House of Commons - Culture, Media and Sport

Select Committee on Culture, Media and Sport First Report

UNPICKING THE LOCK: THE WORLD ATHLETICS CHAMPIONSHIPS IN THE UK

THE £20 MILLION AND THE £100 MILLION

In seeking to remove athletics from the national stadium project at Wembley in 1999 the Government and Sport England had to consider the £120 million of Lottery funding that had been paid over to WNSL in relation to a project to provide for all three sports. We have noted the grave misgivings on this score of Mr Derek Casey, Chief Executive and Accounting Officer of Sport England, put before the Permanent Secretary and Accounting Officer at the DCMS on 13 December 1999.[111] Nevertheless the Government went ahead with efforts to reclaim a proportion of the Lottery grant without the involvement of Sport England, the proper custodian of the relevant funds.

The result of the Government's efforts was the £20 million that was the subject of a 'handshake' between the Government and the Football Association in December 1999. This arrangement has yet to result in a published agreement but is understood to be predicated on the payment by Wembley National Stadium Limited (WNSL) and/or the Football Association (FA) of £20 million to Sport England, in return for the removal of obligations to stage athletics events at any new Wembley national stadium from the Lottery Funding Agreement (LFA) between WNSL and Sport England. This issue has been examined in two Reports from the previous Committee and the background is rehearsed below in the light of further evidence from some of those concerned, including a large amount of correspondence on the matter between the relevant parties supplied by Sport England and published as annexes to their supplementary memorandum.[112]

Making the agreement

The previous Committee's Report Wembley National Stadium stated that the proposal for the payment of £20 million "was first made by Mr David Richards, Chairman of the FA Premier League", on 16 December 1999, in a conversation at No 10 Downing Street. Evidence for this assertion had been given by Mr Ken Bates, former Chairman of WNSL, supported by a parliamentary answer from the Minister for Sport on 3 February 2000: "An informal proposal was made by David Richards ... on 16 December 1999 in the margins of a meeting at No 10 to discuss the proposed Football Foundation. This was relayed to ... the Secretary of State by Department for Culture, Media and Sport officials and followed up by more formal discussions between my Department and the Football Association."[113]

Settling on £20 million

Mr Geoff Thompson, the Chairman of the Football Association, told the Committee in March 2001 that Sir Nigel Mobbs, Chairman of the Wembley Taskforce, had been party to the discussions, having been asked by the Secretary of State "to consider what compensation might be payable if Wembley were released of the obligation to have athletics". Sir Nigel later confirmed that he had been asked by the Secretary of State to examine the recovery of Lottery funds from WNSL and to negotiate with the Football Association. Sir Nigel told the Committee in evidence that "the original request from the Secretary of State was for £40 million". The Football Association was concerned about whether such a sum was affordable. There had then been "haggling" which "led to a figure of £20 million, which was acceptable to the Secretary of State".[114]

The previous Committee described the figure as having been "plucked" from the air and we know of no rationale for it, nor for the original figure of £40 million, as compensation for the removal of athletics from Wembley. Surely it should have been Sport England's role to make this assessment after consultation with all relevant parties? In consequence of the Government's unilateral action, there was "a handshake agreement" between Sir Nigel Mobbs and Mr Richards that £20 million would be paid. The then Secretary of State later confirmed to the Committee that he had asked Sir Nigel Mobbs to "assist as an honest broker between the various parties".[115] There are similarities between this approach and the current situation where Patrick Carter seems to be haggling with the FA on the same subject on behalf of the present Secretary of State.[116]

Confirmation and terms

Mr Ken Bates, then still Chairman of WNSL, met the Secretary of State on 22 December without having been party to the discussions that had taken place. He said in March 2001 "I was merely the errand boy sent from on high to resolve the matter". The Secretary of State confirmed that the meeting on 22 December at his house was itself "a confirmation meeting ... not a negotiating meeting".[117]

On 7 January 2000, the Secretary of State wrote to Mr Bates setting out his understanding of the agreement. Mr Thompson, Chairman of the FA, understood that the issue of commercial constraints had also arisen in discussions between Mr Bates and the Secretary of State and wrote to the Secretary of State on 31 January 2000 agreeing to the £20 million 'repayment' including reference to increased commercial opportunities within the project. On 9 February 2000, the Secretary of State replied that it had been confirmed with Sport England that: "it seems wholly reasonable to consider, with legal advice, amendments to particular conditions of the Lottery Funding Agreement which are requested by parties to the original Agreement. While this could include relaxation of the existing commercial constraints upon Wembley National Stadium Limited, such as naming rights, we will have to take a view on the proposals once the detail has emerged."[118] However it now emerges that Sport England did not know of any reference to the relaxation of commercial constraints until copied in on this correspondence by WNSL six months later in August 2000.[119]

According to Sport England the differing interpretations of the scope of the agreement reached on 22 December 1999 between the then Secretary of State and Mr Bates, in relation to commercial restraints on matters such as naming rights, were negotiated for 'several months'.[120] The former Secretary of State has recently written to the Chairman to correct any impression arising from our evidence that his meeting with Mr Bates was off the record: "the meeting ... was attended by, and minuted by, my Principal Private Secretary ... ".[121] We have asked the Department for a copy of these minutes and been refused.[122] We are therefore prevented from making a proper judgement on this matter. We were disappointed when this uncontroversial request was refused taking into account that the former Secretary of State did respond positively to an equivalent request of the previous Committee.[123]

Giving legal effect to the agreement (nearly)

In September 2000, the issue of commercial rights was resolved. WNSL seemed ready to sign up to payment of £20 million to Sport England in return for the removal from the Lottery Funding Agreement (LFA) of the requirement to stage certain athletics events at cost.[124] The more controversial issue of relaxing commercial restraints would not be covered in the new LFA itself, but the FA and WNSL would reserve the right to make an application for such relaxation in the future, on the understanding that Sport England could approve or reject such a request as it felt fit.[125]

The revision of the LFA giving effect to this 'repayment', agreed between Sport England and the WNSL, was considered by Sport England on 6 November 2000; after consultation with all interested parties. A decision was deferred, in part because of uncertainty about the development of the alternative venue for the 2005 World Athletics Championships at Picketts Lock. On 4 December 2000, Sport England agreed to the terms of the proposed payment.[126]

However, before documents setting down the arrangement could be signed by all parties, the possibility that Wembley might stage the 2005 World Athletics Championships was reconsidered by the new WNSL Chairman, Sir Rodney Walker, concluding in early 2001. WNSL in consequence did not sign the revised LFA.[127] Later in 2001 the FA requested further public funding for the Wembley project and consequently the whole national stadium issue, including its location, was given by Ministers to Patrick Carter to review.[128] The Secretary of State told us, the FA has first to decide if it wants to commit its major games to a single national stadium at all.[129] Should the Wembley project go ahead with the potential to host athletics, there is at present no legal mechanism to implement Sport England's claim on the £20 million. What does exist is the 'big stick'—the clawback of the total grant (£120 million) if the project does not proceed or proceeds without fulfilling the conditions of the original Lottery Funding Agreement.

What now seems clear is that the FA received £120 million of public money in January 1999 and has done little to justify keeping it. There is at present no clear prospect of Wembley Stadium being rebuilt by the Association, with or without athletics. It is quite deplorable that the FA has shown no intention of returning public money to which it has no right. The FA has at least a moral obligation to return £20 million to Sport England.

Supplementary evidence from WNSL does suggest that, should the Wembley National Stadium go ahead, the existing design for the stadium itself will be implemented. Reconfiguring the stadium 'bowl' to take account of there being no need to fit a platform would be prohibitively costly both in terms of more fees for the architects and a new planning application.[130] As Mr Rod Sheard, of the World Stadium Team, told us, there would, however, be no point in acquiring or building the platform itself unless it was to be used for a specific event; indeed, that was the whole point.[131] Thus, any Wembley Stadium built to plans in the public domain will have the potential to host athletics events.

Both Sir Rodney Walker and Mr Geoff Thompson told the previous Committee in evidence that there was a "moral obligation" upon WNSL and the FA to make the payment. In the light of the inconclusive correspondence between Sport England and the Chief Executive of the FA during 2000 and 2001[132] we welcome Sir Rodney Walker's confirmation of this commitment on the £20 million, as Chairman of WNSL, once again in evidence to us in October of this year.[133] The present Secretary of State also told us : "That [the £20 million] will be repaid is recognised by the Football Association, they accept that the money will be repaid and it will be repaid to Sport England".[134]

Timetable for repayment

From agreement in 22 December 1999 it was envisaged that the £20 million would be paid in tranches between December 2000 and December 2004.[135] It is outrageous that, when a second payment is almost due, a first payment has yet to be made. However, the Government and Sport England both take the view that payments are unlikely to begin until the approval and funding of the new stadium have been settled. However, previously at least, the former Secretary of State and Sport England were both expecting payment still to be completed in December 2004. WNSL on the other hand appeared to be envisaging a fixed payment schedule of 48 months to start after the amendments to the Lottery Funding Agreement (LFA) had been signed.[136] On 23 October the present Secretary of State told us that the issue of when the money will be paid is the subject of the continuing negotiations between Patrick Carter and the FA.[137]

We are mindful of the position of the Secretary of State that currently negotiations are underway in camera and she wishes to give the time and space for them to proceed.[138] However, the funds at stake are public monies for which there are time-honoured procedures for treatment set out in Government Accounting. Ultimately it is the Accounting Officers of the Department (the Permanent Secretary) and Sport England (the Chief Executive) who are responsible to Parliament, through the Committee of Public Accounts, for the responsible and lawful handling of such funds.[139] It is not clear to us what status Patrick Carter has been given by the Department, or by Sport England, in this matter.

There is a precedent for the use of an "honest broker" in the shape of Sir Nigel Mobbs acting on behalf of a former Secretary of State.[140] However, since it was the then Secretary of State's sanctioning of those negotiations that gave rise to the detachment of the £20 million from any recognisable legal framework, we have some concern that history may be about to repeat itself. This concern is clearly now shared by Sport England who told us that they wrote to the Department in May and June of this year to ensure that the Carter review did not "infringe on our ability to protect lottery funds, both the full grant of £120 million, and the proposed repayment of £20 million."[141]

The previous Committee's conclusion on the matter (March 2001)

The previous Committee concluded that "the continuing dispute, despite attempted clarification, about precisely who are the parties to the agreement to pay £20 million represents a symptom of the uncertainties that have surrounded the payment since its inception. The payment appears to have originated with a handshake between Sir Nigel Mobbs and Mr David Richards, Chairman of the FA Premier League. It was then the subject of a second handshake between the Secretary of State and Mr Bates. More than fifteen months after those handshakes, the agreement has still not been given final documentary and legal form and even the timetable for payment remains open to doubt. The delays and difficulties arise from the extremely unusual manner in which the payment was negotiated." The situation has not changed.

We believe that the agreement struck between the former Secretary of State and the Football Association for the payment of an arbitrary £20 million to Sport England—which after nearly two years has yet to result in a signed legal document, let alone a single penny being paid over—represents a scandalously inept treatment of public money.

The Government had no business effectively to rewrite the terms of a Lottery Funding Agreement to which it was not a party. Equally Sport England had no business allowing this to happen and deserves censure for being so slack and negligent. We require that, in its reply to this Report, the Government makes clear the nature of its response to the demarche sent to the Permanent Secretary of the DCMS by the Chief Executive of Sport England on 13 December 1999.

It is clear from evidence supplied by Sport England that the organisation was deeply concerned from the outset over the ramifications of the decision to remove athletics from Wembley and by the status of the agreement for £20 million to be returned to them. Our concern arises over the nature of the action that they took to seek redress. For some time it has been open to Sport England independently, on grounds of the delay to the project, to foreclose upon the Lottery Funding Agreement with Wembley National Stadium Limited and demand the return of the £120 million grant in full. Leaving aside the question of whether a subsequent application for a grant of £100 million could, or should, be entertained, we believe that the moment for Sport England to deploy that threat has long since passed.

In our view, a rushed and flawed decision to remove athletics from the Wembley project led to a rushed and superficial agreement purporting to be a partial refund of Wembley's Lottery grant—something specifically ruled out by the Funding Agreement. Presentation of this deal as a 'heads of agreement' to be fleshed out subsequently by WNSL and Sport England is a thin veil for a political stroke which failed to take account of legal and financial realities.

In the case of neither decision do the right people seem to have been consulted nor time allowed for the less obvious implications to be considered. We conclude that the matter merits the attention of the Comptroller and Auditor General and the Chairman of the Committee of Public Accounts and we urge them to investigate the Wembley Lottery Funding Agreement, the handshake over the £20 million and the circumstances which have allowed the situation to arise and persist unresolved to this day. It is for the Comptroller and Auditor General to decide whether the whole saga of the national stadium and Picketts Lock is worth examining from the point of view of his ability to assess the efficiency, effectiveness and economy of the use of public funds. We would regard such an exercise as a valuable complement to the review major events policy being undertaken by the Performance and Innovation Unit in the Cabinet Office at the request of the Secretary of State.

If the fate of the full £120 million Lottery grant to Wembley National Stadium Limited is not clearly resolved, in favour of the public, by the long-awaited conclusion to the English National Stadium saga we intend to pursue matters with the FA, Sport England and the Secretary of State until a satisfactory outcome is reached.

111 Ev, p 132 (annex 7). Back

112 Ev, pp 119ff; HC 164, 1999-2000, paras 110-117; and HC 286, 2000-01, paras 69-82. Back

113 HC Deb, 3 February 2000, C734w. Back

114 HC 286, 2000-01, paras 72-73. Back