Select Committee on Culture, Media and Sport Minutes of Evidence


Examination of Witnesses (Questions 140 - 159)

WEDNESDAY 15 JANUARY 2003

RT HON TESSA JOWELL, MP, RT HON RICHARD CABORN, MP AND MR ROBERT RAINE

Mr Wyatt

  140. Good morning. I wonder if I could look at the cost side and discuss the Treasury's input here? With the Treasury, has there been an analysis of what is required for the East End of London in terms of the regeneration, and a costing of what that is irrespective of an Olympic bid, and if so what are the figures?
  (Tessa Jowell) Yes. Mr Wyatt, you will be aware of the discussions within Government which are being chaired by the Prime Minister to consider the proposal for the development of the Thames Gateway of which the Olympic site is a small part, so yes, the discussions are within that broader context.

  141. Do we know the figures yet?
  (Tessa Jowell) The figures are in the process of development, and clearly the conclusion on the figures will be one of the factors in determining whether to proceed.

  142. I raised this in the House yesterday but the Chancellor of the Exchequer had a Doomsday Book created in July 1997 of all the assets that the UK owns, and if we are concerned as a Government that we do not want to foist a London bid on the taxpayer what analysis has been done on what we do own in the Doomsday Book? For instance, taking one particular example, we talked and then put back and then opened the privatisation of Channel 4, which in today's terms might be worth between £750 million and £1 billion, and presumably there are 10, 12, 15 jewels like that in the Doomsday book. What analysis have we done of what that Doomsday Book has in it so that, if we have to find £5 billion or £7 billion, we could at least look at that Book.
  (Tessa Jowell) Let me begin by saying that we have had an enormous amount of help from the Treasury in the work we are doing on the figures in relation to this and a Treasury official was an observer on the Arup group which developed the first figures and we have had a lot of Treasury assistance in helping refine and develop those figures. On your question about Channel 4, let me make absolutely clear that we have as a Government a manifesto commitment that we will not sell Channel 4 and we are not looking to sell existing assets in order to finance an Olympic Games. We are looking at the available sources of public income in the broadest possible sense. However, we have to accept that at the end of the day the provider of last resort is the taxpayer and that is why we are looking at this very much in the context of this underwriting of an Olympic bid and as being potentially a major public expenditure commitment that would have to be set alongside the commitment to building new hospitals, new schools and so forth, all the priorities that our Government was elected to deliver.

  143. I understand on Friday you will be visiting the President of the IOC and having a discussion with him. I wonder if you could let us know what sorts of things you will be discussing. Let me try and tease some things from you. Some of us believe that the Olympics has been a fairly corrupt organisation. I remember making a film of David Jenkins and the drug abuse that existed in the American and British teams in 1988 for Channel 4, so I have some personal experience of the corruption that existed at the time in the IOC. To what extent do you feel that the IOC is now clean and there is no disruption, and to what extent do you feel the bidding process is clean and there is no corruption?
  (Tessa Jowell) I think Jacques Rogge has seen it as his priority as President of the IOC to address directly all those allegations and facts about corrupt behaviour in the past and he has made that very clearly his mission as President and I know that Richard, who has had a number of discussions with him, has made that absolutely clear. When I see him on Friday I want to establish the degree of transparency in the bidding process. It will never be, as I have said before, an exact science, but I want to get a better assessment than I currently have at the moment about the standing of the UK, the standing of London in Olympic circles and what probability we could put on actually winning a bid. I think at the moment the collective assessment within Government and in consultation with the key sporting bodies would be put at one in three or one in four. That is very simple. We expect that Paris, a German city and a Spanish city, Madrid or Seville, are likely to bid, so that gives us a one in three or one in four chance. There appears to be no overriding obstacle to a London bid. I think the feeling is that a London bid would be a technically strong bid. We know the judgments about Olympic winners are not made only on the technical strength of the bid, it is to elaborate the context in which those decisions will be taken and the factors that will be taken into account that I want to discuss with the President on Friday.

  144. Can I take up some of Frank Doran's questioning. If the Cabinet agrees to going forward, is there any mad rush for this 30 January deadline? In other words, is the gun to your head so that you have to make this decision or could the Government say there are some problems with the figures, we have not had enough time between now and the thirtieth, we would like to look at another bid, say in North Kent, but we actually need more time? Could we say on the thirtieth we are going to tick it, we understand the public are behind it, but, to be honest, we need a little bit more time? Could we tick it in January and then decide not to formally apply in June? Secondly, you gave some thought about what you might be saying after the decision, if it was a tick. Is there going to be an Olympic Department? Is there going to be a Minister for the Olympics in the Cabinet Office? What is your current thinking on that?
  (Tessa Jowell) Perhaps I could take the third question in your list of questions, Mr Wyatt. An Olympic bid will be a bid to host the Olympics in London rather than North Kent or anywhere else in the country and I think that that is absolutely clear. The end of January is an important deadline because the British Olympic Association have made clear that they will need time to prepare a bid, that they will be the bidding organisation, but as Jacques Rogge and everybody recognises, a bid can only proceed if it has the wholehearted support of the Government. We have made clear that we will do it by then. As you know, there is a tremendous amount of work to be done and the work is still in progress in order to meet that deadline, but no, I do not think it would be right to say we need more time. We have said for a long time that we will give a decision by the end of January and it is my intention that we meet that deadline. In relation to if we decide to bid, what then happens: I really do not have anything further to add to my answer to Frank Doran's question, which is that we would make an announcement a few weeks after about how the process of bidding would be organised within and beyond Government.

John Thurso

  145. Can I first of all ask a simple factual question regarding accommodation. I think you said there would be a net increase in visitors of 300,000, which I presume is visitors and not visitor nights. Do we have that accommodation and, if not, how much needs to be built?
  (Tessa Jowell) Yes, we do and it is because of London's hotel capacity and particularly its upper end of the range hotel capacity that London is in fact the only city that the BOA considers to be credible to host the Games.

  146. So we do not need to build any more accommodation in hotel terms other than the village?
  (Tessa Jowell) No, although I think if you have been out to Stratford lately you will see that there are a lot of hotel developments going on there. We do not need more hotel development. That does not mean to say there will not be more hotel development.

  147. Can I come back to the question of costs and benefits and I must commend you on the work that has been done on the costs. It does seem to me that there were rather wobbly costs which the Arup Report started with, but you have probably flushed out many of the problems that might have come in the future, so the £2.6 billion is probably a pretty robust figure. The other thing is the table comparative to the other Games which is very useful. What have you done to compare the benefits that past Games have been able to have in the same way and what assessment have you made of the quality of those benefits?
  (Mr Caborn) We have done that from the visits we have made. It is very difficult to compare like with like here. We are talking about the Sydney Games and there was a major motorway built from the airport to the Games village which was not costed into the cost of the Games. I think there are several benefits that we will look at. First of all, you want to make sure that you use the bidding stage very effectively, but you must have an exit strategy in the event of you not winning the bid. You can actually gain quite a lot out of that. If one looks at what Manchester and Birmingham did on their bids, they actually gained out of the bidding process. I think it is an approach that you can have to the whole bidding process. Beyond that then obviously there is delivering. Again, everybody stressed to us very clearly that we will want to make sure the bidding process time is actually used as a potential part of delivery as well. I think the problem that Athens has now is they lost out for three years in the bidding process and it has now cost them very dearly indeed because to some extent they are in crisis management and therefore they are paying premiums on much of the construction. In terms of the legacy, then what has been stressed to us is to make sure you use the facilities that you have already to the maximum and Sydney wish they had done that because there are now two areas competing with each other. The very important point is to make sure that your strategy is actually in place before you start and that is part of the bidding process as well, so you know what you are going to do with your facilities. For example, Sydney are paying £10 million a year in revenue charges, that is revenue not capital, for keeping their facilities going. You have hockey and tennis, which are massively under-utilized, which they believe and wish they had got an alternative use for, which could have been done as a strategy when they were designing the building. We have learned a lot from that. Therefore, I believe if we did bid then our exit strategy would be as cost-effective as possible, in fact probably better than any other Olympics before. I think the Manchester one was an experience in terms of being able to have a reasonable exit strategy and how you would bring Manchester City into that stadium. They were criticised immediately after the Games when they were going to rip up the track and dig six foot deeper to get 10,000 more seats in there. When you lift the revenue implications off the back of a city or a country it is worth considering. Bayern Munich are now coming out of the Munich stadium after many years of playing there because of a dispute with the architect and it is going to cost Munich city £6 million a year revenue to keep that stadium as it is now. Bayern Munich will move out in about the next six months.

  148. It seems to me from the evidence we received yesterday that it is an absolute prerequisite of any attempt to make a bid that the Government is totally behind it, not just ticking the boxes but absolutely full-bloodedly behind it and I think from the evidence you have given you have indicated that that will be the Government's position. There was also clearly very strong public support probably based on the feel good factor. The mood of music over the last 24 hours has been very much about costs and is it worth it and could not we get it all in a different way. Putting it into perspective, the cost is about three-quarters of the costs of, for example, decommissioning a nuclear reactor. So it depends on how up choose to look at it. Do we not really need to say that this should not be about puritanical cost management, this really should be about Britain going out for a flagship event and just standing up and saying we are going to do this, we have made the best estimate of cost, it is pretty robust, it is worth it, let us get on with it?
  (Tessa Jowell) That may well be the conclusion that we reach, but it has to be a conclusion which is rooted in an understanding of the choices, that it is a choice between doing this and putting more money into hospitals, putting more money into schools, putting more money into transport, putting more money into more grass-roots sport, putting more money into getting more children playing more sport at school. You cannot ever retreat from the choices that you have to make and this is precisely the purpose of the debate that we have tried to create. In a sense let us go for it and let us go for it because we are a proud nation and we are going to showcase London and our athletes are going to win more medals than ever before. That is why you do it, but that is the easy bit. The hard bit, as the experience of the Commonwealth Games has shown, the experience of Picketts Lock has shown, the experience of Wembley has shown, is that it is very easy to be driven by euphoria alone and then the hard reckoning follows afterwards and that is what we want to avoid, so that we say to people, if we decide to bid, yes, we have decided because, in full understanding of the consequences, this is such a great thing for Britain and if we do not bid it will be because we have decided after rigorous examination that the costs are just too great and other very precious priorities, not just of the Government but of people up and down the country, would have to suffer if we were to do this. I think the poll, which I hope you got in good time, that we commissioned showed some very interesting conclusions. Yes, people are overwhelmingly in favour of our making a bid. The numbers fall when people are pressed in committing themselves to that alongside the consequences. There is one very interesting chart in the polling evidence which shows that, from memory, if you tell somebody they have £100, overwhelmingly what the sample showed was that you spend the largest slug of your money on more schools, the next largest slug on more hospitals, the next largest slug on increasing the value of pensions and then, interestingly, above reducing taxes, you spend money on an Olympic bid. I think the public's priorities are very clear indeed, but nobody should believe that hosting the Olympics would be somehow a free good, that we can just decide to do it as a decision that is divorced from the costs, the costs for sport, the costs for transport and all our commitments to public service renewal.

  149. So ultimately the Chancellor will decide?
  (Tessa Jowell) No, the Chancellor will not decide, the Government will decide and the Government will decide because right across Government there is a passion for sport and investment in sport which the Chancellor shares. Look at the money that we won for sport in the last spending round, building on investment in sport in the previous spending round. The investment in sport from the Exchequer has more than doubled in the last five years, so across Government there is a passion about sport, the good that it can bring and the sense of national pride that it can generate, but that is very realistically set alongside our commitments to other areas of public service investment as well.

Alan Keen

  150. Can I just ask about one issue and say a few words to put it into context. I asked Steve Redgrave yesterday about the value of the Olympic village and he said that it is everything. He said it means such a lot to the athletes to live in one village. On the other hand, the alternative to that, I reckon, and maybe you can help, that it must cost £½ billion in order to have 18,000 athletes living in a village for three weeks, the alternative is to spread it around the country. Steve said you could have what would be like a world championships where it is spread around the country rather than have 18,000 athletes living in one village. Because we want them all to live in one village for three weeks and to build a stadium, it is going to cost what, £300 million at least, and then it would be handed over or given to a football club which maybe does not even want it. We perhaps could save £½ billion, and as you are going to see the IOC on Friday, it is an ideal time to talk about it, but we could save £½ billion by having the events spread around the country and we would not then have to build the stadium because we could have the athletics in Wembley Stadium, for instance, and £18 million is the last estimate we have had to put in the metal framing to reduce the seating and make an area big enough for athletics. We have already given £20 million to the FA which you cannot take back from them now. We have given £20 million in order to make it compatible for athletics, and events could also be held around the whole country and we would save £½ billion. If you said to the athletes, "Look, instead of living in a village, we could give you £27,000 each", that would still come to £½ billion, which is a lot of money, so it is costing every nation every four years and it is costing taxpayers and kids who would get that money for sports equipment and facilities, and I reckon it is at least £½ billion we would save by spreading it around the country and this is every four years. Because the IOC is such an undemocratic organisation, nobody can put these points and they do not have to answer to anybody. You are going to see them on Friday and you are not in a position to say, "Look, I think you should do this", because if you take a hard line, they are going to say, "Right, you might as well not even bid because you are not getting the Games". It is an undemocratic organisation, so it is hard to get these changes put forward, so I think you have a job, but I hope you will try to convince me that it is not costing us £½ billion.
  (Tessa Jowell) Let me deal, first of all, with the costs of the Olympic village which Arup estimate to be at about £62 million and obviously there would have to be some conversion of the accommodation from single-person accommodation for the athletes to family housing which would provide the 4,000 homes legacy afterwards. I think you have asked an interesting question, Mr Keen, but it is in direct conflict with the IOC's own standards and obviously touches on our assessment of whether or not we could win. I think it would be highly desirable to disperse facilities in different parts of the country in order that the country as a whole could benefit from what will otherwise be an event which will largely benefit, particularly in relation to tourist numbers, the economy of London. There are ways in which we would expect to be able to do that through the development of training facilities in different parts of the country, for instance, before the Olympics themselves start. The athletes will come well ahead of time in order to acclimatise and to train and certainly it would be possible, it would be a requirement to have training camps in different parts of the country and some of the facilities will be dispersed. Shooting will be at Bisley as it was for the Commonwealth Games and so forth, and football would be held in stadia around the country. The IOC are quite clear that it is a city that bids to host the Games and they do not create the degree of latitude that you might want or that we might think is also desirable.

  151. That is why I said as part of the question that it is difficult for us, the UK, to go to the IOC and say, "Why don't you do this?", but if we do not do it now, if things are going to be perpetuated over another century, and you mentioned straightaway in your answer about the cost of the village, though it is not the accommodation of the village that I am talking about, but having to build a major stadium which is not going to be needed afterwards and having to put swimming pools in places and then having to dismantle them again afterwards, the overall cost of having to build a stadium and all the associated accommodation and everything else that goes with it. What I am saying is that I would like you to calculate how much cheaper it would be if we used stadia that are already around the country because I think it is something which, even if we do not put it to the IOC on Friday, which might damage our ability to win the bid, we should put it to them at some point. With an undemocratic organisation like it is, it is very hard for anybody to bring about any changes. As I said in the debate, I love the Olympics, so I am not criticising the Olympics, but it is just that it must cost £½ billion at least to get all of that stuff in one area and it just seems an awful lot to pay when it could be spread around the country and more people could enjoy it. That £½ billion at least, or £27,000 per athlete, seems an awful lot just to get the athletes together in one village for three weeks when one billion people or more are going to watch it on television and enjoy it. That is the real question I am asking.
  (Mr Caborn) I think that Rogge is very mindful of the point that you make and he has discussed with a number of people how you can actually contain and indeed to some extent downsize the Olympics because it is growing at a rate and has been, some would say, over-commercialised and indeed it has taken it out of the price tag for many nations to run now and I think the IOC and particularly Rogge are mindful of that and are looking at how they can bring it into manageable proportions so that other nations can actually run that. I think, therefore, that any of those suggestions which are put forward, he would be exploring those. The debate a few weeks ago in the IOC was about the number of events and there was obviously a bit of consternation from those who are not likely to be in the bid for the Games in 2012. I think on the question of the village, it is an important one. It is one that we had a lot of discussion about when we ran the Commonwealth Games. There is a question of security, first of all, which we all know from Munich and that has to be a consideration. Secondly, I think there is a desire of the athletes to actually live together and the camaraderie of the Olympics, I think, is an important part and if you have ever been into one of these villages, they are fantastic. I have had the opportunity of visiting two or three of them. Also it can be used very effectively in the exit strategy. If you look at what has happened, for example, in Sydney, half of that is now a campus and they use it very creatively. They use the press, which was again a very big construction in Sydney for the Games there, they have actually used that facility to turn it over now into the sports science and medicine part of the university and they use the housing as part of the campus, so they knew exactly what they were going to do with that and you can see that in a number of other areas. Universities in London are short of both accommodation and facilities, so there are ways that we can look at that. Again in Manchester, we coupled with the university there to look at the swimming complex, so there are lots of crossovers here that you can use. It is obviously an expenditure, but it can also be a major asset in the exit strategy if it is used creatively.

Miss Kirkbride

  152. Secretary of State, listening to you yesterday and this morning, I think most people would all agree that some big baths of cold water have been poured over Britain's Olympic aspirations really. I wonder if you could put more of a case as to why it might be a good idea. First of all, it was in the Labour Party Manifesto in 1997 that you would bring the Olympics to Britain, so what has changed?
  (Tessa Jowell) Well, I am not pouring a bath of cold water over this at all, but I am doing what I think it is my job to do. The Secretary of State's job to do is not to walk the country into an unfunded commitment or into a huge commitment, the funding of which would reduce our ability to meet our commitments in other areas of public spending. I think that, as I have said, the polling that we have published today shows very clearly where the public are on this. Making the case for the Olympics is the easy bit. Of course there is a case for sport which has been made by ministers across government, but this also comes with very heavy costs and I would say to you that this Select Committee has taken a very trenchant view of the handling of big projects by Government, including projects by my Department, and you have been highly critical in the past about the failure to take account of the true cost and the true burden on government. I take that very seriously indeed. The Minister for Sport takes that very seriously indeed. My Permanent Secretary and the officials of my Department take that very seriously indeed. Therefore, in exposing the costs of an Olympic bid and the choices that are involved in deciding to go ahead with an Olympic bid, I am doing my job not just for sport, but for the other investments that we in this Government hold very dear indeed on behalf of the people of this country who have elected us to deliver them.

  153. But other countries which are known to us who have had the Olympics, with the exception of America, have a smaller GNP than we have. They also have the same priorities for their populations, Australia and Spain both have the same priorities for their populations, yet they can afford them. We are the fourth largest economy in the world and you are very much giving the impression that we cannot afford them.
  (Tessa Jowell) No, I am not saying that. The Games are affordable. They are affordable if we decide we are not going to do other things. Those who are directly involved in sport have made it very clear that they would not, for instance, want the price of the Olympics to be reducing our commitment to grassroots sport, reducing our commitment to sport in schools, reducing our commitment to elite sport, so you have to accept that there are choices. There is not a cache of money which is available cost-free from any of these choices and available to spend on the Olympics. It is money from the taxpayer or certainly it is money which is underwritten by the taxpayer. We will obviously look, we are looking at the extent that we might be able to use Lottery income in order to contribute to this and a number of other options are currently being explored, but at the end of the day, taking the most cautious scenario, we have to be prepared to say that we want this so much that we are prepared for the taxpayer to underwrite it and we want it so much that we are prepared to make choices between other priorities. Otherwise, it is simply not a decision that has been taken in the real world and in relation to your—

  154. I am sorry, Chairman, but we do not have very long and if the Secretary of State makes very long answers, then we do not get a chance to put other questions to her. One cannot help but wonder, though, when talking about schools and hospitals, that it is just a good way of warming up the general public to the disappointment of the Government saying, "No, we are not having the courage and the aspiration for an Olympic bid". The truth is that the Government spends something like £400 billion every year and we are talking about a project 10 years away and yes, I do accept that £4.5 billion, at the top end of what it might be, is a lot of money, but, goodness me, we are going to earn a lot of money in the meantime and if we want to go to the theatre, we have to pay for the ticket, do we not? If Britain wants to host the Olympics, if we want to let our domestic population come here and see the Olympics, then there is a price to be paid, but are you really saying that there are so many schools and hospitals which are not going to be built as a result of that? It does not seem credible when we spend £400 billion every year under your Government.
  (Tessa Jowell) The facts are there. If we spend £2.5 billion from public money on the Olympics for all the reasons that we have been discussing this morning, all the positive reasons, then that is £2.5 billion that will not be spent on other competing projects. That is a matter of fact. In relation to your point about other cities, I think it is also important to be clear that Barcelona, Beijing, Sydney and Athens all bid for and wanted the Olympics because it would drive regeneration in their cities. As I said in answer to, I think, Mr Wyatt's question, the judgment is that the part of East London which would be the Olympic site is currently planned for regeneration and the regeneration of that part of London is not dependent on the Olympics. The Olympics would add some value.

  155. Taking that point up, you made it yesterday, and you have inferred it this morning, that only London could possibly be considered for a credible Olympic bid. Bearing in mind that London is incredibly built up, is it not the case this is the only opportunity we have left to credibly go to the IOC and say we would like to host the Olympics, because once that redevelopment has taken place in the East End there is simply not another site left in London, which is the only city that can bid for this bid, that can possibly take a case. The moment for the United Kingdom to actually put forward an Olympic bid is now because of that redevelopment opportunity. That closes and that is it, the UK is not going to have an Olympic bid.
  (Tessa Jowell) In looking at the balance sheet for and against, the argument for the bidding, the aspirational balance sheet, the actual costs in the balance sheet, the opportunity costs in the balance sheet, the legacy benefits in the balance sheet that is obviously a factor.

  156. Once this goes that is it.
  (Tessa Jowell) It is a judgment rather than a fact. The judgment is that it is in East London that you get the synergy between the space required for Olympic development and the planned regeneration, so that is correct, yes. It is also likely that after 2012 if those sites are not used for Olympic facilities will have been developed for other purposes. There is a third element, which again is more art than science, there is a feeling, a belief dependent on decisions like where the 2010 Winter Olympics will be held, that 2012 will be at the European Games and after that the IOC will move to another continent. You are not categorically right in what you say but there are certainly judgments that would support your view.

  Miss Kirkbride: Thank you, Mr Chairman.

Mr Flook

  157. If the Commonwealth Games in Manchester had not been a success would we be sitting here now? To put it another way around, are you not a victim of your own success?
  (Tessa Jowell) I think that is a very interesting question. Obviously the consideration about whether or not to bid for the Olympics preceded the Commonwealth Games and I think we commissioned the Arup Report at the beginning of 2002. The Arup Report, which has heavily informed judgments about the costs, was commissioned long before the Commonwealth Games. I think there are two things that the Commonwealth Games have changed, one is—and I think there are those in the international sporting community who have been quite explicit about this—the Commonwealth Games demonstrated that the United Kingdom could host and could deliver a fantastically successful sporting event on that scale. Remember, the Olympics are 10 times the size of the Commonwealth Games—it depends what measures you use—the Olympics by a factor of more than two are much bigger, somewhere between a factor of 4 to 8 bigger than the Commonwealth Games. I think it is also fair to say that the right decision to withdraw from hosting the 2005 World Athletics Championships did cost us in confidence in international sporting circles and that was confidence that was re-established with the success of the Commonwealth Games.
  (Mr Caborn) I also think as a result of the IAAF indoor games we are to run here in Birmingham in 2003, we have the Commonwealth and the IAAF, and I am sure Birmingham will rise to the occasion and produce an extremely good indoor games.

  158. The DCMS will be aware that the Daily Telegraph has been a big supporter of the notion of having the Olympic Games in London, in Britain in 2012. I was interested in today's Telegraph the honourable gentlemen, the member for West Ham said that everyone has to get behind this—this was reported from yesterday's Chamber—and almost sign up for it in blood, a classic over- exaggeration on his part. The Telegraph also says that the winability of the four, affordability, deliverability, legacy and winability is about the only given, which of course it is not. As a decision by the IOC is very likely to be after the next General Election, because I believe that it is in July 2005, and it is likely there could be an election in May 2005, what would be the most important piece of advice you would give your likely successor on how to take forward a successful decision by the IOC to give London the 2012 Olympics?
  (Tessa Jowell) I think that is a series of well phrased, hypothetical questions. I cannot possibly answer about the date of the next general election.

  159. I appreciate that.

  Chairman: Politically he is being totally uncontroversial.


 
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