onto Heritage Homes between July and August – a lot of pressure to improve the deal that was on the table – you were very keen for this deal to go ahead, and that prior to giving a 845 commitment to signing the agreement to do the land swap with the developer, you also pushed Highways and you said it was quite difficult to actually get them to give confirmation one way or the other, as to whether or not the access would be acceptable. You said that the only formal indication came in April 2011, but April 2011 came after the debate where you informed Tynwald that in fact all of this had been achieved and there was irrefutable proof. 850 Mr Teare: Yes, because there was in the Deeds Registry clear evidence that they had acquired property on either side of the Lhergy Vreck Road.

Q147. Mrs Cannell: No, I am not arguing that Minister, I am not arguing that point with you. 855 They may well be unable to provide proof to you, but they are claiming that they had to provide irrefutable proof to you that they had access agreement to that site. This only came by way of letter from Highways in April 2011, bearing in mind, that it is not Heritage Homes or any developer that can say, ‘We have access for a highway’; one has to have approval for a highway access and it is only the department of Highways that in fact, could give an indication of that. But 860 you did not achieve that until after the debate in Tynwald.

Mr Teare: I did not achieve it in writing, until after the debate in Tynwald.

Q148. Mrs Cannell: Quite. So, if it is not in writing, it is really just hearsay, is it not? 865 Mr Teare: No, it is not, because, basically, if you speak to people and get their assurance, it is then followed up in writing later; but I would also draw you to the Hon. Member for Michael’s contribution to that debate, when he confirmed that they had access. So he already knew they had access; he said it in the debate. 870 Q149. Mrs Cannell: They may well have regarded themselves as having gained access, because they had paid over the odds or whatever, in fact, to acquire the access, but they did not have approved highway access from Government and surely, as a Minister of a Department, you ought not to be giving assurances to Tynwald that this has been done and that has been done and 875 this is the general position, when you do not have formal clarification of such. (Mr Teare: With respect – ) As a Minister of this Government, should you not have formal clarification on all such matters, before you put your signature to any kind of agreement?

880 Mr Teare: With respect, it is up to me to determine the level of clarification that I need. I got verbal clarification and I was content to rely on that and they followed up in writing in April.

Q150. The Chairman: Thank you, Minister. In May 2011, you had a letter from Dr Naylor about another possible problem with the Lhergy 885 Vreck access, namely the Naylors’ rights over the Lhergy Vreck Farm Road. I just wanted to ask, sir, do you understand what you were saying and do you accept that if these claims of prior rights by the Naylors over the road were true, that might have strengthened the Department’s position in dealing with Heritage Homes? If there was some element of doubt over the rights of access at Lhergy Vreck, because of the Naylors’ pre-existing rights through their deeds, that might have 890 strengthened the Department’s position. So did you follow that up?

Mr Teare: No. There was no evidence supplied. We had quite a lot of correspondence at the time, and basically I did suggest to Dr Naylor that he take legal advice, and I heard nothing more.

895 Q151. The Chairman: If his claims were legally substantiated, that would have been of considerable interest to the Department, would it not, in that this new deal becomes increasingly less attractive than the older deal?

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Mr Teare: Arguably, yes, but if you have a look at the final deal that was negotiated with the 900 original deal, the two deals are not very far apart. I think that we negotiated very strongly.

Q152. The Chairman: In the circumstances, the playing field land that Heritage Homes wanted was no longer the ransom strip and, applying Cambridge Stokes formulas for valuing ransom strips, the deal, surely, financially, was not as good as it would have been before. I think it 905 was you who said a golden opportunity had been lost.

Mr Teare: It had, but in the intervening period, from the January debate until the deal was signed, we managed to improve the deal, and I think that we have done well, even if I say it myself. 910 Q153. The Chairman: If the Naylors were right, you might have been able to approve the deal even more, because if there was some doubt over the viability of the Lhergy Vreck access, because of the Naylors’ claims, that would have strengthened the Department’s hand in negotiating with Heritage Homes over the value of the land which they were desperate to get? 915 Mr Teare: It could well have done, but, as I say, the final deal was very close to the original deal anyway and, as you have said, sir, there are an awful lot of ifs there.

Q154. The Chairman: Which is why we need to enquire, had you exercised due diligence, 920 had you pursued these claims – as they were made, they were on the table. The Naylors identified a possible problem and no doubt you are correct – I am sure you are correct – in advising them to take their own legal advice, but what checks did the Department make, as to whether there was anything in what the Naylors were claiming over restrictions on that Lhergy Vreck access?

925 Mr Teare: They were not even certain themselves, because they say in their letter, ‘We simply do not know whether our rights would, or would not…’ They were unsure themselves. They were not making any firm assertion.

Q155. The Chairman: Had they taken your advice and gone and seen a lawyer and said, 930 ‘Have we not got a strong claim here?’ that would have been of great interest to the Department.

Mr Teare: And they did not come back.

Q156. The Chairman: So you just let that ride? 935 Mr Teare: You will be aware that there are many letters, many allegations which come forward, and I made what I thought was a helpful suggestion: ‘just speak to your legal advisers.’

Q157. The Chairman: Yes. I am just trying to see whether there was any coinciding of 940 interest between the Department’s position… They were negotiating with Heritage Homes. The deal that was struck was on the basis of an alternative access, which you were satisfied, the Department was satisfied, held water; and yet we have got a claim that this alternative access might be in some doubt because of the Naylors’ deeds and what they were claiming, which had to be tested under proper legal advice, but there would be a close interest in the outcome of that from 945 the Department’s point of view. I am just wondering why you did not perhaps follow up with the Naylors: did they take the advice; what was the advice; do you have prior rights over this road that would deny access to others to the detriment of Heritage Homes?

Mr Teare: You have to imagine, or you have to realise, that this letter came in three years after 950 Heritage Homes actually bought the properties and got the option over part of the garden on one side of the Lhergy Vreck Road. I could not imagine anybody spending the sort of money that they have without having done their homework.

Q158. The Chairman: Was it your view, or the Department’s view, that the Naylors’ claim 955 was essentially a civil matter and not a matter for planning? Did you reach that conclusion, and therefore that was why it did not need to be pursued?

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Mr Teare: You are quite correct, because in fact in planning matters the ownership of the land is not relevant, is it? It is just they have a look at whether that planning proposal is reasonable. 960 They do not have a look at the technical legal rights or wrongs which might underpin it.

Q159. The Chairman: Was that your view at the time, which is why you simply let the matter rest, with you advising the Naylors to take their own legal advice?

965 Mr Teare: And I also advised them to contact Heritage Homes as well, so I felt that I gave them a good steer of what should be done. I could have easily just sent a letter saying, ‘I have received your letter and have noted your remarks.’ I tried to help.

Q160. Mrs Cannell: But would it not also, bearing in mind that you were looking for – surely 970 – the best deal for the taxpayer…? That is what you said today, that by writing back to them and inviting them to take their own legal advice and then to come back to you, after they had taken legal advice, would have been sensible and prudent, would it not, if you were looking for a good deal for the taxpayer? Had they come back with legal opinion that did, in fact, say yes, they do have legal rights over this, which will have an impact on any developer or may curb any 975 development, that would have provided you with additional leverage, wouldn’t it, to have got an even better deal on the table?

Mr Teare: No, not necessarily, because basically the developers, as I said before, had spent a considerable amount of money on gaining this access and you could not imagine that they would 980 not have not done their due diligence.

Q161. Mrs Cannell: You seem to place an awful lot of reliance upon them doing their due diligence, merely because they tend to be able to splash a lot of money around in acquiring land and developments and options on land. Are you not of the opinion that, as a Minister, you have to 985 make sure, by protecting the public purse, to do your own due diligence and for using whatever additional leverage you can when negotiating with developers, in terms of striking an agreement with them, to get the very best possible deal for the taxpayer that you can?

Mr Teare: And that is exactly what I did. 990 The Chairman: Mr Turner.

Q162. Mr Turner: Thank you, Mr Chairman. Was there much correspondence with the Naylors, or was there just that one instance? 995 Mr Teare: As far as I can recollect, there was just that one and there was no follow-up from either the Department or Dr and Mrs Naylor.

Q163. Mr Turner: So they had not raised concerns – 1000 Mr Teare: There was nothing came back, nothing at all.

Q164. The Chairman: Moving on then, in November 2010 we heard evidence from Mr Cannan that you held what he called ‘a secret meeting’ with Michael Commissioners: can you tell 1005 us what that was about?

Mr Teare: I just gave a briefing on where we were at the time.

Q165. The Chairman: And was that on your initiative, or had you been in correspondence 1010 with Michael Commissioners?

Mr Teare: It was at my initiative.

Q166. The Chairman: Okay and it was by way of a briefing of where discussions were up to 1015 with Heritage Homes?

Mr Teare: As the representatives of the area, yes.

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Q167. The Chairman: Michael Commissioners had always been very supportive of the 1020 protection of the area around the school, had they not?

Mr Teare: They had, although there were differences of opinion in Michael Commissioners as well.

1025 Q168. The Chairman: The whole deal was up for debate in Tynwald in January 2011 and a motion was tabled by Mr David Cannan, to which you put an amendment and which carried quite overwhelmingly in Tynwald and in that debate, I repeat myself, but I quote you again:

‘Access to the land has been secured. That is a done deal and, subject to planning process, development will occur.’ 1030 However, earlier that month your office told a Kirk Michael resident that you had agreed in principle, and that you were now finalising the detail of the agreement in principle, was what you said, when you wrote to that resident. Did you know about the January 2011 motion, when you wrote the e-mail on 6th January? 1035 Mr Teare: I cannot recollect. It would be very close to the publication of the Tynwald Order Paper. Sorry, I cannot remember that.

Q169. The Chairman: It was just really to establish whether, when you wrote the e-mail to 1040 the residents that said you had agreed in principle and just finalising the details, you knew there was a motion that, of course, might conceivably have made that a foregone conclusion. I accept what you say, that you cannot recall. Were you advised specifically, do you recall, by Mr Cannan about his motion, or did you simply pick it up from the Tynwald Order Paper?

1045 Mr Teare: I do not recollect being advised, but that is not to say that I was not. Can I just give you the background? Of course you know the Department of Education and Children’s office is on Peel Road. I did come into the Tynwald buildings on a regular basis, but my mail from the Clerk of Tynwald’s Office is held for me and I collect it every three or four days, so I would not be aware straight away when the Tynwald Order Paper was published. 1050 Q170. The Chairman: Then on the same topic, where you… If you had agreed in principle in January 2011, how is it that in March 2011, you wrote to another resident that ‘negotiations are continuing’? There seems to be some discrepancy by what you said in March 2011 ‘negotiations are continuing’ and in Tynwald you said it is ‘a done deal’; and, just before Tynwald, you said to 1055 another resident that it had been agreed in principle, but in March you are saying negotiations are continuing. There seems to be some discrepancy.

Mr Teare: That is quite correct, because negotiations continued right up until the 11th hour. The Committee will recall that Dandara were constantly put under pressure to improve the terms 1060 of the deal. So basically, we had agreed in principle there was a deal there to be done, ‘now let’s work on the finer details and work through it’. In contract terms, there are many stages to a contract, as I am sure the Committee will appreciate.

1065 Q171. The Chairman: So it was not a done deal in January then, was it? The deal was well on its way, but it was not a ‘done deal’?

Mr Teare: We had reached in effect the outline of the land to be conveyed – or the land swap – but then there were a lot of other issues, which needed to be resolved by continuing negotiations. 1070 Q172. The Chairman: Okay, but when you said to Tynwald it was a ‘done deal; development will occur’, which you said in January, that was not right?

Mr Teare: No, sir. The access was a done deal. 1075 Q173. The Chairman: The access was the done deal?

Mr Teare: The access was the done deal. That was the important thing.

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1080 The Chairman: Alright, thank you, yes. Okay. Thank you for clarifying that. Mr Turner?

Mr Turner: I have not got….

1085 The Chairman: Mrs Cannell?

Q174. Mrs Cannell: Before we move off this particular subject, I just wonder if, in hindsight, looking back, perhaps some of the statements that you have made in Tynwald in respect of this matter, whether, in hindsight, you regret some of the words, perhaps, that you have used in your 1090 statements, that have gone down and been recorded in Hansard ?

Mr Teare: No.

Q175. Mrs Cannell: You do not think you have been economical with the truth? 1095 Mr Teare: No.

Q176. Mrs Cannell: No. So you stand by everything that you have said in Tynwald Court?

1100 Mr Teare: Yes.

Mrs Cannell: Okay, thank you.

Q177. The Chairman: Can I ask, Mr Teare, you seemed to take a considerable, personal 1105 interest or direct interest, as Minister, in this Agreement, why was that?

Mr Teare: Right. It is because of the previous life: I have been dealing with property and land issues in my previous role in my previous employment, so I had an element of experience in these areas and working with my colleagues in the Department, and as a team, we could progress it. 1110 Q178. The Chairman: And you were working with the Director of Education and the Director of Estates. Were they advising you, or were you dealing with much of the negotiating personally?

Mr Teare: You will recall, sir, that the initial negotiations were conducted in 2010, through the 1115 Director of Estates. Then as matters continued, he referred it to me and I said they needed to sharpen their pencil. Over the terms of negotiations, as things got more fraught, we managed to improve the deal, but then, in fairness, the developers needed to speak or have access to the person who is able to make the decision in consultation with his colleagues.

1120 Q179. The Chairman: Okay. Could you just, moving on, tell us a bit about the overage clause that the Department struck with the developer limiting the development to 100 houses. You put in a clause that, in effect, was a covenant over going above that figure. Where did that figure come from and why was it included?

1125 Mr Teare: It was included because we had done our homework and we had found out that if they got planning approval, they would be restricted to 100 units, gaining access from the Lhergy Vreck Road. If they got planning approval for a higher figure, say, the planning conditions were subsequently varied and the Highway Authorities agreed they could have access for, say, another five or ten houses. We wanted to share in the additional development value. 1130 To go back to Mrs Cannell’s comment of maximising the return, that was an attempt to maximise the return for the Department.

Q180. The Chairman: If you had allowed more houses, would it not have been to your advantage – under the Cambridge principle, it would have increased the value of the land? 1135 Mr Teare: Okay, sir. Not for the 100 houses, because they already had alternative access from the Lhergy Vreck Road, but if the view of the Department of Infrastructure changed, and they had permitted an increase in the number of units served via the Lhergy Vreck Road, then by putting that overage clause in, it gave us in effect, access to the Cambridge principle. 1140 ______43 KMLX SELECT COMMITTEE, THURSDAY, 7th JUNE 2012

The Chairman: Okay, thank you. Can I ask my colleagues if they have any questions?

Q181. Mr Turner: I was just going to go back to the point about the Minister’s involvement. Would you say it is fair to say that the reason it had such high-level oversight, was because of the 1145 contentious nature of the whole issue – and it required that?

Mr Teare: Yes, I needed to protect my staff in such a highly-charged atmosphere. I will support, I will protect my staff.

1150 The Chairman: Thank you. Mrs Cannell.

Q182. Mrs Cannell: If I could just explore that a little bit more. I was interested when Mr Speaker was asking about why you took a personal interest in this particular Agreement and you said that you had expertise in this area with your former job. Was that working in the bank? 1155 Mr Teare: Yes. You are quite right to question that and to seek clarification, Hon. Member. Basically, I had responsibility for our property lending portfolio – although I have to say, I did not have any dealing with the relative bonds. So I was fully aware of the principles, the Cambridge principles, how it worked and I have conducted some high-level negotiations. 1160 Q183. Mrs Cannell: So following on from – and thank you for that – your previous answer to Mr Turner, did you step in, possibly because…? Was it because the staff were feeling the pressure from Heritage Homes? It this why you stepped in and took a more personal interest?

1165 Mr Teare: No, nothing of the kind. Basically, what they were looking for, really, is they would come to me and ask for advice, because it was political and practical support. So they come to me, ask my opinion, and I would give them a steer on the way forward. There is no point in them incurring a considerable amount of work and then finding it is to be of no avail.

1170 Q184. Mrs Cannell: But you did say before that, you considered that ‘pencils had to be sharpened’. Would you like to clarify that for us?

Mr Teare: That was instructions I gave to Mr Callister, that the deal was not of sufficient financial benefit to us as a whole to enable me to agree to it. That is negotiation. 1175 Q185. Mrs Cannell: Surely, that would just be part of it, wouldn’t it? I am wanting to explore the manner of the negotiations that took place, that you took such a personal interest in. It appears, on the face of it, that you actually began to micromanage this particular process, as the Minister.

1180 Mr Teare: Not at all.

Q186. Mrs Cannell: You did not? So you did not have the direct contact, then, with the developers, or the key person with the developer who you mentioned before was then the person who would go back and get the agreement of the company? 1185 Mr Teare: It was only as the negotiations moved on that I had a direct discussion with the developer.

Q187. Mrs Cannell: Okay, so your staff acted up to a point, then? 1190 Mr Teare: Correct.

Q188. Mrs Cannell: And then you stepped in. Was that close to completion that you stepped in? 1195 Mr Teare: No, I did not step in. That gives the wrong impression. I, in effect, took the negotiations further forward because the negotiations had reached a certain level and I wished them to provide a further benefit to the Department.

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1200 Q189. Mrs Cannell: But how were you able to impress that upon the developer? If you were not meeting them face to face, how were you able to impress that was your feeling and that was your view and that was where you were standing firm?

Mr Teare: That is why it became necessary for them to speak to me directly. 1205 Q190. Mrs Cannell: So, at some point, you did. When it reached the point where they would not budge any more and you would not agree to what they were offering, you then stepped in. You said ‘step’ in is the wrong word, but invariably that is what happened, is it not?

1210 Mr Teare: Basically, I took the negotiations forward. They had reached an impasse and I took them forward.

Q191. Mrs Cannell: By negotiating with them directly?

1215 Mr Teare: By negotiating with them directly.

Q192. Mrs Cannell: Yes, and what kind of period of time are we talking about when that happened, before you reached what you felt was a good deal for the taxpayer?

1220 Mr Teare: It was quite –

Mrs Cannell: A week? A couple of weeks? A couple of months?

Mr Teare: No, it was months, but basically we were negotiating with them and I wanted the 1225 deal finessed, improved on, and there comes a time when you have to negotiate. The Committee will recall some of my earlier comments that this deal nearly fell down at two minutes to midnight.

Q193. Mrs Cannell: How did you save it? 1230 Mr Teare: By just standing firm – ‘That’s the deal, it’s on the table – take it or leave it,’ and they took it.

Q194. Mrs Cannell: So it was a kind of call-my-bluff type situation developed, then, by the 1235 sounds of it.

Mr Teare: Poker – poker is a different way… But that is negotiations, Hon. Member.

Q195. Mrs Cannell: So a form of gambling, then, in order to get a good deal for the taxpayer. 1240 Mr Teare: Not gambling.

Mrs Cannell: Well, poker is.

1245 Mr Teare: I was quite prepared to negotiate and to negotiate firmly but fairly for the benefit of the taxpayer. I did make it clear to the previous Member for Michael, Mr Cannan – Mr David Cannan, I should say – in a letter in March 2011, that I had assumed personal responsibility for negotiations, so it was after we had the mandate, a firm mandate from Tynwald to continue negotiations, and I carried them on. 1250 Q196. Mrs Cannell: Yes, but you referred to those final negotiations, those key negotiations right at the end, as being akin to a game of poker.

Mr Teare: It was not meant in that way, but it was very much ‘We are quite prepared to fold 1255 and just walk away.’ I did not have to do this deal at all costs. I only did the deal because it was of clear and demonstrable benefit.

Q197. Mrs Cannell: But it was your description, Minister, not mine – the poker description.

1260 Mr Teare: There was clear and demonstrable benefit. ______45 KMLX SELECT COMMITTEE, THURSDAY, 7th JUNE 2012

Mrs Cannell: Thank you.

The Chairman: Mr Turner.

1265 Q198. Mr Turner: Surely then, walking away would have been of huge detriment to the school?

Mr Teare: It would have been.

1270 Q199. Mr Turner: They would have lost that opportunity.

Mr Teare: But then they were not to know whether I would or whether I would not walk away.

Q200. Mr Turner: But in the event that you did walk away, then, what would have been the 1275 impact on the school?

Mr Teare: We would have lost the land swap, we would have lost the additional play area, we would have lost the improvement of the facilities, and I would have been desperately disappointed. But then there comes a time when you realise that you have to make a decision: do you go ahead 1280 on the deal, or not?

Q201. Mr Turner: So do you feel that this deal represented the best value for money for the school and for the taxpayer?

1285 Mr Teare: I do and I feel that is borne out by the Government Valuer and also the press release by the developer, saying that the Department got a very good deal.

Q202. The Chairman: Thank you. By way of winding up, just to ask you to confirm a number of matters. Firstly, that you believe 1290 that… you are certain that Tynwald was given the correct information with regard to the status of the deal in January 2011, in terms of the alternative access, the written confirmation not having been obtained till April 2011. You are quite certain in your own mind that what you told Tynwald in January was absolutely correct?

1295 Mr Teare: Yes, I am.

Q203. The Chairman: Thank you. And likewise, are you content that proper due diligence was exercised throughout this process in confirming Heritage Homes’ claims about the access and all the surrounding matters, that the 1300 Department had checked everything out, not simply taken the developer’s word for it?

Mr Teare: Yes

Q204. The Chairman: And that the motivation for striking this deal was in the best interests 1305 of the school and the Kirk Michael community?

Mr Teare: No, the school and the taxpayer and also I did say at the outset, damage limitation, bearing in mind that they had alternative access.

1310 Q205. The Chairman: Thank you. And as far as enquiries with other Departments of Government to verify the statements of Heritage Homes, again, you did everything that could possibly have been done to verify these statements?

1315 Mr Teare: Before the final deal was signed, yes, the Attorney General was actively involved, or the Attorney General’s Chambers were actively involved, as was the Government Valuer, at all stages.

The Chairman: Thank you. 1320 Any further questions?

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Mrs Cannell: Nothing further, thank you.

Q206. The Chairman: Mr Teare and Mr Dobson, I would like to thank you very much, but if 1325 you wish to take the final opportunity to make any closing comments, please do so.

Mr Teare: During the course of the negotiations, we also asked the Government’s Internal Auditor to have a look at the whole matter as well.

1330 Q207. The Chairman: And was there an internal audit conducted, are you saying?

Mr Teare: I asked for an internal audit, yes.

Mr Dobson: I dealt with the Government’s Internal Auditor on that matter. We actually 1335 checked one particular issue as to whether, in the valuations, they reflected good value for money as far as could be ascertained. That was the direct question I gave to Caldric Randall at Internal Audit. His view was that the Cambridge Stokes principle had been applied to the valuations at all stages, and including the latter one, which was good value for money in comparison with the original one. 1340 Q208. The Chairman: We have written evidence that you have submitted from the Government Valuer. The internal audit though, that was requested by yourself, Director?

Mr Dobson: I spoke to the Internal Auditor. 1345 Q209. The Chairman: And when was it conducted and when was the report received?

Mr Dobson: There wasn’t… We did not ask for a full report; we asked for his professional judgement on – 1350 The Chairman: Oh, I see, so it was not a full internal audit. (Interjections) I see, I misunderstood. Sorry, yes, sorry.

Mr Dobson: I just asked for his view. 1355 Q210. The Chairman: Yes, okay. Thank you very much. Anything further, gentlemen?

Mr Teare: No. I would just like to thank you once again for rescheduling the meeting, sir. It is very much appreciated. 1360 The Chairman: Not at all, glad to oblige. Thank you, Minister, and thank you, Chief Executive. Ladies and gentlemen, that now brings the public session of this Select Committee to a close. I would like to thank members of the public. I would like to thank our two witnesses, Mr Teare and 1365 Mr Dobson, very much indeed for giving evidence and being of considerable assistance to the Committee. With that, I declare the hearing closed. Thank you.

The Committee sat in private at 11.38 a.m.

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