Examination of Witnesses (Questions 104-119)
RT HON
TESSA JOWELL
MP, MS NICKY
ROCHE AND
MR MATTHEW
SYMES
25 OCTOBER 2005
Q104 Chairman: Good morning, Secretary
of State. Can I particularly welcome you to the Committee this
morning and the colleagues that you have brought with you. We
are intending to kill two birds with one stone in this one session,
in that the first half we are going to devote to our ongoing inquiry
into preparations for 2012 and the Olympics and then, once we
have completed that part, we will move on to carry out the scrutiny
of the departmental report, which is something which the House
attaches considerable importance to. Can I, obviously, welcome
you and ask you (as well as asking you perhaps to just introduce
the officials you have brought with you): in turning to the Olympics,
we have now had, I understand, three meetings of the Olympics
Board, which you Chair. Could you give us an update on the progress
that has already been achieved and tell us something about what
has happened as a result of those meetings, and indeed whether
or not the minutes are going to be published?
Tessa Jowell: Chairman, thank
you very much indeed. I am delighted to be in here in front of
the new Select Committee today. Perhaps I could just introduce
my two fellow witnesses for this section (we will have a shift
change when we move on to the departmental report). On my right
is Matthew Symes, who has been seconded to my department from
the Office for Government Commerce, and he is our Olympic Director.
On my left is Nicola Roche, who is Director of Sport but also
carrying a very heavy responsibility for Olympic development.
Perhaps I can also say—and it part-answers your first question
about the publication of the minutes of the Olympic Board—that
it would be my intention to ensure that the Select Committee is
kept as fully appraised as possible of the developing negotiations
and the decisions as they develop in relation to the staging of
the Games. You will understand, and we had the opportunity to
have a brief word about this last night, that a number of these
issues pass through a period of extreme commercial sensitivity
and I would not want that to act as a barrier to the Select Committee
being kept informed. So if you were happy for me to do this, we
would seek to keep you updated at the appropriate time with negotiations,
although those may not be, because of their commercial sensitivity,
matters for public consumption. In the spirit of openness I hope
certainly that we can share the decisions of the Olympic Board,
the presumption being that the proceedings of the Board should
be made available more widely, unless there is a very clear commercial
or at least legal reason for not doing so.
Q105 Chairman: I think that is very
helpful. Obviously, if there are matters which you would prefer
not to be made public at this time we would understand that. We
would obviously appreciate it if you can tell us, if necessary
in private, as much as you feel that you can.
Tessa Jowell: Of course.
Q106 Chairman: In terms of how the
structure is going to operate, you are the Chairman of this overarching
board. How involved are you going to get in the activities of
the two bodies that you are overseeing, the LOCOG and the ODA?
Are you intending to monitor closely the progress or is it, to
some extent, just a body to oversee in a general way and to leave
them to get on with it?
Tessa Jowell: I jointly chair
the Olympic Board, as per the terms of the Joint Venture Agreement,
signed at the time that we submitted the candidate file to the
IOC, with the Mayor of London. I, however, alone have the power
to direct the Olympic Delivery Authority, which will be an NDPB,
therefore at arm's length from my department, which is in the
process of being recruited. I think there is a difference in terms
of levels of engagement now and, probably, over the next six to
nine months as compared to the levels of day-to-day engagement
once the two bodies, the Olympic Delivery Authority and the London
Organising Committee, are fully established and up and running.
So my oversight is obviously to safeguard the Government's interest,
the Government as the ultimate guarantor of the costs of the Games,
but, also, to ensure that the Government plays its full part in
ensuring that we have the most successful Games ever. To deal
specifically with your question: how much will I be involved in
the way in which the London Organising Committee runs, the London
Organising Committee will be an independent body but represented
on the Olympic Board. I will have a nominee, Richard Caborn, Sports
Minister, on the London Organising Committee; in relation to the
Olympic Delivery Authority I appoint the Olympic Delivery Authority.
We are hoping that the Chair and Chief Executive will both be
in post by the end of the year, at which point we can then begin
the recruitment of members of the Board. I would not see it as
my job to interfere or meddle with the work of the Olympic Delivery
Authority. I hope that we will appoint people of the necessary
calibre capable of delivering what will be one of the biggest
construction projects this country has ever seen. We will appoint
experts with a clear track record in delivering projects on that
kind of scale. I hope that that gives you a sense of the way in
which the relationships will be conducted. My oversight will,
obviously, be through my co-chairmanship of the Olympic Board,
which meets on a monthly basis and is very heavily engaged with
the development of these two bodies. Also, however, in order that
we remain ahead or at least on schedule in terms of procurement
and development, we are at the moment engaged in decisions and
tenders are being drawn up for major parts of the contract because
we simply cannot wait until the ODA is fully established.
Q107 Chairman: Inside government,
obviously a huge number of departments are going to have to play
a role in this—the ODPM, the Home Office, the Department
for Transport etc. What is the structure in government? Is there
a Cabinet Committee? If so, how often does it meet? Who chairs
it?
Tessa Jowell: At official level
there is the Olympic Steering Group, which brings together the
relevant representatives at official level and from across government.
Obviously, the departments that we are working particularly closely
with are ODPM (and we have had enormous support from the Deputy
Prime Minister), the Department for Transport and, of course,
the Treasury. Whitehall is fully represented on the steering group.
We are also concerned, beyond Whitehall itself, to ensure that
the devolved administrations are also involved. The Nations and
Regions Group, which is to be reconstituted following the successful
bid, will very much lead on that, but I can perhaps say a little
bit more about the efforts that we are taking to ensure that the
whole country benefits from the Olympics. The Cabinet Committee,
MISC 25, brings together all the relevant ministers in order that
they are also kept fully appraised and in a position to take decisions
where there is an element of risk which has to be judged, and
the Office for Government Commerce is played fully in, both to
the operation of MISC 25 and, also, the day-to-day work of my
department in setting this up.
Q108 Chairman: Who chairs MISC 25?
Tessa Jowell: The Foreign Secretary—and
very well he does it too!
Chairman: No doubt.
Q109 Mr Evans: Secretary of State,
for the Games to be a great success it is going to need some top
sponsors and advertisers coming in. Have you taken a view or your
department taken a view as to what sort of advertisers and sponsors
you would like and, quite the reverse, the sort of sponsors that
you may not like to take a dominant part in the Games?
Tessa Jowell: I have commissioned
some work on sponsorship precisely to ensure that we maximise
the benefit of the enthusiasm that there is from the business
community right across the country to be involved in the Games.
The sponsorship rules are quite tightly drawn by the IOC, and
I know that in your session with Keith Mills and Seb Coe you had
the opportunity for some discussion about that. Our first and
overriding objective is to ensure that the Local Organising Committee
has the clear run that is necessary on sponsorship in order that
it attracts the level of sponsorship income that it needs to meet
the budget.
Q110 Mr Evans: It is going to be
hands-off, really, from the Department; it is going to be up to
the Local Organising Committee to get the biggest buck it possibly
can from advertisers and sponsors?
Tessa Jowell: The Local Organising
Committee will certainly want to get the biggest buck that it
can, but the Olympic Board will also take an interest in the developing
sponsorship strategy because while the LOCOG focus will be principally
on securing sponsorship for the 17 days of the Games there is
also a broader interest in attracting sponsors to support activity
related to the Games—participation by young people, improving
the elite performance of our best athletes, ensuring that the
opportunities for the Olympics are shared round the country. So
there is an interest in sponsorship which extends beyond just
the role of the LOCOG in raising sponsorship for the Games. If
you were to ask me what is the first priority for sponsorship,
the first priority is to make sure that the LOCOG raises what
is necessary. There is then a second objective, which is to maximise
the benefits of sponsorship for a wider range of activities. I
announced, for instance, at the end of September, that we were
gong to establish a 2012 trust for young athletes. We are also
looking for partnership with British Airways and other airlines
to provide reduced price travel for young athletes travelling
to other countries—all the time addressing the obstacles
to our young athletes being the best that they can. This is very
much a developing story, and I would be delighted to keep the
Committee informed of our proposals for sponsorship as they become
more developed.
Q111 Mr Evans: I am just wondering
if you notice any, perhaps, possible contradictions between government
policy on things like obesity and getting young people fit and
having a balanced diet and, on the other hand, having to raise
substantial sums of money. Clearly the big multinational companies
coming in with the big money may be ones like McDonalds, Burger
King, alcohol groups—Interbrew—Coca-Cola, Pepsi Cola—which,
as you know, have taken a bit of a battering of late from the
media generally about their links to obesity. Are you going to
even try and balance that or are you going to say, "Get on
with it. People are adults, they see the advertising but that
does not necessarily turn them into obese people"?
Tessa Jowell: We are going to
say "Get on with it. You raise the money from the sponsorship
that the London Organising Committee need." I think Seb Coe,
when he was in front of you, made it clear there would be no question
of raising tobacco sponsorship. Beyond that, if we started to
make judgments about which firms we would and would not accept
sponsorship from, frankly, the face of sport in this country would
be altered beyond recognition. There is a second limb of activity,
which is getting these big companies, who—you are absolutely
right—have tremendous corporate power behind what the Government
and, I think more generally, parents in this country want to see,
which is their children developing good eating habits, healthy
eating habits, to be, if they put their minds and their promotional
millions to it, great allies with us in that.
Q112 Mr Sanders: Developing that
point, there is a head of steam in Parliament for some sort of
legislation restricting the advertising of certain foods to children.
Who has supremacy in this? Is it the IOC? If they were to take
on board the sponsorship from, say, one of those companies that,
say, our Parliament has said should not be able to advertise to
children—or is it our Government's line—is there a
possibility of some conflict?
Tessa Jowell: I think it is fairly
unlikely that there would be conflict. If I can deal specifically
with the way in which we are pursuing this policy domestically,
the Public Health White Paper published before the last election
set out the Government's position on food advertising to children,
making it clear that it was for the regulator, Ofcom, to come
forward with proposals for a new code that will govern the behaviour
of advertisers. Obviously, if a code applies in this country we
would expect that code to apply whatever the circumstances. The
Committee will be familiar with the argument that the Government
has followed through on this, Ofcom on the Government's behalf,
examining very carefully the case for an outright ban, and that
case being tested against the evidence and the extent of harm
caused by advertising in the generation of obesity among young
people. The conclusion of the Ofcom and the Food Standards Agency
research was that food advertising had an impact but it was an
impact that it was impossible to quantify. We are very much, and
we have a PSA target which we share with DfES and with Health
in relation to childhood obesity, investing our effort in increasing
the amount of exercise young people take and improving the quality
of their diet. Advertising, obviously, has a part to play but
we will not make progress on obesity, which is of course the objective
behind all these policies, if we simply relied on a restriction
on television advertising for food.
Q113 Mr Sanders: I accept that point
but were a Parliament, not necessarily the present one or future
Parliaments, to pass restrictive rules on advertising that would
impact on the sponsorship and advertising deals that the IOC has
agreed, who would actually resolve that dispute?
Tessa Jowell: You are giving me
a hypothetical question.
Q114 Mr Sanders: I know.
Tessa Jowell: It is a question
that in all honesty I do not expect to arise, but it would be
settled through the decision-making process that we have established
for the Olympics; it is a decision that would be taken by the
Olympic Board, but obviously there would have to be discussion
with the IOC and so forth.
Q115 Mr Sanders: Surely our Parliament
is supreme.
Tessa Jowell: I was going to make
the point that the laws of our country are supreme and so we would
not have the Olympic Games in a position where they were breaking
the laws of our country. The IOC is familiar with this kind of
territory and there are, at the moment, negotiations under way
with countries in the context of the Winter Olympics who have
different rules and different penalties in relation to athletes
taking drugs. This would have to be negotiated if the hypothetical
circumstances that you outline were to arise, but the principle
would be that the law of our country would be supreme.
Q116 Janet Anderson: Secretary of
State, as the ODA will be entering into substantial contracts,
I am sure you will be aware that many people have sought assurances
that local and UK companies will be involved. I understand what
you said earlier about commercial sensitivity and also not meddling
in the work of the ODA but is there any way within the confines
of procurement laws that you can ensure that local and UK firms
will benefit?
Tessa Jowell: I am going to ask
Matthew Symes to answer this, but I would just say initially that
it is our intention that companies across the UK should benefit.
The latest estimate that I saw was that there would be something
like 550 contracts that would be let in the course of the Olympics.
They do, of course, have to be let in accordance with European
procurement rules and they are almost all likely to be of a size
that would require that. As part of our intention to maximise
the extent to which the benefits are spread throughout the country
we will be in discussion with Regional Development Agencies in
order to encourage them all to develop Olympic business plans
so that they can build on what I think the North West Regional
Development Agency felt that it was quite successful in doing,
but might have done even more, in maximising the benefits of tourism,
inward investment and so forth. So it is our aim to make sure
that the whole country benefits, it is our aim to ensure that
the Olympic area—which is, after all, one of the most deprived
parts of the country and the most deprived part of London—benefits
and that the Games leave a legacy which is not just a legacy in
terms of infrastructure but also a legacy in terms of higher levels
of employment in that part of London and a more highly skilled
population than is the case at the moment. Matthew, can I ask
you to set out specifically the rules that we will follow in relation
to procurement?
Mr Symes: Thank you, Minister.
This is of interest, obviously, to the policies that are being
set by the ODA, and one of the criteria within the award contract
will be an assessment of the local employment or the national
employment. That is one of the things we are looking at when contracts
come forward. This has happened already in the first award. So
that thinking is very much in the culture now of the interim teams
and we are going to make sure it is in the culture of the ODA
when that is brought to life. I also know, in parallel, that the
Mayor is extremely interested in this, obviously, as there are
four boroughs directly affected, and he is taking steps to make
it easy for small businesses to engage with these bigger processes
to make sure they get involved at the right time and have a mechanism
to come forward. Those are the sort of practical steps.
Q117 Chairman: Secretary of State,
can I just move on to the question of the financing? You have
obviously stressed that you are confident that the budget figures
have been reached after a great deal of analysis and the danger
of a cost overrun is small. However, when we looked at the experience
of other host cities there have obviously been significant cost
overruns, and there is provision made as to what should happen
in that event. There is a feeling, I think, that whilst London
is rightly going to have to contribute a significant amount of
the cost, it is perhaps unfair that the liability of London should
be open-ended; the Olympics should benefit a large amount of the
country, hopefully right across the UK, and yet London appears
to be expected to pick up most of the bill. Is that something
which you recognise, and do you not think that in the event of
a cost overrun, perhaps, the Government should take responsibility
rather than expecting London council taxpayers to do so?
Tessa Jowell: The first thing,
I think, to be clear about is that in line with the IOC's requirements
the Government is the guarantor and, therefore, is the lender
of last resort and underwrites all the cost. However, because
of the decisions that have been taken in Government and extensively
debated, I think, it is our intention that the public sector contribution
should be met through three sources: from the Lottery, from the
London council taxpayer and from the LDA. If I can just help the
Committee, I think it is useful to see Olympic expenditure in
three elements, and this clarifies the nature of what are often
described as cost overruns. There are the costs of staging the
Games and, by and large, the recent experience of the Olympics
has shown that the Games either break even or they make a small
profit and that profit is then ploughed back into sport in the
host country. There is then the second tranche of expenditure
which is the money spent on building the infrastructure, the £2.375
billion, and then there is a third category of expenditure, which
I would describe as essential but non-Olympic infrastructure.
Where expenditure is often described as being a cost overrun is
in that third category. Sydney, for instance, regenerated a major
part of the city, upgraded its public transport infrastructure,
which created a lasting non-Olympic benefit but actually hosting
the Olympic Games was a catalyst—similarly Athens, similarly
Beijing. So I think it helps to look at expenditure in those three
categories. The category of particular relevance to your question
is the central one, which is the £2.375 billion, which is
the cost to which the London council taxpayer contributes. I can
confirm again the rigour that we are applying to the costs in
order that they are contained within that overall expenditure
limit. Because of that, we are able to say that we expect the
consequence, as the Mayor has said on a number of occasions, or
the effect for the London council taxpayer for a Band D home to
be about £20 a year over a 10-year period. There is in the
Memorandum of Understanding between the Government and the Mayor
an agreement (which is as yet not defined because those circumstances
have not arisen) whereby what should happen if the £2.375
billion figure were to be exceeded, and, as I say, at every stage
we will be seeking to value-engineer any increase in costs down.
That is our overriding objective. However, we have provision for
a formula of cost-sharing between the Mayor and the Lottery should
those circumstances arise. So what I cannot say is that we are
guaranteeing that there will be a cap, but what I can say is that
there is daily vigilance on monitoring the costs and taking all
reasonable steps available to contain those costs within the figure
that we submitted in the candidate file.
Q118 Chairman: But you do not accept
that there should be any limit placed on the potential liability?
There is no point at which you would say the Government will step
in to pick up any additional cost?
Tessa Jowell: No, I do not. That
is not the decision that the Government has taken; the decision
that the Government has taken is to underwrite the cost but then
to raise the costs from the council tax and from the Lottery,
together, obviously, also, with the costs which are being met
by the LDA, and the money that the LDA spends is Exchequer money.
Q119 Chairman: There is a reference
in the Memorandum of Understanding to a review taking place in
the summer of 2005. Has that happened or is it an ongoing process?
Tessa Jowell: This will be an
ongoing process.
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