Examination of Witnesses (Questions 180
- 199)
THURSDAY 29 JUNE 2000
MR DAVID
QUARMBY AND
MR PIERRE-YVES
GERBEAU
180. You are clear that you have settled every
issue with them?
(Mr Gerbeau) Yes.
Chairman
181. Claire Ward has just asked you, and Mr
Faber, whom I am going to call next, asked Boots when they came
here at a recent session, how it was that they had failed over
this prolonged period to pay the money that was due to you. Mr
Faber and my other colleagues may take a different view, but it
seems to me their answer was somewhat opaque. Could you tell us
how critical to your finances and your application for further
money the failure of Boots to pay up for such a long period was?
(Mr Gerbeau) First of all, to give credit to my sponsors,
when I arrived we were at war with them, because basically as
a company we did not deliver what we promised. My first initiative,
by the way, was to fix the Zone sponsored by Boots, which was
the famous Body Zone, where we had an average of an hour and a
half waiting time and half the Zone not working, so we were solid
after not even two weeks in. It was kind of ongoing negotiations
and, more importantly, ongoing trust, getting back around the
table. I am very happy to say that our sponsors are all now partners,
which is a much better way to do business. It was a critical issue
at the time to get the money in, and we were trying to share our
concerns.
(Mr Quarmby) I want to say that the scale of the outstanding
money from Boots was important in cash flow terms, but not great
in relation to the overall finances of the project or in relation
to the second additional application to the Millennium Commission.
Mr Faber
182. If I could follow up on the issue of sponsors
briefly as well, after Boots appeared before us they wrote to
us saying that they were never made aware by NMEC of the scale
of NMEC's cash problems. Would you say that was true?
(Mr Gerbeau) I think we were sharing on a daily basis
with our sponsors.
183. So they knew perfectly well what the position
was?
(Mr Gerbeau) Yes.
184. Let me be clear, the three-quarters of
a million that is still outstanding is not from Boots?
(Mr Gerbeau) No.
(Mr Quarmby) No.
185. Who is that from? Is it from Tesco?
(Mr Gerbeau) Tesco, yes. At the same time it is a
difficult situation, because there is a financial position that
is part of it, but we are doing a lot of marketing activities
and promotions with them. So it is a kind of a weird issue where
you have sponsors, you have partners now, and they are really
working with you to make it better, and on the other hand there
is some commercial dispute.
186. Mr Quarmby, we have heard a lot this morning
about how successful the Dome is. Why was Jennie Page sacked?
(Mr Quarmby) Perhaps I can answer that, Mr Chairman,
by going back over the history at the close of last year and the
beginning of this year, and let us recall what it was that went
right about the Dome and for which Jennie Page was, I think, uniquely
responsible. First of all, it was delivered on time and broadly
to its budget. It did, I think, fully meet the aspirations of
those who conceived the Dome in the first place, which was first
of all the previous Government and then endorsed by this Government.
I think that, as I have mentioned already, there were regrettable
delays to some visitors on New Year's Eve, coupled with the fact
that not all the Zones were offering a full service for the first
two or three weeks of the project. I should just say in parenthesis
that that is a shorter shake-down time than one would ever expect
of any visitor attraction. My colleague, PY, who has run these
kinds of businesses, would say that you always allow a soft opening
and then a formal opening much later on when you start to market
it. So there was the problem of New Year's Eve, there were the
difficulties in the early weeks of delivering the kind of visitor
experience that we needed, but I think it was clear—and
I think Jennie said this herself at this desk only last week—that
the team was exhausted. Being a director of the company, I was
aware of the quite enormous and unprecedented effort that went
into completing the project to open on New Year's Eve. The team
was exhausted, and Jennie herself said it needed fresh management
to do what is a very different task from turning a huge construction
project, with an unmovable opening date, into a customer-focused
visitor attraction. The Board felt, in the early weeks of January,
that fresh management was needed in order to get to grips with
the low visitor numbers, fixing the visitor experience and re-invigorating
the team to take on this completely different task of running
a successful customer-focused visitor attraction. At the end of
the day, the Board felt—and it is very regrettable from
Jennie's point of view—that a change of chief executive
was required. In PY I think we have absolutely the ideal person
to run the Dome for this year, and I have never met anyone who
has quite the instinct for the business, nor the command of the
business in running a visitor attraction that PY brings to this.
187. So the errors that were made or what had
gone wrong prior to January were Jennie Page's fault, but what
subsequently went wrong was Mr Ayling's fault because he then,
of course, resigned as well? Where exactly does culpability stop
at the Dome? Who is ultimately responsible and culpable for what
has gone wrong?
(Mr Quarmby) There is no question that the Board has
to accept responsibility all the way along the line, and the Board
does.
188. We heard back in 1997, as I reminded Miss
Page last week, when we had Michael Grade, Mr Ayling and others
in front of us, that they all told us everything would be all
right, they were professionals in this field. Mr Grade, I think,
indeed chaired the Litmus Group which must bear the responsibility
for many of the problems which went wrong with the original design
of the Dome. I have not seen any other Board members leaping up
to resign as well.
(Mr Quarmby) When do you think they might have wanted
to do so?
189. I do not know. I am asking you. It just
occurred to me that some of the people who might have taken a
little bit more responsibility have failed to do so.
(Mr Quarmby) Mr Chairman, I think we should look at
the things that have gone wrong at the Dome in the context of
the total project delivery. I am not prepared to accept the implication
that the Dome is a disaster in any way. It is an extremely successful
project. Some things did go wrong. The Board acted very quickly
to address those and to take ameliorative action, in my view,
in a timely and appropriate way. I do not think anything would
have been served by mass resignations of the directors. It is
conventional in the private sector, indeed, it is conventional
in government that if major things go wrong, the man at the top
pays the price. That does not mean to say that the rest of the
team walks out.
Chairman
190. Could I just interject before Mr Faber
goes on? If he will allow me to say so, I believe his question
is going to the heart of the issue. On the one hand, you did have
a quite extraordinary achievement which other Millennium projects
have not always succeeded in emulating, namely to deliver a huge
construction project on time and open on the date on which it
should. We have been looking at other Millennium projects over
the last few weeks, and there are not all that many of them that
could do that. So in terms of its being a successfully delivered
construction project, there can be no faulting it, and I do not
think anybody around this table would fault it. On the other hand,
right at the beginning of our inquiries—and this is our
fifth—we had before us an expert on visitor attractions
who gave what this Committee regarded as extremely valuable advice
on how the New Millennium Experience Company should proceed. As
far as we can tell, very little of that advice, from an expert
on visitor attractions, was followed. While, of course, the security
issue that caused the problems in Stratford was sui generis,
nevertheless would it be your view that while this cannot be faulted
as a construction project, government organisations are not the
best organisations to run visitor attractions?
(Mr Quarmby) Could I say first that I do not feel
that the New Millennium Experience Company is a government organisation.
We are a Companies Act company, with an accountable board, with
a very clear public dimension to our task and our mission, but
we set out, and continue, to run the Dome as a commercial business
in the best way we possibly can. I am afraid I am not familiar
with the advice that you are referring to, Mr Chairman, which
was given to the Committee in one of your early hearings. My own
view—and I know a little about the tourism industry, as
you will be aware that I have been Chairman of the BTA since 1996—is
that I think if I talk about the Dome as a visitor attraction,
as PY himself has already said, it is a unique kind of project,
it is not a theme park, it is not a trade show, it is not a museum,
it is set out to be something innovative and very special. I think
the fact that 6 or 7 million people will have been through it
and will have enjoyed it by the end of the year shows that we
have not got it all wrong. I do believe there are some lessons
that can be learned of an operational nature, which, with the
benefit of hindsight, we might well have applied. I think perhaps
the most significant is that the type of team you need to create
something like the Dome is not necessarily the same kind of team
as you need to run it as a visitor attraction, and I think if
there is a lesson I would take away from our experience, it would
be that. We needed to have brought in earlier than we did the
kind of expertise which PY brings, in order to ensure that it
succeeded operationally from day one and had the right approach
and the right customer focus.
191. You talk about the benefit of hindsight,
Mr Quarmby, but we offered you the benefit of foresight, because
our very first Report dealt with these issues when we had an expert
in visitor attractions before us. I see no point in recriminating,
and there are lessons to be learned, but since it was not any
of us members of this Committee who can claim the credit, but
an expert who came before us, it might well be that it was an
error not to take great account of what he said to us and what
other experts in the field were saying at that time, well before
the opening, more than two years before the opening.
(Mr Quarmby) Chairman, I think it would not be fair
on my predecessor and my previous colleagues for me to comment
on that, because I do not know what that evidence was, I do not
have it in my mind, I do not have it in front of me. As far as
I know, a good deal of it might well have been taken, but I will
certainly, when I leave this Committee, go and read your Report
and what was said there and judge for myself the extent to which
the advice was not taken and could have been taken.
Mr Faber
192. The Chairman is absolutely right, the problem
has been the creative design involved in the early stages of the
Dome. Indeed, Mr Gerbeau a moment ago, for all the success of
the Dome as you portray it, said—and his exact words were—"We
were at war with our sponsors because the Zones had not been delivered
successfully." That is what he said just a moment ago. The
Zones were not delivered successfully because the method of design
and the way in which it was gone about was not sufficient. I do
not know if you heard Mr Evans on Radio 4 last week giving his
interview. He, as I understand it, was a content editor for the
Dome. I asked Miss Page about him two weeks ago. He, as I understand
it, was one of the few people in charge of the creative design
of a £800 million or so project, who described his previous
experience as having a background in idea generation and some
architectural knowledge. What on earth was he doing in charge
of delivering the creative content of the Zones? He has done us
all a favour by admitting now that in fact the content of the
Zones was done to, as he put it, the lowest common denominator.
That is a pretty damning indictment.
(Mr Quarmby) Mr Chairman, I do not think one should
overstate what Mr Evans's role was in the total design.
193. He was talking himself up on the radio,
was he?
(Mr Quarmby) I am sorry?
194. He talked himself up in the interview?
(Mr Quarmby) That would be for the Committee to judge.
There was a clear responsibility for the overall design content
and the creative process by a board committee chaired by Michael
Grade, which was colloquially known as the Litmus Group, which
I think is well known to you. There were a large number of advisers
on that group. There were what were called godfathers, advisers
of great standing, who looked after—godfathered—the
designs Zone by Zone. There was a team of management of which
Mr Evans was one. So I think it would be quite wrong that either
he should claim or that you should believe that he was in any
sense overall responsible for the creative design of the Dome.
If he believes that there was an element of "dumbing down",
he is entitled to that belief, but I do not believe the Litmus
Group would take that view, nor would the Board.
195. In your last set of published accounts
for March 1999 the cost of the Zones was put at £202.3 million.
I am not aware that the Committee has a breakdown of the cost
of each of the Zones. Are you able to provide us with that?
(Mr Quarmby) We can give you some up-to-date information
on the cost breakdown of our revised £758 million budget,
and that will give detail of —
196. I am interested in the Zones cost. I am
interested in particular in the cost per Zone, as against that
original budgeted cost, within that £202.3 million.
(Mr Quarmby) We can provide that information.
197. Thank you.
(Mr Gerbeau) To move on, at the end of the day today
I am looking forward instead of backwards, because I think it
is very important for me and for the organisation to look forward.
I think there are changes that have been made. Some things are
working, some things are not working, but at the end of the day
3 million people love it. If you look at the show, I think this
is the best show ever built in the world, and everybody is looking
at it that way.
198. I admire what you do, Mr Gerbeau, but I
am afraid I would still like to know a little bit more about the
accounting of the Dome.
(Mr Gerbeau) We will give you the detail.
199. I am sure. My problem is not with whether
people like it or do not like it, but the vast amount of money
that has been spent on it, and how that money has been spent,
which we, as a Committee, have not been told and the public have
not been told at all. I would like to carry on with the accounts
for a moment, if I may. Mr Quarmby may be in a better position
to help here. Again going back to the March 1999 published accounts,
£289 million is the cost of the actual structure and infrastructure
of the Dome itself. Are you able to tell us what sum within that
is for the Rogers Partnership for the actual delivery of the Dome?
(Mr Quarmby) Chairman, perhaps I could I say in general
answer to that, that in each annual report we have given a cost
breakdown of the kind that you are referring to. We are due to
publish our annual report for the year to the end of December
1999 within the next two or three weeks. That will contain updated
information. It will be laid in the House later in July. I am
sure you would appreciate that it would not be appropriate, with
the protocol of the House, for me to reveal that information ahead
of the publication or the laying in the House of the annual report,
but that detail will be available in overall terms. I cannot tell
you now, I am afraid, what the amount of the construction cost
that is attributable to the Rogers Partnership is, but I am sure
we can make that available to the Chairman under the normal conditions
under which we provide that information.
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