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14 Jan 2003 : Column 609—continued

Kate Hoey (Vauxhall): The Secretary of State rightly referred to the opinion in the sporting world that holding the Olympic games in London would be hugely motivational, but she also implied that the money might have to come from other parts of sport if we decide to bid for them. Does she really believe that to be the case? Surely if we want to bid for the Olympics and the Government support that, the money has to be over and above anything that is already going to sport.

Tessa Jowell: Money for an Olympic bid and for building the Olympic facilities would come from the same pool as money to fund the Government's other priorities. It would have to compete with schools, hospitals, the development of grassroots sporting facilities and the renewal of our transport infrastructure. That is a fact and it is why the decision requires us to face tough choices.

Every host city has found that the games come at a price. Past experience informs us that early estimates for the cost of major events or for other capital projects tend to escalate before their completion. The costs of the Manchester Commonwealth games, one of the great sporting festivals of the summer, more than doubled from Manchester city council's first bid, and the games had to be rescued by the Government and the national lottery before becoming the success that they were. The costs of the new Wembley stadium were originally forecast at #250 million, whereas the project that was finally agreed is budgeted at #760 million. Escalation of costs is not unique to Britain. Sydney found it necessary to spend double its original estimate, and Athens could be heading the same way.

Mr. Clive Betts (Sheffield, Attercliffe): As a northern MP, I am very supportive of the proposed bid for London. However, as costs rose so much for the events that my right hon. Friend just mentioned, we have to be sure from the beginning that we are not underestimating the likely costs of London's bid; otherwise we will hear damaging stories about costs escalating out of control, which will detract from the good news about the event. Hopefully we will win the bid.

Tessa Jowell: My hon. Friend is absolutely right. He almost makes my point for me. I am determined to ensure that, as the funder of last resort, the Government are absolutely clear about the extent of any possible liability before we make a commitment.

Mr. Chris Smith (Islington, South and Finsbury): My right hon. Friend will know that many of us in London

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are greatly excited by the potential hosting of the Olympic games in London. That could do wonders for the regeneration of the city as well as for sport and Britain's standing in the world. She will know also, however, that the bid depends crucially on investment not only in sporting facilities and the running of the games but in London's infrastructure. Will she take the message from the House to the Chancellor that without Government investment in London's infrastructure, particularly in transport and housing, the games cannot be the success that they should be?

Tessa Jowell: I am sure that the Chancellor will have heard my right hon. Friend's intervention.

To ensure the extent of any Government liability, we have developed the work undertaken by Arup, which concluded that the total cost of hosting the 2012 Olympics would be #3.6 billion, requiring a net public subsidy of #1.1 billion. In our view there is a significant risk of the total cost rising to #4.5 billion, with a net public subsidy requirement of #2.5 billion. The scale of work needed, the impact on the regeneration of east London and the total costs involved mean that sport alone cannot fund the Olympics, nor can sport alone justify the total expenditure. Those wider considerations must be weighed before a decision can be made.

Mr. Gareth Thomas (Harrow, West): Will the Secretary of State give way?

Tessa Jowell: I shall make some progress.

Any public subsidy of the games must, by definition, come from other areas of public spending. It is the job of Government to balance what are inevitably competing claims, and I hope that one of the outcomes of the debate that we seek to have will be greater public understanding of the extent of those choices. If the Olympics would carry forward the regeneration of east London, if they would contribute substantially to the UK economy and if they could be financed without distorting other spending priorities, they could be affordable. However, if they would do none of those things, but rather inhibit regeneration and fail to leave a valuable legacy, the argument is clearly considerably weaker.

Many, if not all, Olympic host cities have justified their expenditure by those wider considerations. Hon. Members will know that the Minister for Sport and I have, over the past few months, visited a number of past and prospective Olympic cities in order to understand those points at first hand. For the 1992 Olympics, Barcelona wanted to rebuild and even reinvent itself—to turn it round to face the sea, as one resident put it to me when I visited. It wanted to emerge as a new, modern city and as the capital of a vibrant region, to increase hugely its capacity as a tourist destination. It spent accordingly, perhaps #8 billion in today's terms. Beijing clearly wants to use the Olympics to promote the city and to turn it round to face the rest of the world. Athens, too, is using the impetus of the games to rebuild and rebrand its city.

In this context, it is important to recognise what our Olympic expenditure would cover. It would cover the cost of making the bid; land reclamation and the development of sport sites and the village in the east end;

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transport enhancements for the period of the games; preparation for our elite athletes; a world-class Olympic fortnight; and the Paralympic games. The level of funding would not provide for wider Thames gateway redevelopment. Those who look admiringly at Barcelona and Athens, with their dramatic changes to their cities, and assume that the London gain would be similar, need to know that public works on that scale would increase the costs still further and would not make a London bid any more winnable.

Mr. Nick Hawkins (Surrey Heath): Will the Secretary of State give way?

Tessa Jowell: No. I shall make some progress.

The third test is legacy. The best estimate to date is that the lasting legacy of the Olympic buildings and associated infrastructure could be otherwise provided for about #300 million. That would include the stadium, a 50 m swimming pool, some improved sports halls and other facilities in east London, around 160,000 sq m of employment floor space and about 400 permanent jobs, 4,000 new homes, and expanded rail capacity at Stratford station.

The subsequent use of the stadium is important. More recent Olympic and world event stadiums have been economically unsuccessful unless a viable anchor tenant has been found. That is true of Stadium Australia and also of the Stade de France. Arup's preferred solution is for the #280 million, 80,000-seater Olympic stadium that London would need to be reduced after the games to 20,000 capacity and to be used for athletics. However, even at that capacity, the stadium would make a loss and would require continuing subsidy. An alternative considered by Arup was to follow the Manchester example and find a football club to take over the venue. That would leave the stadium with a 60,000 capacity, but Arup felt that residential and commercial neighbours might be wary of being close to football grounds, and that that would be reflected in the development prospects.

There are other legacies to consider. The Olympics could bring a substantial boost to London's tourism. The benefit is estimated at #400 million to #600 million over four years.

Mr. Gareth Thomas rose—

Tessa Jowell: It is true that London is already the most popular destination in the UK, and steps would have to be taken to encourage visitors to venture beyond the capital so that the rest of the country would benefit from the Olympic impact. There could be a legacy of people enthused to take up sport because of the excitement generated by the event, but experience shows that that immediate effect is short lived, when high standard facilities and coaching are available. Even in Australia, which in 2002 had one of the most successful Olympic games ever, participation levels have fallen away, and its couch-potato population is estimated to be equal to ours. To capitalise on the Olympics in that way would require further expenditure if people are to be engaged in sport in the longer term.

Mr. Hawkins rose—

Bob Russell (Colchester) rose—

Tessa Jowell: No, I shall make progress.

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A further consideration is the impact that the games decision could have on the wider Thames gateway, giving confidence to investors that it is an attractive place to invest. The games could revitalise the image of London in the eyes of the world, confirming its position as a leading world city. There is the potential for improving the image of the UK around the world, something done to great effect for their countries by Sydney and Barcelona. There is the undoubted value of the games in terms of national pride. We had a foretaste of that in the Manchester games this summer, which showed that we really are a can-do nation.

Deliverability is the third of our criteria and perhaps the one in which I have greatest confidence. There is absolutely no doubt that Britain can stage a great Olympics in 2012. The Queen's jubilee and the Manchester Commonwealth games show how we can organise and deliver vibrant and exciting events, bringing together hundreds and thousands of people to celebrate. Some of our detractors will point to Picketts Lock and say that we cannot be trusted to deliver, but Manchester, the jubilee and the 1996 European football championships all show otherwise, as do the outstanding regular events that this country hosts in football, cricket, rugby, golf, tennis, rowing, sailing and many more sports.

Of course, the Olympics are on a different scale and level of complexity, but given the time available and provided that the games are fully funded and that we are confident about the costs, we can be confident about delivering an impressive event with which London's infrastructure is well able to cope. Our current assessment is that transport would not be an obstacle to a successful bid. The Government are currently considering what measures would be necessary. We would also ensure that the necessary planning and development powers are in place—an important lesson from other Olympic cities—and that the Mayor of London and relevant local authorities have all indicated their support for a bid. We would look to the mayor and the London development agency for a substantial commitment of their resources, to reflect the fact that London would inevitably be the main beneficiary of the games.

I am very grateful for all the work undertaken across government in assessing the practicality and deliverability of the games, and I should like to thank my colleagues for their wholehearted co-operation. As a result of all that work, I can say that a high-quality games is well within our reach to deliver.

I turn finally to winnability, which, as I have indicated, is not an exact science. The ballot is secret and the delegates are drawn from more than 80 different countries, each with different traditions and attitudes. We know that the competition will be intense.

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