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16 May 2006 : Column 224WH—continued

but he was promptly contradicted by Lord Coe, who rather tartly observed:

Reading those quotations, one sees that there are very different perspectives on how the games and the facilities should be designed and costed. It is appropriate to ask the Minister where the Government sit in that controversy. What end of the spectrum are they at? Do they broadly agree with the Mayor or with Lord Coe? Where will they throw their weight in the argument?

Another question about how the Government in particular could help with the management of potential costs relates to the subcontracting of much of the construction work. One of the more worrying documents that appeared in the past few weeks was the report by PricewaterhouseCoopers, which I am sure the Minister has seen. It says that whereas London’s GDP will benefit by some £6 billion, non-London will lose £2.8 billion. In other words, the rest of Britain will be worse off than if another country had staged the event. I present that not as a negative debating point but to make the point that the provinces of Britain could benefit from large-scale outsourcing and prefabrication in respect of a great deal of the work. They will have lower construction inflation, too. Clearly, the process needs to be managed, and I ask the Minister who is managing it.

There is a series of questions about sponsorship. The £1.5 billion needs to be met through aggressive and successful sponsorship. We all wish the sponsors well. It is a worthy cause and I hope that they are able to raise the money, but it is a big ask, because we are talking about more being raised in sponsorship than the whole marketing budget for British sport in any one year. What happens if the sponsorship falls short and the £1.5 billion operating budget cannot be met? Who
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is first in line to take up any slack if the sponsorship does not come in as we hope it will?

My hon. Friend the Member for Bath (Mr. Foster) has been pursuing a series of issues relating to the link between sponsorship and the integrity, the copyright, embedded in the Olympic symbols. Quite rightly, the Government have been tough in insisting that those symbols should be protected. There is real intellectual property there, and protection is essential to encourage sponsors to come forward. There is an issue of detail, because we are all beginning to hear from small businesses that are irritated or frustrated that they cannot muscle in on the Olympics. The question for the Government is about when they will produce the guidelines that explain exactly how the integrity and intellectual property elements of the Olympic symbols are to be protected. What guidelines will govern people who try to encroach on that terrain?

There are also questions about security; we know from the Athens experience that that can blowthe financing of the games wide open. Clearly, the Government have to give security priority. If the security budget goes way beyond what was in the bid document, where will the slack be? To what item of the budget will the Government look to offset any escalation in security costs, as could well arise for very good reasons?

There is also an issue about the legacy and its costing. Who will benefit from the legacy? In the past few months, a change in the concept of the Olympic village has emerged; the village could become a more valuable, high-density development than was originally envisaged. Presumably, that means that after the games it will be worth a good deal more. That is positive, but who will have first access to that money? Will it be London, the Government or the International Olympic Committee? Under what formula will any upside be apportioned between the various partners? Similarly, who will take the first hit if it all goes badly? I am not clear that there is a clear protocol that defines which of the various supporters and guarantors will be first in line to take both the benefits and the losses that might arise.

How far have we gone in clarifying what will happen to some of the legacy buildings? I am aware that the IOC has praised the London Olympic bid for the thinking that has gone into legacy work. That is a very positive sign. As one who represents the rugby Mecca, I was somewhat struck by the proposal, current until recently, that the main likely future for the big stadium was to downsize its capacity from 80,000 to 25,000, and that it would probably then be used for a London rugby club. Harlequins, my local rugby club in Twickenham, is good and well supported, but even with the recent expansion of capacity, it operates at about 10,000. It is not at all clear how any London rugby union or rugby league club operating in the east end close to West Ham will be able to pull in anything remotely like 25,000 spectators. The concept I have talked about may have disappeared, but it would be useful to have clarity on whether the issue has been resolved, and if so, in what form.

We acknowledge that it was necessary to enter various guarantees, involving notably the Treasury, but also London as a result of the memorandum of understanding with the DCMS. The lottery is also a
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potential support. However, from what I have read and discussed, what is missing from the picture is the exact relationship that would exist between those three potential guarantors and support bodies in the event of things going wrong. Who will take the first hit when, and under what conditions? We need more clarity on that.

Among my constituents there is a mixture of pride and hope on the one hand, and worry, anxiety and even a degree of cynicism about the funding of the games on the other. The feeling is that the present generation of politicians of all parties is only too happy to scoop up the credit for having brought the Olympics to London, but in six, seven or eight years’ time somebody else will have to pay the bill. If we are to prevent that anxiety from degenerating into outright cynicism, it is important that we should be absolutely up front and clear about the costs, risks and potential dangers, and that we should face them now.

11.24 am

Mr. Christopher Fraser (South-West Norfolk) (Con): Initially, I came only to listen to the hon. Member for Twickenham (Dr. Cable). However, having understood and appreciated what he has said, I should like to make a few comments.

Financial commitment is an important aspect of the games, because we have, dare I say it, been here before. Contingency planning has come before the House for many years. I remember when we discussed and managed the preparation for and development of the millennium dome, when I sat on the Select Committee on Culture, Media and Sport. Over a period oftwo years or more, we had the then Minister,Mr. Mandelson, in front of the Committee—I hope that the Minister will spend some time looking back at some of the evidence given then—and our biggest issues and complaints were about contingency planning.

Of course, things happen, as part of a development process, that one does not anticipate at the beginning. The hon. Gentleman’s earlier questions on this issue are particularly timely, because we now have an opportunity to overcome some of the problems from which we have suffered on issues such as the millennium dome.

The hon. Gentleman pointed out that sponsorships have to come in. One of the problems with the millennium dome was that sponsorships did not come in on time, and the Ministers and other people involved with the commissioning of the dome had to back-pedal on many occasions. We all know that the costs spiralled enormously. Having said that, the dome opened on time, but then there was a big question about its legacy. Unfortunately for the Government and all those who supported the dome, the press had a field day and the dome became a great white elephant. The issues of the dome and its legacy still have not been resolved, and I do not want to see what could be a fantastic event for this country, with a fantastic legacy, being handled in a way that does not close off all the financial issues that were not closed off for the millennium dome.

The Culture, Media and Sport Committee also studied the preparation and build-up of the Olympic games in Sydney. Our Chairman decided that it would
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be appropriate to go out to Homebush, and we spent some time there. I was extremely impressed by the work done by the Australians in preparation for and in the build-up to those games. I may have this wrong, but I remember being told that they had sold off the competitors’ village in advance to raise funds. We all thought that was fantastic, but at the end of the games—like many others, as was well described by the hon. Gentleman—even though their contingency planning was, in my opinion, well scrutinised in advance, they came across some extremely large financial costs which had to be supported by the Australian nation.

We cannot take anything for granted. We want the games to be a success. I want that not only for my constituents but for the nation. Importantly, we must accept that although not everyone can participate and compete in the games, everyone can be a part of the process. I would like the Minister to accept this morning, in terms of the planning commitments and finances that go with them, that we should have a nationwide project through our schools, sports clubs, regions and local authorities to encourage people to participate in a successful launch and games. That could do many things: it could mean that everyone says, “I didn’t compete, but I participated,” it could help to raise funds, and it could make people buy into the concept, so that when the games happen, everyone owns part of them. The nation’s ownership of the games is a fundamental part of everybody understanding the financial commitment that goes with them.

I have a specific point to put to the Minister about the games and their legacy, and about contingency planning in order to get the “best of British” flag flown from the beginning. Does he agree that an environmentally sustainable Olympic park that demonstrates the best in UK green landscaping and planting would be a valuable contribution to the games? I speak with a vested interest: I am vice-chairman of the all-party group on gardening and horticulture, and in my constituency there are many companies that can and will produce first-class plants, trees and all sorts of landscaping products for use at the games.

My point—and it has been amply demonstrated that this was not well handled at the Athens Olympics—is that such activity is always considered last and not first. If we want to give a commitment to make the park an environmentally sustainable place where the whole nation can participate and it becomes a British park—not a world park, because we are flying our flag and nobody else’s—I have to ask this question of the Minister: as part of the financial commitment, will he join me in calling on the Olympic Delivery Authority, by ring-fencing funding early in the development process, to allow this to happen, because I assure hon. Members that it would pay dividends in the end?

May I draw to the Minister’s attention my early-day motion asking for this commitment? It currently has all-party support, but not enough people recognise the need for us to fly the flag for Britain. We need to make a financial commitment now, and we must ensure that
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that financial commitment, and the contingencies that go with it, are fulfilled before, during and after the games.

10.31 am

Mr. Don Foster (Bath) (LD): I congratulate my hon. Friend the Member for Twickenham (Dr. Cable) on securing the debate. It is traditional to say that, but I also congratulate him on the content of his contribution. He made it very clear that the Liberal Democrats are fully supportive of all the work being done to ensure that London in 2012 has the best ever Olympics and Paralympics. However, he also made it crystal clear that our support comes with a clear understanding that we will be critical friends of the project, and that we will not be prohibited in any way from seeking answers to some of the crucial questions—questions that were raised not only by my hon. Friend’s constituents in Twickenham but by people across the country. I am delighted that he had an opportunity to put a series of questions to the Minister, and I am sure that we all look forward to the responses.

There have been many debates in this Chamber and elsewhere about the Olympics and Paralympics. During them, it has been traditional for the relative merits of the cities of Loughborough, Bath and Sheffield to be aired, and for the virtues that they have to offer in respect of the Olympic movement to be extolled. I am prepared today to agree to a self-denying ordinance to make mention no more of my wonderful city and the contribution it can make, if we get a similar assurance from the Minister in relation to Sheffield.

The crucial thing so far has been the cross-party support for the Olympics. In a recent letter from the IOC to the Secretary of State, the IOC praised that cross-party support and made it clear how important it had been in securing the Olympics and Paralympics for London in 2012. I must place on the record therefore my considerable disquiet at the winning of the Olympic games having been used in a Labour party election broadcast in the run-up to the recent local elections. I know that that concern is shared by the hon. Member for Faversham and Mid-Kent (Hugh Robertson). We have raised it with the Secretary of State, and we have been given a clear assurance that such events will not be repeated, which I welcome. We have also been assured that there will continue to be the opportunity for members of Opposition parties to work closely with the Government on the various issues that will no doubt come before us over the next few years, because this is a crucial project. It has not been said so far in this debate, but it has been said elsewhere, that seeking just to build the Olympic park and to make the associated transport arrangements is the equivalent of seeking to secure within just six years two terminal 5s. This is a huge project. My hon. Friend the Member for Twickenham is absolutely right to say that it is critical that we examine and question issues relating to the cost of this mammoth undertaking at all stages and to what happens if things go wrong, as they are likely to in one way or another. He rightly asks questions about who will pick up the tab and who will get the huge benefits that may come.

It is crucial that we do not see the winning of the games a year ago as the end of the matter. One of the
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diligent researchers in my office came across a quotation from Polybius, made over two and half millennia ago:

In a sense, that is what our debate is about: ensuring that we make proper use of our success in Singapore a year ago. Scrutiny mechanisms must be in place to ensure that we do not have the sort of fiasco we had with the millennium dome or the many other public sector projects to which my hon. Friend referred.

We must ensure, as the hon. Member for South-West Norfolk (Mr. Fraser) rightly said, a sustainable legacy. That includes an environmentally sustainable park and many other aspects. We will be critical friends of the project, but from the outset enormous praise must be given because of the huge progress already made. That progress was recognised by members of the visiting IOC delegation recently. They rightly said that we were years ahead of some other cities that had previously won the great honour of hosting the Olympic games in their countries.

The London Olympic Games and Paralympic Games Act 2006 was passed in record time, and it will set up the various bodies that run the games. The Olympic Delivery Authority and London Organising Committee of the Olympic Games are both now well under way, and soon we shall see the official launch of the ODA, even though it already has some excellent people on board—people in whom I have a great deal of confidence. The organising committee has begun to search for the first tier of sponsors, which is an example of good, early progress.

London 2012 now controls 90 per cent. of the land at Stratford and has done deals with the majority of landowners. As my hon. Friend the Member for Twickenham says, we still have the compulsory purchase order inquiry to come, but good progress has been made. Work has already begun on the Olympic site with the burying of what were previously overhead power cables. Recently, Stratford International station has been completed, which will open next year once the final stage of the channel tunnel rail link is completed.

During the past 48 hours, we have seen the success of the national lottery, not just in meeting the £14 million target for this year’s Olympic lottery games but in exceeding it by more than £2 million. We know that work is under way to consider all aspects of cost. My hon. Friend rightly referred to the KPMG study, and we look forward to that report. I hope that it will touch on the issue that he raised of inflation costs. A figure of roughly 3 per cent. has been assumed, but many people are saying that inflation costs in the construction industry are running somewhere in the order of 7 per cent.

Understandably, there will be concerns. My hon. Friend said that we should be “ruthlessly realistic” about the cost of the games, and that notion should apply at all stages. The fullest information must be made available, so that as many people as possible can be engaged in the necessary scrutiny. We do not wish to be left in the same situation as Athens—some are saying that it will still have to find about €9 billion or €10 billion.

We know that there are huge challenges ahead, and my hon. Friend mentioned many of them. I do not
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wish to repeat things, but I shall discuss additional concerns. A huge challenge is being given to the national lottery in respect of the money that it is to secure both from its traditional funding sources, where money will be taken away, and from the money raised through the specific Olympic promotions. Despite the recent successes—overall lottery ticket sales have increased for three years on the trot, which is welcome because of the money that is going to good causes—there are some clouds on the horizon.

One such cloud relates to lottery-style games, which are increasingly being run by gambling operators and have no mandate to raise money for good causes, yet offer lottery-style arrangements. They confuse consumers, are at odds with the duty of the Gambling Commission to ensure that gambling is conducted in a fair and open manner, and are increasingly diverting money away from the national lottery and the good causes that it supports, including the Olympics.

I also have a concern about possible impacts on the national lottery of the newly-established online lottery, monday. Recently, on the Floor of the House, I asked the Minister whether it had been set up as a result of a loophole being found in the existing legislation. I was told that that was certainly not the case and that it was all perfectly above board. It seems odd that monday is claiming that it is offering a prize of £1 million, yet the operators are set up as a so-called society lottery, for which the legislation requires that the maximum prize be £200,000. The only way in which it can offer£1 million is by linking five individual lotteries, but I understand that such linking is also not permitted.

We have concerns about how that particular online lottery is operating. It is setting itself up very deliberately—its advertisements are clear—in competition with the national lottery. I recall the Minister assuring me during debate on the Gambling Bill that everything possible would be done to protect the national lottery. I am in favour of society lotteries. I moved amendments to propose that such lotteries that provide funding for hospices, for example, would be protected. The monday operators have found a loophole in the legislation, which I hope will be examined quickly.

My hon. Friend and I share the growing concerns of some Londoners about the contribution that they will have to make. My party has argued, and the Conservative party has supported us, that there should be a cap on the total contribution that London council tax payers should make to the running of the games. Londoners will benefit more than those in other parts of the country, but there is a limit to what they should realistically be expected to pay. They should not be put into a situation where they have no certainty about how long they will have to make the contribution for. I must point out something that is rarely said in a debate about London council tax contributions. The total contribution is estimated at £625 million, but the Mayor of London has always made it clear that that represents £550 million going towards the Olympics and Paralympics, and the further £75 million has been included for potential cost overruns.

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