House of Commons - Culture, Media and Sport

Select Committee on Culture, Media and Sport Sixth Report

II INTRODUCTION

Previous work on Wembley

This Committee, and its predecessor, has reported on the progress of the Wembley project on four previous occasions:

Staging International Sporting Events, May 1999, which, inter alia, examined the project and concluded that Government and public sector involvement with it should be at the very top of the in-tray of the new "Minister for Events" recommended by the Report (but, regrettably, not to date instituted);

Wembley National Stadium, March 2000, which largely focused upon the circumstances surrounding the removal of athletics from the proposed stadium in December 1999 and the quality of that decision;

Staging International Sporting Events, March 2001, which, inter alia, examined developments made with the Wembley project and the agreement of a Ł20 million repayment of the Lottery grant in recompense for the removal of athletics events from Wembley; and

Unpicking the Lock: the World Athletics Championships in the UK, November 2001, which examined the failure of the proposed national athletics centre at Picketts Lock (developed as an alternative to staging athletics at Wembley); the consequent failure of the UK's bid for the 2005 world athletics championships; and issues surrounding the proposed Ł20 million repayment to Sport England for removing athletics events from Wembley.[1]

Recent activity

The Committee agreed to a 'final' round of evidence on Wembley following publication on 19 December 2001 of the interim report of the review of the project led by Mr Patrick Carter, accompanied by an announcement in the House by the Secretary of State, the Rt Hon Tessa Jowell MP.[2] The Secretary of State set out a number of hurdles which the Wembley project had to clear within a reasonable timescale if attention was not to switch to the proposal for a national stadium in Birmingham. The precise grounds for concern were not clear, as she told us in May of this year: "the reason for my statement, the claims of further delay and the reasons for the conditions I was setting were not generally understood, the problem being that they arose from my scrutiny and my officials' scrutiny of a report which we had secured with some difficulty under conditions of legal privilege."[3] It was clear from the interim Carter report that the deadline was the end of April 2002 and we agreed to hear evidence from all the relevant parties on 14 May 2002.

In preparation for this session the Committee agreed to pursue the background to the Secretary of State's December announcement, in particular the investigation commissioned by WNSL that had blunted the positive endorsement from Government that had generally been expected.[4]

Under formal powers delegated by the House, the Committee asked for and received from WNSL a copy of a report by Tropus, a company supplying staff to the Wembley project up until 2001 (hereafter the 'Tropus report'), and a copy of a report by Mr David N James CBE, and solicitors Berwin Leighton Paisner (BLP), who had been commissioned by WNSL to conduct an independent review of the key matters raised by Tropus (hereafter the 'James report').[5] We agreed to receive this material in confidence and with various deletions to protect commercial and other sensitivities.

As part and parcel of this submission, and at WNSL's request, the Committee heard evidence in private from WNSL on 13 May 2002. The Committee also took evidence from Mr James on this day. At the session the Committee gave WNSL notice that members would be considering requesting WNSL for the submission of the documents in question in a form suitable for publication. Immediately following that private evidence session the Committee cancelled the public evidence session due to take place on the following day to allow time to digest the implications of the information that had been received.

In the event, and after extended deliberations, the Committee required of WNSL unabridged copies of all relevant documents and subsequently insisted upon the publication of a version of the James report with certain deletions agreed to protect commercial and other sensitivities. In addition the Committee has now published, alongside this Report, the evidence heard on 13 May 2002 from WNSL and Mr James (with similar regard for confidential information).[6] We decided not to publish the Tropus report as it stood but rather to request specific written and oral evidence from Tropus on their concerns.[7]

Given the serious allegations concerning a project involving substantial Lottery funding and the potential for further public expenditure, we felt that not to proceed in our customary manner would be to fail in our remit as delegated by the House; in effect becoming collusive in the handling of Wembley and its problems. This we were not prepared to do.

On 21 May 2002 the Committee took evidence in public from Tropus, WNSL and the Football Association (FA) and from Sport England. On 23 May we heard from the Secretary of State accompanied by Department of Culture, Media and Sport officials. Immediately following this latter evidence session the Secretary of State made a Statement to the House in which she signalled that the project was now on track but that final approval of the Government's contribution to non-stadium infrastructure costs was dependent upon a final report from Mr Patrick Carter after proper banking arrangements had been concluded and assessed. WNSL told us that concluding the detailed financial arrangements would take weeks rather than months.[8] We note the announcement by WNSL that on 31 May Westdeutsche Landesbank (WestLB) confirmed agreement to a mandate and heads of terms agreement with the company and the FA in respect of the proposed financing of the new national stadium at Wembley.[9]

We expect that in reply to us the Government will be able finally to report on the future of the Wembley project given the clarity of the Secretary of State's words to the House on 23 May: "Mr Speaker, I am clear—as indeed is the Football Association—that the current negotiations represent the last chance for Wembley."[10]

Background

The initiative to develop an English National Stadium began in November 1994 within the English Sports Council. The key events are set out below.

Date

Event

December 1996

Wembley was confirmed as the preferred site for new English national stadium by the English Sports Council (Sport England) and Ł120 million is earmarked for the project.

June 1997

The English National Stadium Trust (ENST), a charitable trust established to oversee the project, formed a limited company, the English National Stadium Development Company Ltd (ENSDC), to implement the project.

September 1997

Grant application made by ENST to Sport England for the earmarked funding.

March 1998

ENST reported failure to make progress in acquiring the old Wembley stadium business from Wembley Plc in the face of rival bids from Arsenal FC and others.

March 1998

ENST and the Football Association (FA) made a new joint grant application to Sport England for the earmarked funding. Problems continued with site negotiations.

June 1998

Discussions started between the Football Association and Sport England over new funding arrangements.

June 1998

Discussions started between DCMS and Sport England over new Financial Directions for the grant to clarify the relationship between the Lottery distributor and the providers of the expected private sector funding.

November 1998

New Financial Directions for lottery distribution issued by the Secretary of State

December 1998

Ł3.26 million spent on the project under two preliminary Lottery Funding Agreements to cover initial design work and costs of negotiating the purchase of the old Wembley stadium business.

January 1999

Main Lottery Funding Agreement (for Ł116.74 million), related FA Event Staging Agreement and Sale and Purchase Agreement for the site, all signed. The ordinary shares in ENDSC acquired from ENST by the FA with ENST retaining a 'golden share' with certain rights attached in the public interest.

March 1999

Acquisition of the Wembley stadium business and site completed. ENSDC became Wembley National Stadium Limited (WNSL).

June 1999- September 2000

WNSL sought a contractor to build the stadium.

July 1999

Wembley national stadium design was launched to general acclaim.

22 December 1999

The then Secretary of State announced that athletics would no longer be part of the Wembley national stadium and that the FA would repay Ł20 million of the Lottery grant to Sport England.

January-December 2000

Sport England sought agreement with WNSL and the FA over the means to give legal effect to the repayment of Ł20 million for the release of obligations to stage athletics events at Wembley (HC 264, 2001-02, pp. 133-144).

December 2000

The first attempt by WNSL to secure private finance for the project failed.

December 2000- April 2001

WNSL and the FA reviewed the project to ascertain whether the FA could take on the role of lead sponsor without any support.

April 2001

The FA requested a partnership with Government on the project and Ł150 million of financial assistance.

June 2001

Mr Patrick Carter appointed by the Secretary of State to lead a review of the project in the light of the FA's request (the National Stadium Review).

August 2001

The Tropus report was submitted to the Chairman of WNSL. Mr David James, supported by solicitors Berwin Leighton Paisner, was commissioned to investigate the substantive issues raised by Tropus.

December 2001

A report by Mr David James, and Berwin Leighton Paisner, was submitted to the Chairman of WNSL and discussed subsequently with the DCMS.

December 2001

An interim report from the National Stadium Review team, led by Mr Patrick Carter, was submitted to the Secretary of State. The report recommended a revised version of the July 1999 design for Wembley and identified a number of issues to be resolved by April 2002.

19 December 2001

The Secretary of State announced that Government support for a modified Wembley project was dependent upon four key tests—value for money of the procurement contract, exposure of the relevant papers to NAO scrutiny, improved corporate governance at WNSL, and final commitment of private finance—which must be satisfied within a reasonable timescale. If this did not happen the alternatives were: taking forward the proposal for a stadium in Birmingham; or no national stadium at all. A review of the provision for athletics within the Wembley design was also announced.

7 May 2002

The Secretary of State announced that the key tests had been met by WNSL with the exception of a final conclusion on financing the project. The Secretary of State confirmed that athletics events continued to be a part of the Wembley project. A final decision on Government support for the project was deferred until confirmation that the private funding has been fully committed and the final report of the National Stadium Review Team has been submitted.

21 May 2002

Written answer from the Secretary of State revealed that Sport England had agreed to a reduced number of public seats in the proposed national stadium at the request of WNSL.

23 May 2002

The Secretary of State announced that Wembley's problems, as revealed by Mr James, had not irrevocably damaged the project and that her first three tests had been met. As on 7 May, a final decision on Government support was deferred until final commitment of the private finance and the conclusions of the National Stadium Review team.

Arising out of these events it is clear that the Wembley project has seen a number of significant changes.

The project structure underwent a significant revision in 1998 when the FA took over lead responsibility for delivery through ENDSC (now WNSL) and the earmarked Lottery funding was provided to purchase the existing stadium site.[11]

During 2000 the obligation to stage major athletics events at cost at the proposed stadium was sought to be removed from the project with a consequent repayment of Ł20 million to Sport England. This decision was never implemented and is now in abeyance with athletics back in the project.[12]

WNSL has requested, and Sport England has agreed, amendments to the LFA to allow for a number of extensions to the programme milestones set out in the main Lottery Funding Agreement.[13]

After the failure of the first approach to the private sector for the funding to complete the original project, and an unsuccessful request by the FA for Ł150 million from the Government in May 2001, a revised design has been produced (without hotel, office accommodation, and visitor attraction).[14]

Following the Tropus and James reports, WNSL has, with the approval of Sport England, made a number of changes to its corporate governance and abandoned the representative board structure in favour of a reduced team (under a new chairman) appointed by the FA to 'represent' only relevant areas of expertise in project management (with the approval of Sport England).[15]

Most recently, on grounds of developing a viable business case—i.e. increasing future income to pay for the private finance sought—WNSL has requested, and Sport England has agreed, an amendment to the LFA to allow for an increase in the number of premium seats available for corporate pre-purchase with a consequent reduction in the number available to the general public (from 75,000 to 71,200).[16]