Select Committee on Culture, Media and Sport Minutes of Evidence

Examination of Witnesses (Questions 120-139)


25 OCTOBER 2005

  Q120  Mr Yeo: Accepting your three categories of expenditure, it still is not a huge comfort to the poor old London council tax payer, if they suddenly find that the £20 a year on a Band D house turns out to be £40 or £50 a year in the later stages, that they have got a bit of extra infrastructure somewhere in Greater London. It is not quite the same as the Mayor standing for election on a particular broad spending to improve the road somewhere in East London, and we recognise that has a cost to it; this would be a sort of accidental consequence from the point of view of the taxpayer. I think somebody ought to be a little bit concerned by your answer to the Chairman that there is no level of overrun at which the Government would feel it necessary to relieve the burden on London taxpayers.

  Tessa Jowell: It is in everybody's interest to ensure that the Games come in within the budget which we have calculated, and it is also important that the bases on which those calculations and assumptions have been made are transparent. It is difficult to provide comfort to every hypothetical scenario that may arise, and we are talking about circumstances that would apply seven or eight years from now. Of course, the formula which is in the Memorandum of Understanding was drafted in a way that reflected the balance of benefit between an increased draw on the Lottery and, should the need arise, an increased draw from the London council taxpayer, but I have to say to you that none of the planning, none of the work which is under way in staging the Games is predicated on a resort to that failsafe. You would be quite right to ask me, had we not put that in the Memorandum of Understanding, "What is going to happen?" and I would then have to tell you that we were going to go and work it out. We did work it out, but on the basis that we are keeping as tight a lock as we can on £2.375 billion.

  Q121  Mr Yeo: I am sure you are and, equally, I am sure everyone would expect you to say that, and I do not suppose any of those cities which did experience a severe overrun started out as part of a plan to overrun their cost estimates, but I have no doubt we will return to that sometime between now and 2012. Can I move on to the way in which the money is being drawn from the Lottery? Some of the Lottery funding that has been allocated will be a diversion from existing Lottery sports distributors. There will be other sports which are currently receiving money which will diminish somewhat as a result of this. Do you know which particular areas of sports investment are going to bear that cost?

  Ms Roche: At the moment we are not looking at any particular area. If the situation arises we will clearly work very hard with both Sport England and UK Sport on what the implications are for them, but our overall aim is, as a result of the Olympic Lottery gold scratch cards, for example, that we will reinvigorate interest in the Lottery across the board and, therefore, Lottery receipts will be maintained or possibly increased. However, if in the last resort we do need to draw on the other sports Lotteries we will need to work very closely with distributors.

  Q122  Mr Yeo: Would that include some sports that are not Olympic sports?

  Ms Roche: It could, possibly, but a lot of governing bodies have talked to us to-date: "Does that mean that Exchequer and Lottery money in the future is going to be targeted on Olympic sports to our detriment?" and our answer to that is: "No, we are absolutely committed to all sport." After all, we have got 26 Olympic sports but we have got over 100 other sports, and we have a job to help them all.

  Q123  Mr Yeo: However, the possibility clearly does arise that some sports which have nothing to do with the Olympics may find that some of the Lottery funding has to be spent in order to meet the Olympic bill.

  Tessa Jowell: I understand the question but, again, we are getting into the area of hypothetical speculation. Again, these discussions about the apportionment of responsibility of funding have taken place with the two sports Lottery distributors, and of course we will be mindful of what would be a perceived unfairness and of course we will be mindful of the long-term effect on performance in other non-Olympic sports in taking these decisions. These will be decisions taken by the Sports Lottery distributors in that light.

  Q124  Mr Yeo: It is a bit more than hypothetical, it is actually quite probable that some of the money will need to be a diversion. Moving on to the non-sporting beneficiaries, the promotion that Camelot do for the Olympic Lottery, again, is likely to have some diversionary effect amongst Lottery players, so other non-sporting causes potentially are also affected by a drop in their income.

  Tessa Jowell: Again, we have dealt with this and I think, from memory, have submitted quite detailed evidence to the previous inquiries of the Committee on this. Before the Olympic Lottery was established, we looked at the likely attrition rate and the impact on other good causes. We estimated—and these figures were validated by the National Lottery Commission, and we subjected them, from memory, to further independent assessment—that the figure between now and 2009 would be a 4% impact, which for most Lottery distributors is about £20 million a year. After 2009, if it was necessary to take a further £400 million by top-slicing the NLDF, the impact would increase to around 12%. All these figures have a degree of elasticity depending on the performance of the Olympic Lottery game. The early signs are that that is performing very well and Camelot have said that it is the best scratch card game that they have launched to-date. We have got to stay on top of this and we have got to monitor the impact all the time. I think the other message that I would give to other Lottery distributors is that the Olympics is not some kind of hungry beast which is sucking income away from them and diverting it to this rather exclusive cause because, again, consistent with our ambition of ensuring that every part of the country benefits, there are enormous potential benefits for heritage in relation to the Olympic Games—for the arts there will be a major cultural festival that will start in 2008—and participation in sport. Every good cause that the Lottery funds has Olympic potential without distorting the way in which it allocates its money. The Olympics can enrich every good cause of the Lottery, and I hope that the Lottery distributors will very much rise to that challenge.

  Q125  Alan Keen: Just following on from that question, I was at Edinburgh and other performing arts events and I have been approached time and again by people who are really concerned. Have you thought about appointing somebody from within your Department or a Minister to liaise with Camelot on this particular issue? It is crucial. I am not a gambler myself and I tend not to gamble or buy tickets but for the Olympics it is very likely that I would think I would like to contribute to that. It is something special, and it is crucial because we do not want to take any particular revenue support for expenditure away from arts groups who have relied on it for years; we do not want to damage their futures. Raising money on the Olympics Lottery is absolutely crucial to the fundraising. Have you thought of having a Minister responsible, particularly just for this one issue, to liaise with Camelot and engender the enthusiasm from the public to buy these tickets?

  Tessa Jowell: Richard Caborn, the Sports Minister, is also responsible for the Lottery and obviously we are in pretty regular contact with Camelot. Camelot are the experts in marketing the Lottery, not the Government. Through the Lottery Promotions Unit, we have done an enormous amount of work—or the distributors, more especially, have done an enormous amount of work—in promoting the benefits of the Lottery and making sure that people understand that they can both become millionaires by playing the Lottery but they can also support a very wide range of projects from the large and transformational to the very local, community projects. So a lot of that liaison with the distributors and with Camelot takes place. What we have to ensure, but again I think Camelot are best-placed to do this, is that "Lottery fatigue" does not set in and that the game continues to be refreshed and continues to attract players in the very high numbers that it has done previously.

  Alan Keen: The Olympic Lottery fundraising part of it is very special, obviously; it is for one event and something that people need to focus on. For instance, sports clubs themselves could play a part around the country in helping to sell these tickets, which is something quite different from how Camelot operate normally. I am saying we can focus on this; it may well bring dividends. I am just highlighting that it is different.

  Q126  Helen Southworth: You spoke about your very considerable concerns to ensure that everybody across the country benefits from the Olympics, from the nations and the regions. However, there is going to be very significant diversion from established Lottery sports distributors—I think it is £340 million—and the diversion from other good causes from 2009 is going to be £410 million. How are you going to ensure that the regions do actually benefit from the processes of that diversion rather than have everything sucked down to London?

  Tessa Jowell: There are a number of ways. The first is, as I have said, through the work that we intend to do with the Regional Development Agencies in promoting and ensuring that they take the initiative in promoting and seizing the economic benefits of the Olympics. Those are beyond the Lottery—maximising the benefits of tourism, and the opportunities to host preparation camps for athletes. I have had a recent meeting with the Japanese National Olympic Committee, for instance, and they are very keen to establish a preparation camp in this country and, in the run-up to the Games, for their athletes to work with young people in our schools in the sports that they are particularly accomplished at. In the early days of looking at how we spread the benefit that is another one of the ways. I referred to the very large number of contracts that will be let. There is absolutely no reason why active and engaged Regional Development Agencies should not be looking at the potential for businesses in their regions. Of course, there is the cultural festival which will start with Liverpool being Capital of Culture in 2008 and we will see a programme across the country of Olympic-related cultural activity between 2008 and 2012. It is entirely the case that were we to do nothing the benefits would fall disproportionately to London, but the consequences you describe are the consequences of having taken a decision to bid for the Olympics and to win the Olympics. That was why the issues (returning specifically to the Lottery) concerning the consequences for the Lottery were given a very full airing both in the Olympic Lottery Bill and, also, in other debates on the floor of the House and around the country. So there will be a consequence for other good causes. My answer to the heritage and arts and other good causes would be that each and every one can be enriched by engaging with the potential for the Olympics, but the short-term consequence on their share, on figures that we believe to be prudent and cautious figures, is a consequence of the decision we took to bid for the Games.

  Q127  Helen Southworth: Can I focus very specifically on the geographical impact of diversion rather than on a diversion towards an Olympic change? How are you going to measure the impact on the regions of diversion to make sure that it is equitable and that we do not find that there is disproportionate loss from some areas, or that projects that are being worked up in some areas disappear—sports clubs, sports centres, schools? There are going to be lots of things within the regions that really have to work if the Olympics are going to work.

  Tessa Jowell: Matthew, would you like to start on this?

  Mr Symes: Yes, I would like to elaborate on one point, just winding back a little bit and touching on the first part of your question. We have been looking recently with the Olympic Board at the whole question of legacy and what is legacy. A lot of legacy to us means benefits, and that has taken us into this question of: "So where do the benefits apply round the nation?" That has now taken the thinking to the point where we are now setting up a Nations and Regions Group in conjunction with LOCOG to look at a distribution channel for getting benefits delivered and properly harnessed around the country. Your recent question was how do we measure the benefits? What we are looking at now is the benefits that were articulated and how to translate those into practical plans and projects which will be delivered around the country. We are doing that with LOCOG and setting up a Nations and Regions Group which will be basically responsible as a channel for benefits around the country for organising and co-ordinating all activity around the country and for—to answer your question—tracking the benefits in a coherent way. So this is not: "Let it happen in an uncontrolled way" and it is not: "Don't do anything at all"; it is: "Do something, plan it and co-ordinate it through this Nations and Regions Group", which we, as the Department, are working on in parallel with LOCOG. So we are just getting going on that now; the first meeting will be in November and then we will have a series of meetings with representatives from around the nations and regions. So this will be a project which is properly co-ordinated and planned.

  Q128  Helen Southworth: Will the Lotteries also have a responsibility for ensuring that this is distribution that is equitable across the regions?

  Tessa Jowell: As you know, we have taken some important steps, as a Government, to ensure equitable distribution of the Lottery, and the steps that we have taken, through Fair Shares and other initiatives, have quite substantially reduced the inequalities that were beginning to creep into the pattern of distribution five or six years ago.

  Q129  Helen Southworth: Finally, can I ask a rather practical question? Will projects that are working up plans that, perhaps, are in-phase be given good advice about how to put those things forward, bearing in mind that there is going to be significant diversion of resources in the future away from some types of projects, so that we do not get the kinds of things we have had sometimes in the past, phase one going ahead and phases two and three disappearing?

  Tessa Jowell: This is actually a bigger question, I think, about the way in which Lottery distributors make their decisions about the allocation of grants. A number of them, particularly where the sums involved are large, put applications through two stages, maybe in some cases even three stages, so this is a way of filtering down applications and focusing then on those that are most likely to deliver according to the project specification. So there is not any intention to interfere with the Lottery distributors' approach to doing that, but there will be a dedicated Olympic Lottery distributor, which is in the process of being established at the moment, and the big Lottery funds will have a particular role in being more proactive in providing advice and help to local organisations in drafting bids for the Lottery that give them the best chance of success.

  Q130  Janet Anderson: Secretary of State, I think I am right in saying that the contract for the Lottery comes up for renewal in 2009. Does it concern you, in the run-up to the Olympics, that we might be in a position of having a changed distributor, and might you consider just sticking with Camelot?

  Tessa Jowell: We had a question on the floor of the House about this yesterday. Obviously, we looked very carefully at the potential impact on competition for the operator. The advice that we have from the National Lottery Commission and others was that the competition should proceed as per the timetable, and that the Olympic Lottery would not be adversely affected by that. Obviously, the timing of the Olympics and the critical role that the Olympic Lottery has to play was a consideration but it was a consideration that led to the conclusion which was announced, which is that the competition should proceed.

  Q131  Chairman: Did you carry out a risk assessment in reaching that decision?

  Tessa Jowell: We took advice from the National Lottery Commission, from Lord Burns and, also, from the Office for Government Commerce.

  Q132  Chairman: Did you talk to the London 2012 Committee?

  Tessa Jowell: They were aware of the position.

  Q133  Chairman: They are relatively relaxed about that?

  Tessa Jowell: Yes. We are all vigilant about seeing off any risks at all, but the overwhelming—in fact the unanimous—advice that we have as Ministers was that the competition should proceed.

  Q134  Mr Sanders: Can you explain how, in practice, the provisions of the London Olympics Bill relating to marketing will operate and how you intend to police them?

  Tessa Jowell: This will be very much a responsibility for the Local Organising Committee. The provisions to protect the Olympic symbols—not just, in the case of London 2012, the Olympic symbol but we will now also extend protection to the Paralympics symbol—are contained in the Olympics Bill which completed its committee stage in the Commons last week. The objective is a very simple one: I talked earlier about the importance of maintaining the value of sponsorship income and the fact that we will be seeking large amounts of sponsorship from high-value sponsors whose association with the Games must be clear, commercial and worth the amounts of money we want them to spend on it. So the purpose behind the regime, which is not a new regime but very much built on the regime that Sydney used to prevent ambush marketing, is to prevent anybody who does not have a legitimate commercial association with the Olympics from asserting that they do. How that is actually applied in practice will be consistent with all our expectations of proportionality and will be taken on a case-by-case basis. I think there have been some rather florid and over-excited examples of how this might be applied. There will be no ban on referring to "Summer", there will be no ban on referring to the "Summer of 2012", and as we get closer to the Games then a body of case law will begin to emerge.

  Q135  Mr Sanders: How is that going to work in relation to the small businesses that will clearly have an association with the Games—hospitality, hotels, bars and restaurants that are all likely to benefit from the Games—who may wish to market that they have an association with the Games by virtue of their location in London?

  Tessa Jowell: I think the position in law will be that if they have a pre-existing title which suggests an association with the Olympics then they will be allowed to keep it. If it is an association that they assert simply by virtue of geography it will not be allowed under the terms of the ambush marketing proposals.

  Q136  Mr Evans: Can I ask one additional question? Does that mean that pubs will be allowed to advertise outside their pubs to say: "Watch the Olympics on our big screen"?

  Tessa Jowell: In order that I give you exactly the correct interpretation, can I write to you about that? I am not a lawyer, I am a politician, and I want to make sure you have the very best advice on that.

  Q137  Mr Sanders: That is actually very important because there are many parts of the country outside of London who would be marketing themselves overseas as a potential place to visit during the Games and associating themselves with the fact that they are part of the country that is hosting the Games. So it is both an issue for small businesses in London and for many communities outside of London.

  Tessa Jowell: This may not reassure the Committee but let me just say that I have already made the point that there will be no blanket ban on using words like "summer" and "games", and context is all important, I am advised, and that the courts will ultimately decide what is fair. Factual references to London and the Olympics will still be perfectly legal. So I suppose it will be a matter of fact that the Dog and Duck in Stratford East may be showing the Olympics on a given night during 27 July and the middle of August in 2012.

  Q138  Mr Evans: It would be daft, though, would it not, if a pub faced prosecution for saying: "Come and watch the Olympics on our big screen"?

  Tessa Jowell: It would be daft. All these provisions have got to be able to meet the kind of commonsense rule, and I hope that as the case law is established in practice that will happen.

  Q139  Mr Yeo: Last month your department said that UK Sport would lead on delivering success in high performance sport, developing elite athletes, and so on, and that Sport England would focus on the development of community sport and grass-roots participation. Would you like to enlarge on that and say how it is going to work in practice and why it is a good thing?

  Tessa Jowell: It is a good thing because I think one of the complaints about the management of sport in this country has been its fiendish complexity and lack of clarity; so we will have a structure which is completely clear where Sport England will carry responsibility for promoting participation and helping to meet our very demanding PSA target, which is to see an increase of 3% in the numbers of people playing sport by 2008. That is 400,000 people a year. It is, I think, the most demanding target set by any government for increasing participation in Europe, so we have to have an organisation which is dedicated, fit for purpose to do that, and I pay very warm tribute to the Chairman of Sport England, the Board and the staff of Sport England for driving through a programme of reform that means that we are almost at the point where Sport England is 25% of the size it was five years ago, with very much a focus on overseeing performance in relation to meeting this target. Then you have UK Sport, which will take on some of the responsibilities for performance and elite development which have previously existed with Sport England, UK Sport which will have an exclusive focus on promoting elite performance, bringing on young champions, in addition to the international responsibilities that it has, and, of course, its world recognised reputation for anti-doping. The overriding reason for pursuing the course of action that we have done, and it has taken us about three years to get here, is clarity, fitness for purpose, which was sort of accelerated by winning the Olympics and our hopes of very good medal performance by our athletes in front of a home crowd in 2012.

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