Examination of Witnesses (Questions 200
- 219)
THURSDAY 29 JUNE 2000
MR DAVID
QUARMBY AND
MR PIERRE-YVES
GERBEAU
200. So your December 1999 accounts have been
signed off by your auditors?
(Mr Quarmby) Yes, they have, and they are just about
to be signed off by me too.
201. Why did you change your accounting date
to the end of the year, midway through a project?
(Mr Quarmby) I am trying to recall why. I think we
started out with a financial year for our reporting year, and
because of the significance of the calendar year 2000 in our total
operations, it seemed much more sensible to move our accounting
year to a calendar year, and, I am sure, in order to promote greater
clarity and transparency between the different phases of the project.
202. You referred earlier, in an earlier answer,
to the contingency fund of £41 million in the accounts, did
you not?
(Mr Quarmby) Yes.[3]
203. Mr Gerbeau, when you arrived, that had
already been spent presumably?
(Mr Gerbeau) There was absolutely no contingency,
neither in cost nor revenue, left in the budget, that is right.
204. Do you know where that had been spent?
Are you able to identify that?
(Mr Gerbeau) It is going to be difficult to say. We
can provide you with the numbers definitely. The most important
thing for me is there was no money, nothing left to play with.
We will provide you with those numbers certainly.
(Mr Quarmby) Perhaps I could just say that the provision
of a 10 per cent or so contingency is absolutely standard in a
construction project of this kind. The Board specifically approved
drawdowns from contingency as the project progressed, in an entirely
appropriate way. So I have no problem with the fact that pretty
well all the contingency had been spent by the completion of the
project. That is really what the contingency was for; it was to
allow for general coverage, under the control of the Board, for
over-expenditure or under-expenditure in particular areas of the
project.
205. I also two weeks ago asked Miss Page about
outstanding litigation with Koch Hightex. Could you tell us whether
that is included in the current contingency?
(Mr Gerbeau) We are in commercial dispute with that
company, so I am sure you will understand that I cannot give you
numbers in such a way, but we will be happy formally to send you
the right numbers in a different kind of audience. We are dealing
with them, and we are in the middle of negotiations with them.
That was taken into account in that structured budget. That was
pretty well handled by Mr David Trench who did a great job on
that.
206. Finally, Mr Gerbeau, you are very positive
about the future. Quite understandably, you want to draw a line
under the past, and I am sure in answer to others, you can continue
to wax lyrical about the future. I would like you for the moment,
with your experience of visitor attractions, to say what you feel
was wrong when you arrived, and what had gone wrong on an accounting
basis and in terms of visitor attraction.
(Mr Gerbeau) I am afraid I am not going to answer
your question, Mr Faber. Most importantly—and I understand
the context of this, I am familiar with the private sector and
the public sector—I think it is really time now for me to
focus on the business. I would be even more than happy at the
end of this year to draw a line again and stand in front of you
and share with you what were my overall feelings. I think—understandably,
since this is the Committee and you need to know—there are
many people who are looking to this as a kind of a national contest
to knock this thing down where we are a success. At the end of
the day—I am sorry to repeat myself—we have turned
the project around. The product is fixed, the organisation is
fixed, and we are a lean, commercial operation and, as I said,
more importantly, a fantastic, popular success. We have to keep
on this line, fighting back, making sure that everybody who crosses
our gates is overwhelmed by the experience, and then at the end
of the year I will sit down and I promise I will share very formally
with you what happened, if I may, if that is a satisfactory answer
for you.
Chairman
207. Perhaps, taking into account that this
project can be counted a success by any criteria, other than those
who accept risk, you might care to send us a note about the things
that, when you arrived, you decided had to be done that were not
being done, and the things that ought not to be done that were
being done? That would be of assistance to us.
(Mr Gerbeau) Yes, absolutely. To give a kind of global
view, as David said before and as I have said before, I think
the biggest problem was to move away from a project construction
mentality and move into a very focused visitor attraction business.
As we said before, they are totally different skills. Coming in
from my ex organisation, where we built a big project called Space
Mountain, for example, we made sure it was a totally dedicated
team, and the minute it was finished they handed over the keys
to the operators. I think this is a good thing for the business.
So we had to move very quickly into a situation of new management
values and philosophy and changing really the focus of the company
and the people. The good news at the end of the day is that we
got the right people, we have got 2,000 direct employees and 5,000
jobs revolve around this business. So when people ask me is it
worth it, I think it is worth a very good battle, because not
only is it a fantastic, unique visitor attraction, but you are
talking about 5,000 people who will give their life for a few
years, to make sure that they are part of this experience. I think
that is worth a lot of effort on my part and our part as a team.
Chairman: We shall be hearing shortly
from Greenwich Council about that very matter. Alan Keen.
Mr Keen
208. Thank you, Mr Chairman. Before I come to
other issues, could I pick up the point you made earlier this
morning, Mr Quarmby? It seemed like a pretty serious accusation
that you were patently accusing newspaper editors, because they
were kept in a queue on New Year's Eve at Stratford, of instructing
their reporters to damn the Dome for quite a period of time. You
did not actually use those words yourself.
(Mr Quarmby) I did not.
209. The condemnation of the Dome did go on
for a long time, and it seemed like that to us. The Dome was an
icon when Britain's name was being judged unfairly. Are you really
saying that the editors were responsible for that, just because
they were kept waiting?
(Mr Quarmby) I think what I would say is that we had
an own-goal on that evening, and I have no doubt, because I have
spoken to some of them, that the experience that some of them
had on that evening gave the project a bad start in their minds.
It would be quite wrong for me to imply the extent to which that
may or may not have driven the editorial policies of any particular
newspaper in the subsequent weeks, because I have no means of
looking inside those editorial teams. What I am aware of is that
there was, I think, extreme criticism of the project in the early
part of January and February, which it would be difficult to place
entirely on the basis of responding to the facts of the visitor
attraction and experience that was going on. After having said
that, there has been a lot of support from many media. Many journalists,
many editors have been to the Dome since and have had a great
time, they have brought their families. Some of them have even
written about it subsequently, some of them not. We realise that
the Dome will continue to be a political and business story. My
concern is, it being a continuing business and political story,
that it should not so put people off coming to visit it as visitors
that we have difficulty achieving our revenue targets, and there
is evidence that the media treatment has blunted the edge or blunted
the interest of many people who would otherwise have come.
(Mr Gerbeau) Absolutely. To reinforce that a little
bit, it is kind of a global question here. It is: what is success?
Is it media perception, or is it customer satisfaction? We have
got the second part of the equation right. I came out a few weeks
ago and said I was pleading for somebody to draw the line and
just get behind it. At the end of the day, it feels very weird
that you have got a stupid Frenchman standing in front of you
telling you this is the best thing in the world, and the overseas
market seeing that there seems to be some kind of disagreement.
I am pleading for actual facts. The few people who are important
opinion leaders, after the shoot at it, are turning around. The
best example is a lady whom I have met, whom I have a great respect
for, and that is Anne Robinson. She came to the Dome, and she
had the courage to stand up and say, "You know what, I love
it." That takes courage. So we are really doing this on a
daily basis. I have a lot of sympathy for what happened in the
past. As Mr Faber said, we have to do a kind of statement at the
end of the year to see what went wrong, but why focus on what
went wrong when we are focussing on what is going right? I think
there is a fine balance to be found here. What I am really demanding
is fairness and honest treatment of what is wrong and what is
right. This is where I stand very strongly, because in our latest
survey there is a perception that the Dome is now a risky purchase.
If you look at the different markets we are targeting, those in
Greater London are going to take that risk because they are not
too far away, but when you live in Scotland or you live in the
North of England it is difficult to make that call, because it
is not only the money issue, which is a big issue, but it is also
the leisure time that you spend with your family. People are looking
at it and saying, "Is this worth the risk if I bring my whole
family for a whole day?", which is a very long period, and
we are all working very hard, so we have little time to spend
with our families. So they are really asking the question, and
it is really putting people off. I think this is a very unfair
thing.
210. The Chairman interjected when David Faber
was asking questions. To help look back at the evidence that we
took in the first session, the first person who gave evidence
and was sceptical about whether there was enough involvement from
experts in entertainment was a man called Keith Bales who had
been a Disney vice president and had been involved in the start
of the Epcot Centre in the United States. To paraphrase what he
said, he said, "There are people who think that because they
took their kids to Disneyland, they can run a business attraction."
Do you think that was a valid point he made, looking at some of
the problems that the Dome has had?
(Mr Quarmby) I do not know the individual. I think
PY does know him. I am sure that was a remark which needs to be
taken in context, but I think the fact the Board chose somebody
with a Disney background to come and run the project means we
value greatly the experience of the other big players in the attractions
industry. As I said earlier to the Chairman, I have not seen that
and am now intensely curious to go back and read the evidence
to your earlier inquiry and your Report to see what he said. Is
there anything you would like to add to that? Do you know the
individual?
(Mr Gerbeau) Yes, I do know him. I also have brought
in a few people with me on this project to make sure we were doing
things right. But I think it is key, as we said before, that different
skills are needed to build a visitor attraction and different
skills are needed to run a business as a visitor attraction, and
that is what we have now.
211. We got the right man earlier this year
and he is looking even better and more optimistic than he was
when we first met him.
(Mr Gerbeau) I blossom in England!
212. What you are really saying is that we have
done the right thing now but we were much too late in recognising
that we needed experts in entertainment and visitor attractions?
(Mr Quarmby) Chairman, I would not say "much
too late" but "too late", yes.
213. Do you agree, and you have mentioned it
already this morning, we should have had two separate teams, and
the idea should have been to have two separate teams right from
the very beginning, maybe a small team on the entertainment side
to start with? We asked lots of questions in a number of evidence
sessions about the attractions which were going into the Dome,
and we began to think at one time that it was not that they were
being kept secret from us but that nobody knew what they were
in any case—a little bit like the critical path analysis
which we asked for in the first session which did not appear for
an awfully long time and we felt there was not one at the beginning.
Is there any justification in my assuming that?
(Mr Quarmby) I think the design companies were pretty
well appointed, as I recall, in the early stage of 1998, and they
had under two years in order to bring to reality the concepts
on which each design company was chosen for each Zone, and to
validate those, and to get those approved and costed and designed
in detail and built and commissioned. It was a very intensive
process and a much shorter time than is normally allowed for this
kind of thing. A number of the Zones actually went through quite
a process of change during the course of that. I was not part
of the process which was keeping this Committee informed on how
it was developing but I know there were Zones whose design was
being changed during the early part of 1999, and I do not know
whether those were the ones on which you were finding it difficult
to get the information which you were looking for. Certainly it
was a process of concept to reality which was much shorter than
you would normally get in anything of this kind and it was a very
fast moving scene.
(Mr Gerbeau) To give you the time frame, usually that
kind of project takes at least four years to develop—to
design, to make it work, to do the market surveys—and it
was all innovation. It is very difficult to attribute to what
happened there. Overall, I am always asked with my "mouse"
background—I left my ears and my tail somewhere else—would
I have built something else as an attraction. I think it would
have been a dramatic mistake to do some kind of roller-coaster
out there because you would have brought the Dome down to a theme
park business and then you are facing fierce competition. You
have a fantastic operator—the Tussaud Group—in England
who are operating things like Alton Towers, which is a fantastic
theme park operation, and then you are just going to fight Disney
and all these guys who have been in the business 50 years and
there was no way that was going to happen. The way it is now,
with some kind of niche strategy, we are answering a lot of questions,
and I think apart from the business point where we achieve what
has never been achieved before, you can have a fantastic fun day
out but the most important message out there and what really convinced
me was the educational message behind it. We are delivering magic,
theme parks are delivering great fun messages, but you are actually
leaving the Dome and you are going to ask yourself questions.
I have a four-year-old daughter and I really want her to come
over because this is the future of education. Over a million kids
are going to come to the Dome and see that education can be fun.
You are already answering a big question there and this is a very
strong message and I think whatever happens in the future, it
is something which will stay because that is the big part of the
message and it was never been accomplished before.
214. Because the team lacked an expert in visitor
attractions, the only alternative was to have bids from a number
of separate companies all putting attractions together but there
was not anybody to co-ordinate and link it all together. Is that
a fair criticism or not?
(Mr Quarmby) I do not think I would have approached
it that way because it was still important that the concept of
what the Dome was about should be held on to. While it has been
the subject of a lot of debate and criticism too, I think what
you have delivered there is still in line with the original mission
to mark the change of one Millennium to another and to cause people,
visitors, to stop and reflect on all aspects of their life, and
that is the experience you get in the Dome. It has a fun and entertainment
dimension as well as a stop-to-think and an educational dimension.
I do not think you would go to a theme park operator to conceive
that but you would look to the experience of a theme park operator
in order to make sure that when you have built it and are operating
it, it delivers a good visitor experience.
Miss Kirkbride
215. I want to go over a little bit of what
has been said already and then cover some new territory. The original
12 million figure—which I think may well be something about
which this Committee gives a lot of consideration as to who was
responsible for that—bearing in mind the genesis of the
project spanned the last Conservative Government and three years
of this Government, can you tell us at what point these figures
were revised and revisited in the run-up to the Dome being opened?
(Mr Quarmby) I have explained a range of figures from
10 to 15/17 million was considered during the early stage of the
project, certainly when I was on the board.
216. Can you give us a year, so we know when
you are talking about?
(Mr Quarmby) When the Millennium Commission issued
their first tender documents in 1995, inviting proposals for a
Millennium celebration, their document said there may be a range
of 15 to 30 million visitors, so the sights were set pretty high
right from the beginning. Responses to the tender document—and
again this long pre-dates the choice of Greenwich or Birmingham
or an operator—were around the 10 million mark. The first
business plan which was put together before the establishment
of the New Millennium Experience Company—or as it was called
in those days, Millennium Central Limited—was based on 13½
million.
Chairman
217. What date was that?
(Mr Quarmby) That was the end of 1996. When the first
indicative budget was drawn up in early 1997, and that is when
NMEC was created and I joined the Board at that time, it was based
on 10 million and then, as the business plan evolved in the later
part of 1997, it became 11 million, and then it moved up to 12
million later in 1997 on the assumption that the nation would
respond to the exhibition experience in a similar way to maybe
the Festival of Britain and the Lisbon Expo. It was not revisited
until the first new look at the business plan in late January,
when we had the benefit of the early figures in early January.[4]
Miss Kirkbride
218. This year?
(Mr Quarmby) This year.
219. So the figure was set in stone in late
1997 based on your company which was going to be running the show,
and then it was not reconsidered in the light of other experiences
until this year?
(Mr Quarmby) That is true. There was, I think, no
genuine grounds on which to reconsider that number fundamentally.
Perhaps, Chairman, I could just make a comment from my knowledge
as Chairman of the BTA about what is happening this year in the
tourism industry and the attractions industry? Three years ago
we did not forecast that the pound would be at its unprecedentedly
high level, particularly in relation to European currencies but
also in relation to virtually the whole of the rest of the world's
currencies with the exception of the United States dollar. The
effect of that, and I speak with my BTA hat on for a moment, is
that overseas visitor numbers have been static to Britain for
about the last three years, whereas world tourism has been growing
at 6 to 8 per cent per annum, so Britain has been losing market
share. Particularly significant is the effect on British people
using their leisure time because there is now an unprecedented
outflow of British people to Europe and elsewhere for holidays
and weekend breaks. It was only two or three years ago that as
Chairman of the English Tourist Board I was advocating that while
people were going away for their main holidays abroad, the short
break was going to be the saviour of English tourism. Well, of
course, it is not, because with the pound so expensive people
are choosing to have weekends in Amsterdam rather than travelling
to London to see the Dome or anything else. The second thing we
did not forecast in 1997 was the enormous flowering of Lottery-financed
projects, visitor attractions and cultural attractions. Indeed,
I have been stomping the world for the last two years since September
1998 for BTA telling the world about Millennium Britain. The impact
of that and the strong pound was not fully understood on the Dome,
but I do not need to remind this Committee that in the last few
months we have seen Tate Modern and the London Eye open, as well
as in the last 12 months Vinopolis, the reopening of the Royal
Opera House, the Dulwich Picture Gallery, et cetera, et cetera,
and all round Britain too. From the point of Britain it is wonderful
but it does mean there has been a shrinking market to go round
an even greater number of visitor attractions. I think those are
two key factors which have not only caused our numbers not to
be reached but are causing similar difficulties which are not
publicised among a wide range of other visitor attractions in
London and in the rest of the country.
3 Note by witness: See footnote to Q 157. Back
4
Note by witness: Throughout 1997 to pre-opening, the company
undertook regular NOP tracking research to gauge people's attitude
to visit the Dome-from will visit, likely to visit, to will not
visit. The outcomes of this research indicated that the kind of
volume forecast was likely to be achievable but it did not take
into account any external factors which might influence people's
views such as the strength of the pound and media coverage. Back
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