Examination of Witnesses (Questions 20
- 34)
TUESDAY 14 JANUARY 2003
MR MARK
BOSTOCK, MR
SAM HIGGINSON
AND MR
NICK BANKS
20. And that would be public sector backing
it?
(Mr Bostock) Yes.
21. The taxpayer backs that bit?
(Mr Higginson) Yes. I am sure you are aware that the
LDA is currently very active in that area of London and what we
were assuming is that they take on that role, so the other costs
that would come in would be land acquisition costs.
22. Paid for by whom?
(Mr Higginson) By Government but they would be off-set
by land disposal revenues, so when you move forward you move forward
with a development agency that has a plan A and a plan B. Plan
A is you win the Games in 2005 and then you go on and develop
the Olympic facilities and deliver the Games, and plan B is you
do not win the Games in 2005 but you go on and deliver a significant
amount of development in the area anyway.
(Mr Bostock) The issue of risk was not part of our
commission and it seems to me—and it is for you to ask the
Secretary of State when she gives evidence—that Government
has been going through its own risk evaluation to look at the
bottom and upper limits of the contingency positions that they
need to make from the public sector, but that is not for us to
make any comment on but for Government and each of the stakeholders.
23. In terms of your professional competence,
if they are bought on compulsory purchase does that make a difference
to the price as opposed to the open market, because clearly if
the Olympic bid is successful then it is more valuable, and it
is the taxpayer picking up the bill?
(Mr Banks) I think you should probably ask the LDA
that when you speak to them because they are responsible for that
but compulsory purchase buys at current value, broadly speaking.
24. Current value, not expected?
(Mr Banks) Yes.
25. In terms of how this would work if we were
to go forward, you say in the report that there are enough hotel
spaces; we have touched on but not really clarified the issue
of Crossrail and the transport infrastructure; but can you go
into a bit more detail and elucidation as to how people would
get there, where they would stay, what transport they would use
in the absence of Crossrail, and how much disruption the rest
of us who live in London would have to cope with if this went
ahead?
(Mr Bostock) That is a good question and we will try
and answer it, but one of the great attractions of London, of
course, is the very high quality of existing hotel stock and that
is particularly appealing to the members of the IOC, so we have
assumed that all those are going to be in the West End and West
End hotels—
26. What about the rest of us? Where are we
going to put the competitors and the spectators? How will they
get there? What transport infrastructure will they be using in
the absence of Crossrail, and in summary how much disruption to
the rest of our lives is there going to be for the glory of having
the Olympics?
(Mr Banks) I will just briefly take you through the
methodology. Our first step was to try and work out what the demand
would be and how many people would come to the Olympics, and some
of them are fairly straightforward because they are the Olympic
family and the athletes and the media and those people. The spectators
were more difficult and we had to make an estimate which we based,
broadly speaking, on the number of tickets and assumed that all
the tickets would be sold. We then added on the people who accompany
people going to the Olympics but who are not actually attending
it, and we apportioned those people between those who will stay
with friends and relatives, those in hotels and hostels, those
who are day visitors and those who are international and those
who are British. That gave us our demand scenario and we worked
out where the accommodation was, and for those in hotels and hostels
we apportioned them according to where they are located. As far
as the friends and relatives are concerned, we assumed those international
visitors would have the same behaviour as domestic visitors to
the Games. So that gave us our pattern of origins for the journeys,
and it also gave us the scale of the demand needed to be catered
for on the network. Here I think it is very important to describe
our approach to transport because it is absolutely essential to
our thinking about it. Essentially, you can either adopt an infrastructure-led
approach to Olympic transport or a management-led approach or
something in between. We went for the management-led approach
because the infrastructure-led approach has a long history of
problems because it is very expensive and there is risk of being
late and all these difficulties, and very often it does not make
a lot of sense to build a whole new bridge or whatever for the
sake of a six-week Games. The infrastructure has to be needed
in the long term if it is worth investing in. It is difficult
to believe sometimes but London has a very large and very flexible
set of transport networks, albeit very congested, but it is also
in many ways very inefficiently used. Our argument is that if
the traffic flows are heavily managed during the period of the
Games and it is planned for seven or eight years before the start
of the Games, the capacity can be allocated efficiently and you
have a long time for the existing people in London to decide how
they are going to react towards that during the Games. A big part
of the Sydney experience was that everybody pitched in during
the Games and there was a big celebration, and that is something
that probably the BOA can probably tell you about more than I
can. Now, with all those things in place our approach was to allocate
as much as possible on to the rail networks and then to provide
for the rest with dedicated routes and shuttle coach services,
but there would also be facilities park and ride and all the rest
so that was the essential pattern. What we would aim to do was
minimise the infrastructure investment and, in fact, infrastructure
investment only ever provides for a small part of the overall
travel demand because it comes from many directions.
John Thurso
27. I want to ask you about risk and risk assessment
but before I do can I follow on from the question you have just
answered and perhaps ask you to give a definition of what "heavily
managed" means? Are you expecting the congestion charging
to clear the roads for you, or are you asking people not to get
on the tube and go to work?
(Mr Banks) I think the first thing is that for those
attending the Olympic Games there would be mechanisms to ensure
that when you bought your ticket you were also buying a particular
route to travel to the event wherever possible, so you can use
that mechanism to allocate people to different bits of the transport
network, but it also means that you need a transport agency with
proper powers as they had in Sydney, and it means you have to
have thought about all the individual aspects of what could go
wrong and have contingency plans for it. It also means you have
street management during the duration of the Games which keeps
the key routes clear, and in terms of the totality of London there
are not so many key routes that you need to be clear. Then you
ensure you have all those pieces in place and that the agency
has the powers to direct people who are not very keen on this,
so that you deliver a result.
28. It sounds very easy!
(Mr Banks) It is not easy. I certainly do not want
to give you that impression.
29. Can I come to the question of risk. Here
I do not want to ask you about financial sensitivity. In other
words, this is not a question of how much you have built into
your various scenarios—but actually the risks to the project
going through. What assessment have you made of those events or
actions that may or may not take place on the critical path which
are likely to or could have the effect of derailing the project?
What are the things that put most at risk the viability of the
project?
(Mr Bostock) I will repeat what I have said already—we
are assuming that the delivery of the Games and its legacy will
engage the expertise of the private sector. I assume right upfront,
and I am going to come back to this concordat, that the budgets
are agreed and there are funds available for what needs to be
done in that highly project-managed approach for the delivery
of that project. Right upfront there is no argument as to where
the funds are going to be delivered. Our assumption is that there
is a very strong transport authority put in place, and that there
is a development authority also in place. I have to make those
assumptions; and we have to make those assumptions. Because if
you haven't got those, then you haven't got a concordat and there
is not a basic proposition. For the delivery of the infrastructure
under those assumptions we are fairly confident; but there is
a whole range of things outside those that we have been discussing,
such as revenue; interestingly enough, security has not come up,
and there are three or four main areas which are totally outside
the control of the delivery mechanism provision, which are very
difficult to put probabilities to, but which are high risk. We
did an evaluation of a `what if' situation if there was a terrorist
attack three years before, and the impact that would have, and
that is a disaster scenario in terms of the consequences, in terms
of reduced revenues, attendance all the rest of it. I assume that
the Government, in terms of their risk evaluation from the point
of view of public sector risk, will be looking at all those, and
coming up with an overall provision. I would expect that to be
the case.
30. You mentioned that one of the risks you
saw was the private sector not engaging in the process. Perhaps
this is what you have just said, but would it not be fair to say
that the biggest risk is, surely, Government not engaging in the
process?
(Mr Bostock) Yes.
31. The lesson of Manchester must surely be
that, unless there is ministerial involvement from the outset
and leadership from Government, that it is doomed to failure?
(Mr Bostock) The answer to that is: absolutely correct.
Implicitly I was trying to say that.
32. Now you have said it explicitly.
(Mr Bostock) It has been quite interesting—as
we have been going round (and I am giving you a personal view
and not a view of Arup) there is a lot of consultation with all
the relevant ministries we have dealt with—that Government
is a portfolio of silos, and it is the delivery of the totality
of Government which is absolutely critical for this. The Manchester
experience is directly relevant. I am going to go stronger to
say, if there is not a political will to do this which is cross-Party
(and I am expressing a personal view) forget it.
33. You would also say that in order to get
that responsibility it really is one minister who is responsible
for this and takes the lead role in Government?
(Mr Bostock) Correct.
Chairman
34. Thank you gentlemen. We are very grateful
to you indeed, first of all, for coming and, secondly, for providing
us with this very illuminating insight into the way you have conducted
your work. Thank you.
(Mr Bostock) Thank you, Chairman. You have asked us
some quite difficult questions. If you want any further views
from us we would be very happy to respond.
Chairman: Much obliged.
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