Treasury-CMI deal criticised

April 2, 2004

The Treasury was accused this week of setting an unwelcome "constitutional precedent" by excluding government colleagues from plans to set up a £65 million partnership between Cambridge University and the Massachusetts Institute of Technology in the US.

Taking evidence this week as part of their probe into the establishment of the Cambridge-Massachusetts Institute, members of the House of Commons public accounts committee expressed astonishment that the Treasury did not involve the Department of Trade and Industry in the plans for the pioneering venture until after it had announced the multimillion-pound deal.

This was despite the fact that the DTI would be funding and managing the project.

Alan Williams MP questioned John Kingman, the Treasury's head of enterprise and growth.

Mr Williams said: "It was rather arrogant not to inform the DTI, even the secretary of state. I used to be an industry minister. I'd want to know about it as early as possible, and I suspect the secretary of state would have wanted to know.

"To keep it from the secretary of state sounds rather uncomradely in terms of accountability at ministerial level. It is an utterly abnormal way to conduct government - a constitutional precedent in the Treasury cutting across other departments."

Mr Kingman insisted that the Treasury was under pressure to act quickly to seal a deal. He said that MIT had indicated it would look elsewhere in Europe for a partner.

He said that, as the Treasury was giving the £65 million tothe DTI, it was right to take the lead in the initial stages before handing over responsi-bility.

Mr Williams then turned to Sir Robin Young, the DTI permanent secretary.

He asked: "Hand on heart, weren't you a little miffed when you found out about it?"

Sir Robin replied: "Lesser mortals may have felt that emotion." Sir Robin explained that he and his DTI colleagues felt the setting up of the CMI was "a prize well worth it".

The committee was following up a report by the National Audit Office last month that found that the Treasury committed £65 million to the CMI without allowing for competing bids from other universities and with no proper risk assessment, targets or objectives.

Some committee members were concerned that about half of the £65 million provided by the Treasury had been spent at MIT in the US.

Michael Kelly, the executive director of the CMI, told the committee: "I think the moneyis a snip for what we are getting. UK taxpayers will get their money back 100 times over."

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