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16 May 2006 : Column 230WH—continued
I am also concerned that Londoners may not get the full benefit that they seek. One concern is whether we are doing sufficient to ensure that people in London have the necessary skills to acquire the jobs that will be
created. A recent Local Government Association report expressed concern that not enough was being done about that.
Another area of concern relates to tourism, for which the Minister also has responsibility.
The Minister for Sport (Mr. Richard Caborn): No longer.
Mr. Foster: I apologise to the Minister. He has been stripped of that responsibility, but he had it until recently, and I know that he is an expert in these matters, so he will have no difficulty in responding to my point. I say to him in the gentlest possible way that I for one am confused by the Government’s policy on tourism. Before we had won the games, the Secretary of State proudly boasted that she would get behind tourism and that, consequently, by 2010 we would achieve income of £100 billion from tourism. That was her tourism target. The Minister looks puzzled. It was published on 19 July 2004.
We won the Olympic games, there was a pause and then the Prime Minister decided to get in on the act. He produced the Prime Minister’s Olympic tourism charter. When we asked for a copy of it, nobody could give us one. Eventually we got one—it was printed on one side of an A4 paper—but nobody has heard any further details. The interesting thing was that it set a target of £100 billion for income from tourism by 2012. Having won the Olympics, the Government appear to have downgraded their aspirations for income from tourism.
Finally, on the nations and regions, I have spoken to the Minister about the commitments that we all made to our electorates that all parts of the country would benefit from the Olympics and Paralympics coming to London. It is critical to ensure that that is the case and that at the earliest possible opportunity people in every part of the country who were so supportive of the bid for the games are given information on how they will benefit not just from one-off contracts, although those are important, but from lasting legacies in each nation and region.
I note with some concern that the chief executive of the British Olympic Association is urging the Minister, as did my hon. Friend in his excellent contribution, to publish at an early stage a set of guidelines on how plans for—rightly—protecting the Olympic symbols and names will be put in place in a way that enables firms, businesses, organisations, charities and so on in each of the nations and regions to feel that they are able to contribute.
My hon. Friend asked a series of excellent and important questions. We look forward to the Minister’s answers, but I end where I began, by saying that, notwithstanding the fact that we are critical friends of the Olympics and Paralympics, we believe that significant progress has been made. The games are a huge opportunity for each part of this country as well as for London, but a great deal of work must be done to ensure that we grasp that opportunity in such a way that our preparations are not only on time but on budget.
11.48 am
Hugh Robertson (Faversham and Mid-Kent) (Con): I, too, congratulate the hon. Member for Twickenham (Dr. Cable) on securing this debate on the financing of the Olympics. It is of course only six weeks since the London Olympic Games and Paralympic GamesAct 2006 passed through the House, but three key things have changed since then. The first is that the Olympic Delivery Authority has been formed as a result of the Act. It is focusing its attention on land acquisition, site assembly and, particularly, the businesses. Secondly, the Olympic precept has hit the doorsteps—people are now paying for the games.
Thirdly, the local elections have taken place. We had the same feedback in west London that the hon. Gentleman described. There is a clear feeling that people in the west of the capital are not benefiting from the process at all, and that came back time and again during the local election campaign. We have already spoken to the Minister and voiced our dissatisfaction about the party political broadcast. I suspect that in some subconscious way people’s feelings were stirred up. There are many people in the west of London who believe that the games are very east London-centric and that they are not benefiting them. The first of five questions that I want to ask the Minister is about the plans of the Government and the Mayor to ensure that west London benefits from the Olympics in the same way that east London evidently will. I want to concentrate firmly on the financing of the Olympics.
As the hon. Member for Twickenham said, the issue is a jungle, but it is best explained by breaking the Olympics down into four departments. The first is the area for which central Government are responsible. They have responsibility for the overall strategic direction, the legislation and the funding through the Exchequer and lottery. As the hon. Gentleman said, tied up in that are generic infrastructure improvements—exact cost unknown. The second department—these divisions correspond exactly to the four seats on the Olympic board—is the responsibility of the Mayor and the ODA. They are responsible for infrastructure; the estimate for that is £2.375 billion.
The third department is that managed by LOCOG, which is effectively the event manager. It raises its income through sponsorship and merchandising. When we considered the Bill, we were told that LOCOG had to raise £1.5 billion, as the hon. Gentleman said. In a written answer to me this week, the Minister for Sport suggested that that sum was too big. Finally, there is the BOA, which is responsible for training the athletes.
The best analogy for that structure that I have heard is that of a theatre: the Government decide that having a theatre would be a good thing; the ODA and the Mayor build the theatre; LOCOG is the events manager who lays on the show; and the BOA ensures that the actors turn up ready to go, having learned their lines. That is the rough division.
Let us consider those four areas one by one, starting with the Government. We debated the Government’s part extensively during proceedings on the London Olympic Games and Paralympic Games Act, and there are two points worth emphasising. First, there is still a
crucial lack of protection for Londoners from any cost overruns that may occur. We suggested to the Minister—we proposed an amendment, supported by the Liberal Democrats, to this effect—that there be a cap on Londoners’ contributions. In the absence of that cap, the feelings that the hon. Member for Twickenham mentioned will continue. There is a real worry—particularly in west London, where the hon. Gentleman’s constituency is—that costs will overrun and that Londoners will be left to pick up the tab. Until the Government address that, those concerns will continue.
The second point to emphasise is that the Minister could have been spared the battle with the Treasury over funding that characterised the autumn and the spring and that caused so much unpleasantness if the Government had adopted either or both of the policies that we advocated at the time. They were: to return the tax on the Olympic lottery game as a one-off—that would have provided £320 million, which would have comfortably paid for all the elite athlete provision—and to put back the four original pillars of the lottery. The other day, I was interested to note figures from the Library showing that since the lottery was reformed in 1998, £3.2 billion has gone away from those four original pillars, although some of it has come back. That is quite a headline figure. If sport had received a quarter of that—£800 million—it would be in a dramatically different place.
The second of the four areas is the part played by the Mayor and the ODA. That is at the heart of this debate. London council tax payers are expected to contribute £625 million. A KPMG review is in progress, and that will look into where costs have increased and where value can be added to the site, and so where the bill can be adjusted. However, there are five key things that give us worries about cost overruns. The first is the evidence. I am afraid that the evidence is simply that every single Olympic games up to now have substantially overrun their budget. Local taxpayers in Montreal are just now paying off the debts incurred in 1976. Sydney’s budget was £1 billion, but the games eventually came in at £2.8 billion; the hon. Member for South-West Norfolk (Mr. Fraser) alluded to that. The Athens budget of £1 billion went up to £5 billion. So the evidence is not at all encouraging; indeed, the one thing of which we can be sure—apart from death and taxation, of course—is that there will be an overrun on the Olympics.
The second worry is that security costs are likely to soar. The budget was decided on before 7 July last year. No Member of this House can believe that the international security situation will improve dramatically in the near future. I think that we would agree that, if anything, it is likely to get worse. It was the rising cost of security that caused Athens to run over budget so dramatically. I believe that the security budget is £220 million. The question is whether the Minister still holds to that figure.
Mr. Don Foster: I urge caution on the hon. Gentleman. Was not a new Tetra security system established as a result of the increased cost of security in Athens, which has provided a lasting legacy? That could have been borne outside the Olympic costs. We have to be careful about where the different costs lie.
Hugh Robertson: I entirely take the point. However, the central point is that the original budget of£220 million is unlikely to sustain the post 7 July environment.
Thirdly, I have always felt that there is a contradiction at the heart of the process. The Mayor has always been commendably honest about his reasons for supporting the Olympics: he wants to regenerate the east end of London; it is his lifetime’s passion. However, that is not the Government’s key priority; they want to deliver the 2012 Olympics on time and on budget, as the best games ever. The temptation for the Mayor to try to get a little more for his key lifetime’s project of regenerating the east end will be irresistible. That will necessarily add to the pressures on the budget.
Fourthly, the cost of acquiring land in the lower Lea valley—and therefore of site assembly—is bound to have risen dramatically since we secured the Olympics. That is an inevitable product of the market.
Finally, to pick up on the point made so clearly by the hon. Member for Twickenham, I looked up the inflation rate of building costs, and the current estimate is that it stands at 7 per cent. However, the bid document shows it to be 3 per cent. My second question for the Minister is therefore this: is the funding package of £2.375 billion still accurate, and in particular how have the estimates for security at£220 million and for construction sector inflation at3 per cent. altered since we debated the Bill?
The third area of concern is to do with LOCOG. It has rightly received wide praise for the progress it has made since the bid was won—particularly, as the hon. Member for Bath (Mr. Foster) said, during the IOC visit. When the Bill was going through Parliament, we were told that LOCOG would have an operating budget of £1.46 billion. That was made up of£550 million from the IOC; £310 million from ticket sales in its role as an event manager; £100 million from revenue, licensing, merchandising and the like; and £500 million from sponsorship. However, in answer a week ago to a written question that I tabled, the Minister told me that LOCOG’s budget is now£2 billion. My third question to the Minister is why has the budget risen from £1.46 billion to £2 billion, and when was that increase announced? In connection with that, does the Minister still stand by LOCOG’s original expectation that it would produce a profit in excess of £100 million? Clearly having to raise so much more must throw that profit forecast into doubt.
My fourth area of concern is the BOA—the fourth pillar of the Olympic board. It is in the market looking for sponsorship. We have raised the issue with the Minister before. Private sponsorship is now an extraordinarily congested field—a point made by the hon. Member for Twickenham. As far as I could see in my brief survey, LOCOG is in for either £1.5 billion or £2 billion; UK Sport is looking for £100 million, as announced by the Chancellor in the Budget; the Youth Sport Trust, albeit a charitable organisation that has already secured sponsorship for the UK school games, is also in the market looking for money; and the National Sports Foundation, which the Minister launched in April, is looking for private sponsors. That strikes me as an incredibly congested field. A number of sports bodies are likely to be competing with each
other and possibly against each other, so my fourth question for the Minister is how does the DCMS, which is the only body that can regulate or act as umpire, plan to regulate the market, and what are its priorities?
London 2012 has two central sporting objectives. The first is to put more British athletes on the rostrum, and the second is to increase the number of people who take up sport. The first has been dealt with as a result of the Chancellor’s announcement in the Budget, but the second very firmly has not. Many people are making encouraging noises about how we want to get more people, particularly young people, involved in and taking up sport for all its health and educational benefits. So far, however, no pot of money will pay for those improvements, and they will not happen by magic. The Greeks tell me that fewer of them participate in sports now, after the Olympics, than before. The Australians, whom I visited last month, told me that there was no discernable take-up in sport as a result of the 2000 Olympic games. The fifth question is how can the improvement in mass participation be financed? Connected to that, does the Minister believe that through Sport England, the structure is capable of delivering the improvement?
In conclusion, I congratulate the hon. Member for Twickenham on securing this timely and useful debate. I thank all those who have contributed, including my hon. Friend the Member for South-West Norfolk, and of course the hon. Member for Bath. I would like the Minister in his winding-up speech to address five key questions. First, what plans does DCMS have to ensure that the whole and not merely the east of London benefits from the games? Secondly, is the funding package of £2.375 billion still accurate, and what are the estimates for security and construction sector inflation? Thirdly, why has LOCOG’s budget risen from £1.5 billion to £2 billion, when was it announced, and does it still hold to its target of producing more than £100 million in profit? Fourthly, how do the Government plan to ensure that the sponsorship market is properly regulated? Finally, how are the improvements in the mass participation agenda to be structured and delivered?
12.2 pm
The Minister for Sport (Mr. Richard Caborn): I shall try to answer the many questions that have been asked, but first I congratulate the hon. Member for Twickenham (Dr. Cable) on securing the debate. It is always good to update the House, and this is an opportune time to do so. I shall try to answer the questions as I go through my response to the hon. Gentleman.
As has been reflected again this morning, 6 July 2005 was a momentous day. There was great rejoicing and a great feeling of pride when Jacques Rogge said London. Several of us present today were at the announcement, and we also saw the fantastic celebrations in London and the length and breadth of the United Kingdom. We must now manage those expectations into reality, and the hon. Gentleman brought us down to earth to start analysing how we are doing so. I hope that what I shall say will provide some
assurances that we are well on the way with the management of the project. It will be managed probably as no other major project in which Government have been involved has been.
We are determined that the London Olympic and Paralympic games will be a memorable and inspirational event that leaves a lasting sporting, social and economic legacy, and that not only London but the nations and regions throughout the United Kingdom benefit and gain from it. It has rightly been said that the challenge facing us is formidable. As the hon. Member for Bath (Mr. Foster) said, the biggest construction project in Europe is terminal 5, which is running at £5 billion, but we are embarking on a project twice the size in half the time. By any standards, it is a challenge, but the prize is a legacy that will last for generations.
The regeneration of the Lea valley—one of the most deprived parts of the UK— will make it into a stage fit for the greatest sporting and cultural show on earth. Although we rightly focus on the Olympic games, we must put the event in context. It is the gateway to the Gateway: the gateway to the Thames Gateway, which is a 20-year project and, again, probably one of the largest investments in transport, social and housing infrastructure anywhere in Europe. What we are discussing will bring about between £13 billion to£15 billion of investment, with a lasting legacy of not just a stadium or other sports facilities but housing, as we have heard, improved transport infrastructure, schools and health care. That is an integrated regeneration package, of which the Olympics are part.
The games will also bequeath a powerful sporting legacy to the whole UK, as I have said. Those 60 days in 2012 will give many young people throughout the UK the unique opportunity to see elite sportsmen and women competing at close hand. I have talked to people who saw the 1948 Olympics, and the experience is vivid in the mind of many of them. I hope that tens of thousands of young people will for years to come be affected in that way.
We have heard many times about the inspiration of competing in one’s own country. We are determined to capitalise on that, creating a new generation of elite sportsmen and women in the UK. London will inherit major new sports facilities, including an aquatics centre, a velo park, a hockey arena, an indoor sports arena and the main stadium, but the UK will also benefit from top-class sports facilities. That is how what we are doing differs from Australia’s approach and that of many other countries that have won the right to stage the Olympics in the past. Through the nations and regions group we shall invest—and are already investing—in sport and recreation facilities. An impetus is added in the Olympic context.
The work will also bring considerable lasting benefit to business and the economy throughout the UK. The games are expected to create 7,000 jobs in the construction industry alone. In addition, a further 12,000 jobs could be created as a result of the legacy development of the Olympic park area. A cultural Olympiad is planned to coincide with the games and a wide range of cultural events will be staged throughout London and the UK. Jobs are likely to be created in the cultural sector as a result, and stage managers, lighting
technicians, producers and artists will co-ordinate a massive programme of events.
The games will also offer a considerable boost to the tourism industry in the UK, by putting this country in the biggest shop window in the world. The games are seen by billions of people, and visitors will naturally want to see what else the UK has to offer. It is essential to consider tourism—a matter that the hon. Member for Twickenham raised. It has always been difficult to get visitors to one of the most famous capitals in the world, if not the most famous, to go to other parts of the United Kingdom. The games give us an opportunity to do that. Only yesterday I was discussing with representatives of visitBritain how we could capitalise on the Olympics and other sports events and use London as the gateway to the rest of the UK. We are now receiving a level of co-operation from Visit London that we have not had before.
I am fairly confident that we shall be able to do what was done in Sydney where there were an extra1.6 million visitors between 1997 and 2001, with a spending power of 6 billion Australian dollars between them. We should expect to do equally well or, I should hope, better, in 2012. Tourism industry leaders forecast that hosting the 2012 games should be worth at least £2 billion to our visitor economy. Those benefits will fall particularly on London. However, we are committed to ensuring that the 2012 Olympics will maximise the potential for job creation, training and business growth throughout the UK.
Early progress has been made, as both Government and Opposition Members have I think acknowledged, as, recognising the need for fast progress, we either passed or at least framed much of the relevant legislation ahead of 6 July, to get a flying start if London proved successful. By 31 March this year, more than £40 million had been spent on essential preparatory works. To date the Chancellor has announced an additional investment of £200 million in our most talented athletes between now and 2012. The London Olympic Games and Paralympic Games Act 2006 has received Royal Assent, and I want to acknowledge the support that we received from all parties in the House, and indeed in the other place.
The Olympic Delivery Authority has been established and its board appointed. Its board is one of the most significant to have been created while I have been the Minister, and I was very pleased at the number of people who came forward.
Let me digress slightly, however, on the issue of the Olympic board. The IOC delegation came here to look at the progress that is being made, and everybody will acknowledge that its report was very good, but I get very concerned when I see articles that are as ill-informed as the one in yesterday’s Evening Standard. It was headed “Get a grip now on the Olympics,Ms Jowell” and was written by Rowan Moore, who I understand—I have never met the guy—is the paper’s architectural critic. The IOC delegation made it clear that it gets all the cuttings from the British press, and its members are incredibly well informed—they know what goes on in Select Committee and in the press.
Let me quote just one bit of Rowan Moore’s article to show how ill informed he is. He writes:
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