Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 280-299)



  280. May I ask you something about balance sheets again? I know you have explained the whole nature of the beast does not lend itself to balance sheets. At the same time, is it not the case from what you said about there being no balance sheets that you end up with this organisation almost going into serial bankruptcy, all the time saying they are at the edge, they need some more money, and that is no way to plan any sort of business?
  (Mr James) I had not realised the extent to which I was giving the impression there were no balance sheets until my colleagues gave me a bit of a mild kicking on that during the break. In fact of course, as I well know, there were balance sheets. The point I was making was rather different. I was saying the balance sheet was not being addressed and used by the board as the means of balancing it out against its cash flow, what I call the integrated financial model. The balance sheet existed but was not being used in the traditional manner and not being used as the means of assessing the surplus value which you could go to your banker and offer as security.

  281. There were management accounts showing cash flow and the sort of things you would normally expect.
  (Mr James) They had a cash flow and they had a balance sheet. They did not integrate them in one model; that was the error.

  282. You mentioned that £13 million reservations were made without any deposit. Why was that not simply changed?
  (Mr James) They knew it was happening, but they assumed that it was a British characteristic that you liked to put your name down for a ticket on a certain day and then pay for it when you got nearer to it.

  283. You mentioned the figure of £13 million. Of the £13 million how many did not show?
  (Mr James) I could not give you the precise number but a very high proportion of them did. The other thing we changed at that time was that originally we were only going to accept bookings on a three-month rolling basis, so that we were not actually selling tickets ahead for the rest of the year, which was another marketing mistake at the beginning. There were plenty of them.

  284. Mr O'Connor you mentioned that people making projections did not have much idea about running theme parks and therefore you employed Deloitte & Touche. What experience do they have of theme parks?
  (Mr O'Connor) Deloitte & Touche are one of the very large consulting companies who have a specialist division concerned with the leisure industry. We turned to them for advice on the business plan put to us by NMEC.

  285. Can I confirm the numbers they generated, the eight to 12 million? Was that projection generated without knowing what the price was or the marketing mix or clear idea of what the product on offer was?
  (Mr O'Connor) The NAO report summarises the caveats in so far as a lot of things had not been settled at that point: the price, the content. Their assumption was on the basis of a family-friendly price being picked and the content being of the standard to which we had aspirations[25].

  286. Do you have figures on the regional sales levels? Can you give me some idea what proportion of people come from London versus Wales, for argument's sake?
  (Mr James) I am advised that we are unable to provide a geographical split due to the variety and location of the various ticket outlets we have. I am afraid we cannot give you a regional breakdown.

  287. Can you not provide a note to the Committee? Why not?
  (Mr James) I think I am being advised that this is information which is not available in any database at the moment. May I just validate that?


  288. I am advised that Ministers have responded that this information is not available simply on commercial confidentiality grounds. Those limitations do not apply to this Committee. If they are available and they are being withheld, we should like them please.
  (Mr James) We will undertake to review this and write to the Committee with such information as we have[26].

Mr Murphy

  289. I want to ask primarily about visitor numbers and publicity but start with a question about GEN36. Did it oversee the other attractions, millennium celebrations which have been so successful, the Lowrie in Salford and the one in Edinburgh and the Botanic Garden in Wales and the big idea in Irvine which are all well above the projected visitor numbers?
  (Mr Young) No, it did not. GEN36 was particularly to oversee the Government's role in relation to a millennium festival, which is retranslated as meaning the Dome.

  290. Who did? Who made those predictions?
  (Mr Young) The other projects were part of the Millennium Commission's programme which Mr O'Connor will happily talk to you about.

  291. The one set of visitor figures that this group was involved in was just wildly inaccurate. Everyone else on those other major projects seemed to get it right. Is that correct?
  (Mr Young) Yes, but you could not say GEN36 invented those figures. They oversaw the process.

  292. I am aware that there is a shared responsibility in all these figures. Reading the report, notwithstanding what you said about having some great days recently, as far as I can tell 25 October was the busiest day for the Dome with the figure of 40,188 visitors. Perhaps I should ask: what was the busiest day?
  (Mr James) We have had one day at 43,000. I would take advice on that. It was 42,000 and a few.

  293. You made a point there that over a ten-day period you achieved 350,000. Was that recently during the floods and the trains and everything else?
  (Mr James) It was just before and it was during one of our peak periods which was the half-term holiday. During the half-term, which is a great demonstration that when the children are available and when they can get there, we do get very good figures.

  294. You said that the 15 to 30 million ballpark figure could be ignored in terms of our discussions here about the specifics of the Millennium Dome, that figure from July 1995. Even on the figure earlier in 1995 of 15 million and then the figures of February 1996 of up to 16 million paying visitors or paying customers, even on your best day of 42,000 and a bit, even on your best series of ten days over the half-term break, you would not have achieved that 15 or 16 million figure at all.
  (Mr James) Exactly and that is precisely why I introduced the subject of the double ticketing for the day because that demonstrated how it was expected to have occurred. It was an early recognition of a marketing failure, but we could not see it until we had started trading.

  295. On 18 January 1996 projections were identified, and perhaps this is the most accurate advance prediction which existed, that we could expect 10 million paying visitors to the Dome on 18 January 1996. Could you tell me what changed by February 1996, a couple of weeks later, to take it from 10 million, to the prediction between 10.9 and 16 million? That was only two weeks. What changed in that period?
  (Mr James) I cannot comment on that because I have not looked at the difference between those reports.
  (Mr O'Connor) I think you are talking about 1997.

  296. Nineteen ninety-six; 18 January 1996 and February 1996. This is in a supplementary memorandum submitted by the Millennium Commission. They are not my figures.
  (Mr James) The only market research data which I have available at that time suggest that in December 1996 the report that was provided by ERA suggested a range of 10.9 to 16 million[27].

  297. When was that?
  (Mr James) That was December. Then they did a further review in January 1997.

  298. I am sorry to interrupt but the memorandum we have been provided with as a Committee says February 1996 not December.
  (Mr O'Connor) I am sorry, I think we may have been responsible for that memorandum and I think it is an error. It should say 1997. The ERA report said 10.9 to 16 million in November 1996. The business plan which was produced by the predecessor to NMEC, Millennium Central Limited, in December 1996 suggested 13.5 million. NMEC was then formed and they started off with a business plan of 10 million in January 1997 and increased it to 12 million in May 1997. That formed the basis of their business plan which they put to us for approval.

  299. Do you understand the confusion? My correction. It was a memorandum submitted to the Culture, Media and Sport Select Committee, not this Committee, which said that in February 1996 the ERA report identified 10.9 to 16 million.
  (Mr Young) The memorandum should have said 1997. Apologies.

25   Note: See evidence, Appendix 4, page 000, (Pac 00-01/13). Back

26   Note: See Evidence, Appendix 4 page 000 (PAC 00-01/40.) Back

27   Note: See evidence, Appendix 4, page 40, (Pac 00-01/13). Back

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2001
Prepared 12 September 2001