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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 1669-i House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE CULTURE, MEDIA AND SPORT COMMITTEE
LONDON 2012 OLYMPIC AND PARALYMPIC games
Tuesday 24 October 2006 MR PAUL DEIGHTON and MR DAVID HIGGINS MS JANET PARASKEVA and MR MIKE O'CONNOR CBE MS BRIGID SIMMONS OBE and MR TIM LAMB Evidence heard in Public Questions 1 - 77
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Culture, Media and Sport Committee on Tuesday 24 October 2006 Members present Mr John Whittingdale, in the Chair Janet Anderson Philip Davies Mr Nigel Evans Mr Mike Hall Alan Keen Mr Adrian Sanders ________________ Memoranda submitted by The Olympic Delivery Authority
Examination of Witnesses
Witnesses: Mr Paul Deighton, Chief Executive, London 2012 Organising Committee of the Olympic Games and Paralympic Games (LOCOG), and Mr David Higgins, Chief Executive, Olympic Delivery Authority (ODA), gave evidence. Q1 Chairman: Good morning, everybody. This session is one of a regular series which the Committee is holding to look at preparations for the 2012 Olympic and Paralympic Games. May I welcome two splendid people with the greatest responsibility for ensuring that we have a successful Games, that is Paul Deighton, the Chief Executive of LOCOG, and David Higgins, the Chief Executive of the Olympic Delivery Authority. Could I start by asking about the structure of governance and oversight. The Olympic Board, Paul Deighton, LOCOG is represented on, but the ODA is not on the Olympic Board. Has that caused any problems, and is the ODA confident that it will manage to have a strong enough voice without being a member of the Board? Mr Higgins: We are not a member of it, but of course our Department is, which sponsors us, and I have attended every Olympic Board to date that has occurred, certainly this year. I find the ODA has plenty of opportunities to contribute to it and raise any issues. If we wanted to raise an issue, from a shareholder point of view, clearly we would do that through the Department, so no, I do not think there is any disadvantage whatsoever that the ODA is not a formal member of the Board. Q2 Chairman: You said that you are sponsored by DCMS, as is LOCOG. One of the concerns which we looked at last time was the possibility that DCMS might try and micro-manage or interfere. Are you happy that you have sufficient autonomy to be able to run this without having to get permission from Whitehall? Mr Higgins: We have close co-operation with the Department. Importantly, what we have done on major projects and major commissions, such as the appointment of the delivery partner or the appointment of the firm for the stadium, is to set up steering committees well in advance of any decision that needs to be taken. The Department is represented on those committees and then they have an approval process which not only includes the Department but other arms of government and also other funding partners. Mr Deighton: I would endorse that. From our point of view, we have the right degree of autonomy to get on with the job but given the broader policy objectives, which are part of the delivery obligations of the Games, then having a close relationship with our government stakeholders is absolutely important to get this job done right. Q3 Chairman: Particularly could I ask David Higgins, the ODA has recently had the resignation of its chairman for personal reasons. Could you tell us whether that is going to cause any problems, and how quickly do you think you can find a new chairman and get him or her in place? Mr Higgins: First, Jack was a non-exec chairman, he was Chairman of the Board, so for the day-to-day operating of the ODA, it should not have any direct impact on the Board. Importantly, what Jack Lemley did was oversee the establishment of the Board, the recruitment of myself to the Board and also signing off on major strategies, so the overall programme for the Olympics - "2:4:1", as we term it - was two years to get established, and a great focus on planning was something that he was instrumental in and ensuring was put in place. Sir Peter Mason, who has a long background in construction and engineering of course, joined the Board and is ex-Chief Executive of AMEC, he started on 1 October. Sir Roy McNulty is Deputy Chair and Acting Chair and the Department will go through a selection process over the coming months. Q4 Chairman: In the submission from LOCOG, you have at the back a list of programme objectives with responsibilities aside for each one. That is quite a detailed list of objectives. Could I ask, how are you going to measure achievement against those objectives and how can you ensure that you are on track to deliver them? Mr Deighton: In terms of our specific objectives, LOCOG's principal responsibility is to deliver an outstanding Olympic and Paralympic Games. Frankly, the best yardstick for performance measurement which we have for that is our work with the International Olympic Committee because, of course, they have put on every Olympic and Paralympic Games held to date. We have regular update meetings and discussions with them and are held very closely to account with their master schedules that are specifically in terms of delivering the Games. Our relationship with the IOC is probably the most critical because by far they have the best understanding of what it takes to be successful and we found them incredibly helpful in telling us the kinds of things that we will have to confront six, five and four years out because, as you can imagine, this kind of project is understanding what is important when, and focusing on those things at the right time in the right way are what really count. The IOC's experience in that has been absolutely invaluable to make sure we have got our priorities right. Q5 Chairman: Are you confident that you can also keep track of progress towards your specific objectives and that you have sufficient monitors in place to do that? Mr Higgins: Absolutely, and we also participated in this recent review of the IOC. Of course we are audited by the National Audit Office and we use OGC extensively in terms of our Gateway reviews of all the major projects. Q6 Mr Evans: Paul, we are all looking forward to the Olympics in 2012 being on time and on budget. Is that still the plan? Mr Deighton: From our point of view, 27 July 2012 is the day we are very much focused on which is in five years, nine months and a few days. It is a calibration I keep a very close check on. In terms of getting things done on time, I do not think there has been an Olympics in history which has been late and we have absolutely no intention of breaking the record on that front. The issue for us really is being prepared early enough and working with David to make sure the new venues are ready early enough, so that we have long enough, as we come up to 2012, in the last year essentially, to practise, test and rehearse so when we come to the real thing it is second nature by that stage. What to watch, as we go through this process of preparation, is to make sure that period which we have set aside at the end, that one year for testing, is protected and is not eaten into by delays on the building project. That is where David and I work very, very closely. In terms of being on budget - as I am sure the Committee appreciates and David will talk about the ODA's budget - our budget is for staging the Games. It remains at the level of £2 billion, which was our original estimate, which is the out-turn equivalent of the £1.5 billion constant price number that we submitted as part of the bid proposal where the IOC demands that all proposals are put in on a constant price basis for the purpose of comparison, so ours has stayed at the same number of £2 billion. That is the target we expect to meet and at the moment we are working extremely hard on reviewing our plans, constantly going through each component of the budget to keep it within that framework and at the moment I can report that is absolutely our expectation to be able to contain it. Of course, in our case, that £2 billion will be funded privately, so my first recourse, if I have any difficulty with the costs, will be looking to whether I can raise additional financing privately to support it. If I cannot, then it is a matter of choosing priorities amongst the things that we are trying to do on the staging side to keep within the overall £2 billion constraint. Q7 Mr Evans: If we look at the on-time bit first, we have not got a very good track record on things like Wembley Stadium which is an ongoing farce, quite frankly. Have you learnt any lessons from what has gone wrong there as to how you should do it differently? Mr Deighton: I think that is probably David's lot because that is a construction question. Mr Higgins: The lesson we have learnt from that and other projects is the absolute importance of planning, I cannot reinforce this enough. We said when we first arrived, "We are not going to build anything, we are not going to rush out and start construction". Until we have determined the proper brief, particularly wide consultation with our many stakeholders to work out the Olympic requirements - and there are detailed performance requirements to satisfy the IOC and the international sporting bodies - and then match that with legacy, which is a major change on these Games from any other Games, and until we get it all right with the designers very clearly and get the planning approval in place we should not start anything, because that is when things go wrong. If you start construction and then people start changing the scope and briefs, then costs escalate and things get out of control, so we are not doing that at all. We did start one thing, of course, the power lines, because we decided at a very early stage the power lines needed to be put underground for the Olympics but more importantly for the level of housing that is going to come into the Valley. We are right on track in terms of our schedule. We said at the beginning of the year June 2007 is when we get control or access to the vast majority of the land and in a big part through the compulsory purchase work that is being carried out by the London Development Authority. That is on track. The design is on track, so we have done a lot of work on re-modelling the entire Park, so to have a fixed layout for an Olympic Park now, six years before the start of the Games, and a layout that has been tested for the operation of crowd control, access, back of house right through to food courts, to have that all fully resolved so that we can now make a major planning application at the end of January 2007 is a massive step forward and certainly it is well ahead of any other city that has prepared for the Olympics. Q8 Mr Evans: Could I look at one specific aspect of the planning and the budget that clearly is worrying and I assume has been revised greatly from when the initial candidature report went in, which deals with security. I understand that originally somewhere in the region of £23 million was put aside, 1%, for that particular aspect of the Games. That was put in before we had the Tube bombings and bus bombing in London. We have also had reports now that Europe, and specifically Britain, is a target for al-Qaeda, and I could not think of anything bigger for them to target than the Olympic Games quite frankly; surely it is a target for them. Have you revised the budget and are you going to be doing things differently because of the threat that we are now facing? Mr Deighton: The overall responsibility for security at the Games is with the Home Office and the police and, as you correctly outline, due to the change in circumstances one day after we won the bid on 6 July, they are obviously looking extremely closely at ensuring that this is a safe and secure Games. Planning from the beginning, as you would expect, has been to ensure that, whether it is how we secure the site through construction, which is very much David's responsibility, or how we work with the police to ensure security and safety through Games' time, which is the Organising Committee's responsibility, has always been paramount in any case, but the police are the ones who are looking at the implications of that through time for the budget. Q9 Mr Evans: That comes out of the £2 billion? Mr Deighton: No. The way we look at the security budget in terms of slicing it up in different responsibilities is consistent with protocol in the UK for major events. We take responsibility within the local budget for in-venue security, inside our venues which is exactly, for example, how you deal with things like major football matches, but the police and the Home Office take responsibility for the budget and the broader security outside the venues. Q10 Mr Evans: Right, so that is not part of the £23 million then? Mr Deighton: No. Q11 Mr Evans: Any increase in that will be falling on, I guess, the London taxpayers as opposed to coming directly out of your budget? Mr Deighton: It will not be out of my budget. How the Government chooses to fund it probably will not be a question that I will get involved in. Q12 Chairman: KPMG are doing an ongoing review of costs. As far as you are aware, are they still confident that the cost figures you are working on are robust? Mr Higgins: From a funding point of view, at the time the concept design and what was the funding package were put in place, £2.375 billion - this is separate, of course, from Paul's budget - and then a further £1.44 billion was set aside for infrastructure relating to the Games, that was the funding package put in place at the time of the bid 2004-05. KPMG was engaged by our sponsor Department at the end of 2005 to review the overall concept and cost of the Games. We have worked closely with both KPMG and the Department and importantly - because when you bid for the Games it is very much a concept, a plan, there is not a huge amount of detailed work done then and it is very much a concept for the Olympic Games - what we have done over the last nine months now is to go back and integrate the Olympic Games into Stratford, this is a massive development. At the time of the bid there were two entirely separate developments that resulted in the Village becoming a greater part of Stratford. We looked at the utilities and the whole issue of regeneration of the Lea Valley again and that was not planned at the time of the bid for the Games. The overall area framework for the Lea Valley will be launched by the Mayor. It is expected in January and that will envisage something like 40,000 new homes in the Lower Lea Valley and I think up between 50,000 to 60,000 new jobs. Stratford and the Olympic site are the catalyst for what will be the largest regeneration project in the UK, the largest plan ever undertaken in terms of that size and scale and a major initiative to cope with the demand for housing in London. It seems crazy to carry out and complete the Games successfully and then come back in 2013 and retrofit the entire site to cope with the largest expansion of housing that London is going to experience in a concentrated area, so what we have done in the last nine months is to go back and say, "How do we integrate and use the Games as a catalyst not only for the major redevelopment of Stratford but for this long-term regeneration of the Games?" It is important we get that right, because from a wide range of statistics or studies, these boroughs in which the Games are being hosted are the most deprived or - according to a recent survey that is coming out on television I think tomorrow - some of the most difficult in terms of perception of where people want to live, so it is certainly the most deprived in terms of health, education, security and jobs. The figures are really quite concerning particularly on the issue of health. So what we want to do is ensure that in this process of the Games we capture all government expenditure that is going to be expended in the Thames Gateway in this area and make sure we carry it out now because when we do it on a site that is cleared and the Government owns the large majority of the land, the public sector can capture that and take advantage of that infrastructure being co-ordinated. We have done that work, we are in close discussion with the Department, we are working with the Department in terms of those budgets and in terms of the KPMG work they have essentially finished their work but we continue to work with the Department and the Treasury on those budgets. They were required to not only deliver a successful Games but also ensure the site of the Lower Lea Valley is the catalyst for this major regeneration. Q13 Chairman: I want to come on to the regeneration point, but before I do, on the specific task that the ODA has of building facilities, are you confident the £2.375 billion figure remains the best estimate of how much it is going to cost? Mr Higgins: The £2.375 billion was a funding package put in place for the bid for the Games. What we have done is reviewed the work that is necessary in the Lea Valley to deliver the Games but also it is very difficult to separate out the regeneration that is required, for example major decontamination. Yes, you could scrape the surface of the ground and put temporary tents up to carry out the Games, but then you would have to come back and subject that community to a decade of further work to turn this area into a place capable of housing in a regenerated entity. So what we are doing with the Department is we accept the original line of funding but we are going back to the Department saying, "Here is the budget you should consider putting in place", and to do work with the Department and the Treasury that will ensure the necessary regeneration of the Lea Valley as well as delivering the Games because they are inextricably linked. Q14 Chairman: That was the £1 billion government regeneration package? Mr Higgins: That was the original £2.375 and then there was £1.44 billion that was set aside to cover things such as the power lines undergrounding and some of the work. What we have done now is integrated Stratford with the Lea Valley and we have integrated the Mayor's plan for the 40,000 homes that was not around at the time of the Games, which in 2004 was not on the agenda and now in the last two years that has been developed, there has been an enormous amount of consultation with the Government's development corporation, it is run on the Thames Gateway and London Development Agency in terms of their plans for the Valley. We are tying those together to come up with a new budget which will work with the Department and the Treasury which is the one that we should get reviewed and hopefully approved early in the new year. Q15 Chairman: You do have access to the £1.14 billion which is in place and you have the £2.375 billion which is the funding package. Given those things are a covenant, you do not have to go back and ask for additional funding? Mr Higgins: We have gone with the Department to discuss the UK budget that covers additional work which is required to deliver the Games and the integration of Stratford. Those discussions have been in place now over a number of months with the Department and the Treasury and we are looking for a decision on that hopefully within the new year. Q16 Chairman: There is no present intention to ask for more money? Mr Higgins: Obviously if we are going back to the Department, I think it is to look at the chance to invest additional money in this Valley, it is very logical to do it. We could take a lot of shortcuts, we could do a very superficial regeneration of the Valley and take enormous shortcuts. I do not think that is a responsible thing to do. I think the responsible thing to do from a public value point of view is to look at all those other government departments which intended to spend money in the Thames Gateway in the next five to ten years and say, "You need to co-ordinate your expenditure at the same time as the Games because it will be much more cost-effective and better value for public money" so if that means additional money, which it will of course, we should consider that now. Not to consider that when we are planning it but to decide sometime over the next six years that we tie in programmes from other government departments and inject that money into the Valley at the same time would result in a very inefficient use of public money. Q17 Philip Davies: I know Nigel urged you to learn the lessons from Wembley so that it is built on time. I hope you will also learn lessons from Ascot, which of course was built on time but nobody can see anything. I hope when you build it you will have the ordinary punter in mind as well and not just the corporate hospitality crowd. Paul, could I press you a bit further on this £2 billion income. You said if you do not raise this £2 billion, and everybody seems to say it is rather challenging, you will try and scratch around for some more private sector investment, but if you cannot find this investment ultimately you have probably got two choices, you can either spend less on the Games and perhaps have one of the worst Olympic Games in mind or you could ask the taxpayer to bail you out, as I think happened in Australia. If you got to that stage, which of those two options have you been either encouraged to go down or would you prefer to go down? Mr Deighton: I do not plan to go down either of those routes. It might help to talk a little bit about the £2 billion from a revenue perspective to give people a sense of what is involved in each of those areas. The £2 billion potentially comes from a range of sources on the revenue side. First, we can sell sponsorship and TV rights. At the first level we get a share of what the International Olympic Committee derives from its worldwide sponsors and from its sale of TV rights which it does on our behalf, so our first pot of income potentially comes from the IOC. Remember they have exactly the same interest as we do in delivering a highly successful Games, so I would expect to have some degree of flexibility in our relationship with them to ensure the outcome is successful. To give you a sense of where we are on that at the moment, the IOC is in the process of negotiating the TV rights around the world and then over the next year or two we will negotiate with them our share of those TV rights. Similarly, for their worldwide sponsors - there are two types of sponsors for the Games, the worldwide sponsors and the domestic sponsors - the IOC brings in the worldwide sponsors, many of whom have been on the Board for many years, for example Coca-Cola has been on the board since the 1920s. They have provided the long-term funding which has underpinned the financial security of the Olympic Games and the worldwide sponsors sign up typically for four-year periods encompassing both the winter games and the summer games, so in our case they will get both Vancouver in 2010 and London in 2012. Already, half of the 12 who are in place for the previous quadrennial, which included Turin and Beijing, have signed up, which is a record early signing-up and it is in anticipation of the fact that they believe London is a superb venue for the Games, as indeed Vancouver is for the winter games. It is not until all of those are signed up that we will be able to work out exactly what our share of that revenue will be, so those two things are continuing with the IOC and then we have a subsequent responsibility to negotiate our share. Also, of course, we get to sell tickets, about nine and a half million, and we will be working on a balance between maximising revenue, because some of these tickets are clearly very attractive properties, and also making them sufficiently affordable so there is a sense of real participation around the country. Also, we have a range of merchandising activities, putting the Olympic marks on what I think an IOC official referred to as "baseball caps and T-shirts", and there is business there which will derive a lot of income for us. Finally, and this is the part of our revenue-raising upon which we are most focused now, we have the opportunity to raise income from domestic sponsors. The way Olympic corporate sponsorship works is there is one sponsor for each industrial category so to the extent the category has not been taken up by the worldwide partners it is available for sale domestically and currently we have embarked on negotiations with companies in six sectors in the United Kingdom to bring them in as corporate partners. We expect to announce our initial partner around about March next year, and I think having a great company with a great transaction will give our programme the commercial momentum it needs. I lay all that out to show that there are a range of different sources of revenue. I think sometimes there is confusion in believing we have to raise all of the £2 billion from sponsorship, but that is not true, it is only a portion of that £2 billion, and we have flexibility to move between the different sources of income. If one falls a little short, we will push another one a little harder, so there is some comfort in the diversification that our sources of revenue offer us. Q18 Philip Davies: Do you know of any proposed legislation to ban any kind of unhealthy products being advertised on TV? I do not know whether Coca-Cola falls into this kind of category, but whether or not that is going to have any impact on sponsorship levels if, by the time the Olympics come around, we have got this ban being mooted to ban these unhealthy products, may that make a dent in your sponsorship income? Mr Deighton: Our initial discussions with large companies in the UK demonstrate an enormous enthusiasm to be associated with the Games. They see it, first, as a one-off opportunity, it really is a unique opportunity. This is the only time in our lifetimes we will have the Olympic Games in the United Kingdom, so for a corporate to be able to be associated with that is truly unique. "Unique" is the most overworked word in the corporate lexicon, but here it really is, there is nothing like it and that has got people's attention. It gives them an opportunity to demonstrate a degree of patriotism, as an identification with the population here which nothing else does. It is a way of motivating their customers to switch their buying behaviour to support those who are part of the Games. It is a wonderful way to motivate their own workforces. If you look at the patterns of past Games, companies that have been involved in the Games have used it as a great workforce motivation tool. It is also a great way for them to pursue their own corporate social responsibility goals and, indeed, to align some of their spend on activation of their Olympic sponsorship with some of the things we are trying to accomplish more broadly in terms of our wider social and economic benefits. You put that package together and as a sponsorship opportunity it is quite unrivalled, so I am extremely confident that our interest will stay strong through the next six years. Q19 Philip Davies: Do you know if this ban on unhealthy products is going to impact on some of those Olympic sponsors or not? Mr Deighton: No. Specific to that question, the food, restaurant and drinks sponsors are already committed through the worldwide programme, so for my domestic programme I will not be looking to bring in sponsors in those areas. My first six sponsorship areas, the key ones, are banking, insurance, telecoms, automotive, utilities, and oil and gas and that is where the lion's share of our initial funding will come from. Q20 Philip Davies: Given that rosy picture, can you give us a cast-iron guarantee at this stage that you will not be coming back at any point asking the taxpayer and the Government to bail you out from any shortfall in funding? It looks like such a marvellous picture that, surely, you can give us a guarantee at this stage that you will not need any taxpayer's money at any point to bail you out? Mr Deighton: We are certainly confident at this stage the sources of revenue available to us are sufficient to leave us in the Organising Committee with revenues that will match our expenditures, yes. Q21 Philip Davies: Finally on this, Chairman, do you accept that this focus on what a marvellous opportunity it is to sponsor the Olympic Games, as you just told us, could have a detrimental effect on sponsorship of other sporting events that are not associated with the Olympics? Is this something that is of any interest or concern or are you taking a parochial view of "Well, as long as we are all right, we are not really bothered what happens to other sporting events that year in Britain"? Mr Deighton: No, we have a broader point of view. As you can see, part of the legacy of the Games is a broader sporting legacy in the United Kingdom. It would be short-sighted of us to want to starve everything else in order to feed the Olympics. However, my practical experience of negotiating with these companies individually is they treat an Olympic sponsorship as a rather separate event because of its breadth. It is not just a sporting event, it is a cultural, educational, nationwide event and, as a result, when they are looking specifically at how to fund it themselves, they are taking the money from the broad marketing budget. It does not come out of a sport sponsorship budget, it comes out of the broad marketing budget and that works because, as I explained, it is about how do we get consumers to buy more of our products, how do we motivate our workforce, that comes out of the training programme in the training budget, how do we prosecute our corporate social responsibility goals more effectively, that comes out of the CSR budget. That is the beauty of the partnership opportunity with the Olympics. It is far broader-reaching and that is reflected in terms of the corporate budgets from which the funding is drawn. Q22 Philip Davies: Do you think it is much more likely to affect the commercial broadcasters, perhaps, or might we see their advertising revenues go down rather than other sporting events? Mr Deighton: It is not a zero-sum gain. What we have talked about with a lot of companies is if you are spending, whatever it is, £100 million, on broadcasting, let us bring that broadcasting expenditure alive by giving it an Olympic association. It is not zero-sum gain in that respect. Q23 Mr Hall: Mr Higgins, when was the Olympic Delivery Authority brought into being? When did you start work? Mr Higgins: The first week in April. From the Bill we acted as an interim agency from the first week in January, but we formally took up our role on 1 April. Q24 Mr Hall: Why has it taken until the first quarter of the next financial year to bring forward your life budget? Mr Higgins: We have submitted our drafts to the Department and now we are in detailed discussion. The first thing we did was review all of the plans, we did a lot of detailed cost-planning exercises, working out the scope of that and the most important thing was we appointed a delivery partner who was put in place in September. Particularly, we want this delivery partner, which is our agent, to do the tendering and the monitoring on expenditure and time to check all of our figures as well and that should be finished by the end of this year. We have put our forecast figures into the Department and we have worked very closely with KPMG. Q25 Mr Hall: Does the lack of the full lifetime budget cause some difficulty with the Olympic Lottery Distributor? Mr Higgins: It has not to date, no. Q26 Mr Hall: Have they made you an interim offer of a grant, £77 million? Mr Higgins: We have an agreement in place with the Olympic Lottery Distributor to cover this year, we will be putting our budget in for the year 2007-08 to the GLA in November and then to the Olympic department in the next month. Q27 Mr Hall: Is it £77 million for this year? Mr Higgins: That is right, yes. Q28 Mr Hall: Was that contingent on you providing them with a business plan by next month? Mr Higgins: Yes, we are putting in a draft business plan. The actual numbers in the business plan are the subject of Department and Treasury discussions. Q29 Mr Hall: Are you quite clear on the relationship you have got with the Olympic Lottery Distributor then? Mr Higgins: Yes, they have been very supportive and there is close co-operation. Q30 Mr Hall: There is no tension? Mr Higgins: No. Q31 Mr Hall: Good. In terms of the projected annual Lottery ticket sales, are you happy with the projected income from the Lottery ticket sales that is being put forward? Mr Higgins: I do not get directly involved in the ticket sales themselves. Q32 Mr Hall: There is a prediction of what that is going to generate, which is fundamental to your organisation. Mr Higgins: Correct. Every bit of advice, as I understand, is that is on track, but I know you will be talking to the Olympic Lottery Distributor after our session here. You can ask them in more detail then. Q33 Mr Hall: Did Camelot consult with you? Mr Higgins: No, not at all. Q34 Mr Hall: Did you find that unusual? Mr Higgins: No, not really. Our relationship is with the Olympic Lottery Distributor not with Camelot. Q35 Janet Anderson: Mr Higgins, when we took evidence from the London Development Agency in November last year there was a lot of complaints from small businesses which were located on the Olympic site. I understand you told the London Assembly in June of this year that 92% of the site was under public control and you expected the CPO procedure to be concluded in July next year. I wondered if you could tell us a bit about the acquisition process, whether or not you are still confident that is on track and you will have control by July next year. Mr Higgins: Absolutely. The CPO, or the Compulsory Purchase Order, which is being carried out by the London Development Agency on our behalf, is on track. The report went through a public inquiry and that was completed in the summer. The report has been submitted to Government Office of London for review and for the Minister's determination, that comes under the review of the DTI, the Department of Trade and Industry. Subject to a clean report, we expect that report to be out by the end of this year or early January and then there is a three-month judicial review period. All things going well, and there is no indication that they should not be, we would expect to be able to be in control of the land by July next year. Clearly, relocation of businesses and residents is vitally important. What we did in January of this year was to reduce the land take that was required for the Olympics in consultation with the LDA and that saved nearly 1,000 jobs and just short of 100 businesses from compulsory purchase in that process. A lot of work has been going on and we work very closely with the LDA to relocate businesses and so the figure is great, 92% of the land is within public control, not directly in ownership today but is in the process of being transferred presently and agreements are being put in place to ensure it will be under public control by next year. Q36 Janet Anderson: Are there still some businesses on the site which are not happy with this? Mr Higgins: The vast majority of the businesses have now been relocated and what the LDA has done on Beckton and Upper Temple Mills is built over a million square feet of inspected industrial development site which has now been, in most cases, fully occupied by relocated businesses. Some of the more high-profile and vocal businesses, which I am sure you are aware of, have now relocated in and around the area. It is not an unusual process in trying to relocate these businesses that as you get closer and closer to the end of the public process, businesses reach commercial agreement and in the vast majority of the cases that has occurred. Q1 Janet Anderson: You have begun the search, and in fact I think you have almost completed the search, for an integrated design and construction team for the stadium. I notice from this press release, which is dated 13 October, you started negotiations with Team McAlpine and it says here "because their submission was the only one that met all the ODA's pre-qualification criteria". I wonder if you could say a bit about that and perhaps tell the Committee if negotiations with Team McAlpine are not concluded satisfactorily, what contingency plans you have to back you up. Mr Higgins: Absolutely. The stadium is on the critical path. In terms of the overall programme, the securing of the land, the decontamination of land and the building of the stadium over three years, it is in fact one of the most important single venues that Paul's team needs to get occupation of early because 25 per cent of all medals happen within the stadium itself. What we did was ensure that when we had a design, the design was buildable. Lessons learned from previous experiences, there is no point having a fantastic design and then when we go out to the market, the contractors and suppliers say that it cannot be built. In our original brief that went out to the market we said, "We are very interested in innovative design". A big part of this is temporary because a large part of the stadium will be temporary but we have to know that what we are going to design is also buildable and, therefore, one requirement would be that any winning consortium has a contractor which has at least a turnover of £500 million a year. That was the minimum threshold to your point. We had 11 consortia in total that bid, five got down to the shortlist but finally one satisfied all the requirements. How do we protect the public purse to ensure that if we cannot reach viable commercial agreement with this consortia the public is not exposed? We do that by controlling all of the design and intellectual capital that they produce so we pay them for the work they do, the design development work. We also ensure transparency of all the bidding and tendering of sub-contractors and suppliers that team will carry out on our behalf. If at any time over the next 12 months we are dissatisfied with that, we have the option of controlling that design and then going out and re-tendering it. I have to say I believe that we have chosen a really world class team. This is a team that not only delivered Emirates to Arsenal on time and on budget but the same team is delivering 02 at the Dome which is ahead of schedule and is going very well. In fact, after this session, at 12.30, I am going to our first session with the whole team together so I am delighted that such a high calibre UK team is available to do the Games. Q2 Janet Anderson: Out of all the submissions, they were the only ones who met the criteria. If it does not work out, how confident can you be that there is anyone else who can deliver for you? Mr Higgins: The project will go through various stages. Over the next six months we will do an enormous amount of design and development work with the designers, the structural engineers, the sports architect, as well as their specialist designers. In six months' time, if we are unable to reach an agreement with them, we could go out to tender but there would be much greater clarity on the scope of what we want. At the moment we know that we want an 80,000 seater stadium in Olympic mode and a 25,000 seater stadium in legacy but how we get there and what it looks like is subject to a lot of design development option analysis. In six or nine months' time a lot of that will be resolved and therefore there will be more people potentially, if we were unable to reach agreement with them, who would be interested in bidding at that stage. Q3 Janet Anderson: You are confident it is not going to be another Wembley? Mr Higgins: We are going to work to ensure that the public gets value out of this facility. Q4 Janet Anderson: Finally, could I mention the remediation costs. You were optimistic a year ago that the cost of site remediation could be met from existing resources. Are you still confident and do you think that more should have been done to assess remediation costs before submitting the bid? Mr Higgins: No, I do not. The remediation can be met out of existing resources. The remediation will be paid for by the LDA because they are the long-term land owner. We have agreed a budget with the LDA and hopefully this Thursday our board will agree to the novation of those contracts and the budget across to the ODA because it is logical that we manage the process, therefore that is in existing budgets approved by the LDA. Could more have been done? More than 50 per cent of the entire site has had detailed site analysis and investigation already carried out on it. That analysis has been carried out on the areas of the site which are most contaminated. The first and most important check of any area on remediation is to look at the previous and existing land use of the site to work out how contaminated it was. My previous experience, and the team that we have worked with involved Greenwich Peninsula and that is obviously a site where there were gas works and heavy contaminants and chemical works on it. That is not the case in the case of the Lea Valley. We have used the same team of sub-contractors, contractors, engineers and supervisors to carry out the work we are doing on this project. Q5 Alan Keen: What is the target date for completion of the main stadium? Is it 12 months before? Mr Higgins: Yes. Q6 Alan Keen: Has it been agreed that the legacy has to leave an athletic stadium? Has that been agreed by the Department for Culture, Media and Sport? Mr Higgins: Yes. Q7 Alan Keen: What plans are there to make sure that we get a legacy that is sustainable? The football club seems to be very much up in the air. Is there some real determination to try to get a football club in there or are you waiting to see what happens? Mr Higgins: If we go back to how we, as the ODA, get our guidance on what we design to and what our brief is. The Olympic Board is the key governance body that gives us direction. Many months ago we went to the Board with a variety of options. The Olympic Board approved that in Olympic mode the seating is 80,000 seats and in legacy mode it is 25,000 seats. The athletics legacy was an important part of that but also that it should involve community and leisure use, so it should be open and available to the surrounding communities because this is an area where public facilities and playing fields are in short supply. Also, we have all seen white elephants, as they are called, large stadium buildings which carry huge legacies of operating costs and are not usable. It is really, really important that we get the use right, that we do match a lead sport, community use and leisure with revenue to support it. What we are doing at the moment is we are out in the community with an expert consultant on our behalf consulting with community groups and sporting associations to see what use and demand there will be for this facility in legacy, and that includes football. As you suggested, the one thing which is important is this will be a public asset. It is going to be built from public money and it will remain multiple use and available to the public. If we can get football clubs in there to help mitigate the operating costs, we will certainly be very open to that. Q8 Alan Keen: It has got to have a permanent athletics track? Mr Higgins: That is certainly the direction which we have got from them. Q9 Alan Keen: There is no digging it out? Mr Deighton: No, the reason the Olympic Board has given us that direction is because that is part of our undertaking to the IOC when we were awarded the Games that there would be this athletics legacy. Q10 Alan Keen: Are youth athletics happy? Will this be the headquarters for athletics in this country rather than Crystal Palace, which is the main venue at the moment? I know Crystal Palace is not your worry but if we are looking at legacy obviously we need to plan more than just focusing on the one stadium. Have you any indication as to what money is going to be required to sustain the athletics stadium for other major events? Mr Higgins: I do not think that decision has been made, UK Sport would take that final decision. Certainly, there are a number of venues there which could be either regional - London based - or national sporting facilities from hockey to swimming through to athletics. Q11 Alan Keen: You could take West Ham over with the petty cash that you have got in your budget and you could make them move there and make it sustainable. Mr Higgins: I am not sure we would be allowed to do that. Q12 Mr Saunders: One of the things that I think exercises the mind beyond the M25 is what has it got to do with us. We can spend a lot of time here looking at the financial situation and planning and we are right to do both. For the people at the end of the day who pay the bill either through choice, through Lottery tickets, or through the added costs of the goods they buy from the companies that sponsor the Games or from some taxes that have to be paid, what is really in it for them other than a three week Games? Where is the legacy for them? Mr Deighton: Our role at LOCOG is to stage an inspirational Games and I think it is helpful to dwell on that for a moment because it is too easy to take that for granted and not to appreciate just the impact which it has. This is the largest and arguably the most complex logistical event that any nation can undertake and executing that well enough to make an inspiring event is an extraordinarily challenging undertaking. First and foremost, when it comes to my organisation's focus, it is really very, very focused on bringing that about. We are, of course, working very closely with our stakeholders to make sure that the benefits are spread both throughout the country but also through time so you have got both the regional and the legacy components. The thing we can do which will help leverage all those efforts most effectively is that the Olympic Games and the Paralympics Games themselves are so spectacular that it really gives them the ammunition to make a difference in these other things. When we talk about how we want people to remember 2012, we want it to be the summer of 2012 that sticks out in people's memories, really for the rest of their lives. I will get onto the other stuff but I do not want to diminish first how difficult it is to pull that off and how focused we need to be on that but, secondly, how important that is in galvanising communities and people working on other aspects of the legacy, just the actual inspiration of the Games. If you go around the country as we did in July on our road show for three weeks, and you go into schools, you go into town centres and you talk with kids about it, you can see the power of opportunity that we have. For us working day to day in our offices and trying to make more prosaic things happen you sometimes lose touch with that but when you go out into the communities and see the impact in particular it makes on kids, it is a very, very powerful opportunity that we have got. When it comes to spreading things outside the M25, at LOCOG we set up a nations and regions structure to help make sure that as we bid for the Games, the rest of the nation was behind us and that worked quite effectively. Now we are working with that same structure to help on making sure that they understand what we are doing and the benefits are more broadly distributed. Similarly, we are working with the Mayor when it comes to London, the DCMS and the rest of Government to make sure there are broader benefits in sports participation and tourism and making sure that the business opportunities which come out of supplying either David in construction or me through the goods and services that we will need to put on the Games that businesses around the country get the chance to do that. We are very focused on maximising those opportunities, though at this stage most of the effort that is going into that is in the detailed planning rather than execution so we are working with the people who are involved to try and put in place plans which give us the best chance of realising those benefits which we appreciate are an important part of this. Q13 Mr Saunders: There is no doubt that if you are going to be in London in the years running up to the Games, there is going to be a huge awareness. For a start, anybody who is a council taxpayer in London is going to know that something is happening and hopefully they are going to be happy because of what they are going to see being created on the Olympic site and they are going to be in touch with what is going on. For many people in this country all they are going to know about the Olympics is what they see on the television. For them, it might as well be in Sydney or in America. Where is the link to people really feeling a part of this because so much of it is concentrated within the M25? Mr Deighton: First, yes, you are implying there are some events which are outside the M25, the football event, for example, is spread right around the country which is the typical approach for the Olympic football tournament. Weymouth is the home to sailing. There are some examples of sport which is distributed. There is, of course, nothing to stop anybody coming from the rest of the UK to visit the events in London. Q14 Mr Saunders: Can I ask a question on that because here is another fear: if people want to come up to London for a couple of days, what are you going to do to stop accommodation providers putting their rates up for the duration of the Games, given the number of foreign supporters from different countries who are going to come here? Mr Deighton: The beauty of London is that it is a huge city with many different levels of accommodation opportunities so it has got the supply to be able to accommodate the Olympic Games. Of course, the transport connections into London enable you to stay quite a considerable way outside London with friends and family and commute in. I think there is enough flexibility around making a visit to London for the Games for that to work just fine. The other thing I would draw our attention to is the volunteer programme. In fact, last week we had our 100,000th volunteer signing up on our website which again is a reflection of the enthusiasm around the country. As we pull our strategy together and implement a travel tier programme we will be making sure that reflects a broader regional participation as well. Q15 Mr Saunders: Many people 200 miles plus away from London, and I will come back to the point, might not be able to afford to stay in London because they could not come up in a day to watch an event and would have to stay and there will be a premium. For them to feel a part of these Games there ought to be, it is too late now, more events out in the community, in the nations and regions of the country and if that cannot happen, how are you going to drive forward a connection between what is seen as a London event with the rest of the country so they feel fully part of it? I am picking up cynicism now in my own patch that "nothing is coming here, nothing is happening, everything is out of focus". I think that is going to repeat itself more and more unless you build in a strategy to really engage and to show people what it has to do with them in a tangible way. Mr Deighton: I agree with you that this is a challenge we all have to address and it is a simple one. To win the games the IOC looks at it very much as a city event and demonstrating its compactness is a very important criterion to succeed. We did not consciously make a mistake of not distributing it, that was the only way that we were going to win the Games. Having won the Games on the only basis which was possible I think we are now working as constructively as we can to be realistic about which benefits of the Games are distributable regionally and how the inspiration of the Games can frankly work around the country. I did not see any difference when I went to a school in Darlington on the road show to look at the kids and talk about the Olympics from when I visited one in Newham. The kids feel exactly the same regardless of the proximity, the fact that the Olympics are in the United Kingdom is what is important. I think you are right, you stressed the communication side of it and that is where we have a very important role to play in telling people what we are doing, telling people what the Olympics means, giving kids around the country a chance to participate in sport effectively, that will enable us to develop a sustainable legacy. I agree that is a challenge and that together with our stakeholders we have to do our very best to make this a nationwide event. The good news is that everybody involved in this project accepts the two challenges, first that we have to deliver the benefits of this nationwide and secondly that this is more than just a games-type event, that there is a real legacy to focus on. This is the first time in an Olympic Games that those two dimensions have been so focused on so early on in the planning to try and really get the best. Q16 Chairman: You mentioned the 100,000 people who have registered to be volunteers. When are you going to start the pre-volunteer training programme? Mr Deighton: I am sure you noticed the other week that the Chancellor launched his child poverty programme. Attached to that was our London employment skills training exercise which is going to work very closely with the pre-volunteer programme. The whole idea, just so people understand, is that volunteering is not just about having a wonderful volunteer force at the time of the Games, which is very important given that they are the face of the Games to most of the visitors but it is also about what we can do leading up to the Games to equip people through that programme with skills which will be useful not just in volunteering but also to get those who are out of the workforce potentially back into the workforce. Then, of course, there is the legacy which comes post-Games, once we have learnt these volunteering skills and got it more broadly developed in the country which can then be taken to apply to a whole range of other events and activities. Volunteering is a wonderful example of how we can do things pre-Games, at the Games and post-Games and tie it altogether into the bargain to achieve other social and economic objectives. We are already working on that programme with the GLA. Q17 Chairman: Will you be paying the volunteers' expenses? Mr Deighton: That is one of the things we have to look at. What we would hope is to bring volunteers who do not live in London into London, we would like to have a hosting concept which effectively makes it zero costs for everybody. We will have to look very closely at what it will take to ensure broader regional participation is effectively implemented. Q18 Mr Evans: To finish on a jollier note, piggy-backing on Adrian's question about the regions because everybody throughout the whole of the UK would like to be a part of the Olympics, everybody is proud that London has got the Olympics, although it is city-based, it is still seen as the Olympics coming to the UK, the pre-Games training is going to give an opportunity surely for the regions and cities the length and the breadth of the UK to get involved in that. Do you want to say something about the announcement which you made yesterday? Mr Deighton: Thank you for reminding me about all the good things we have done. Many of the Olympic teams like to come to the country before the Games in order to train, acclimatise and get ready for the Games. Our objective is to bring as many of them as possible to the UK rather than committing as an alternative to train elsewhere in Europe too because they are in the same time zone and this is one of the best opportunities for the regions outside London to benefit. What we have done in order to stimulate that interest and in order to encourage national Olympic committees, who otherwise would find that prohibitive from a cost point of view, is to put in place a programme where we will pay £26,000 worth of expenses in those pre-training camps around the UK for each NOC so that would be particularly attractive for the ones who would not otherwise be able to afford it. We have been working very closely around the nations and the regions getting the appropriate facilities to put themselves in the brochure that we compile which is really the advertising for those facilities which we formally release at Beijing when the countries who are coming here begin to focus on London. Hopefully that will be a great stimulus and we will see a lot of activity around some of the great facilities that we have got in every corner of the United Kingdom. Q19 Mr Evans: What is the closing date for these areas around the UK to ensure that they get approved because they have got to be approved sites? Mr Deighton: They have got to be approved so we are trying to get all of that done by January next year. That process is very much ongoing at the moment. We need to make sure that people who want to be in our brochure are in good shape by January 2007. Q20 Mr Saunders: Are these for whole packages, for example the whole country as a team would go to a particular area, or do they break it up by sports? For example, would the sailing athletes have to go somewhere other than the rest of the country's team? Mr Deighton: Both is the answer. Some of the smaller teams might come en masse somewhere but clearly if you are talking about some of the bigger teams, they will distribute parts of their team to where the best facilities are. It will be a mixture of sports and entire teams. Chairman: I do not think we have any more questions. We shall probably see you again in the future. Thank you very much, indeed. Witnesses: Ms Janet Paraskeva, Chairman and Mr Mike O'Connor CBE, Interim Chief Executive, Olympic Lottery Distributor, gave evidence.
Chairman: We now turn to the Olympic Lottery Distributor. Can I welcome the Chairman, Janet Paraskeva and the Interim Chief Executive, Mike O'Connor. May I invite Janet Anderson to begin. Q21 Janet Anderson: Thank you, Chairman. You say in your evidence to the Committee that your exclusion from the two bodies, the Olympic Board and the steering group, creates a needless obstruction to the free and timely exchange of programme information which could result in delayed payments or increased administrative expenditure on nugatory work. I wonder if you could tell us a bit about why you believe you should be represented on both those bodies? Ms Paraskeva: I will also, if I may, update you on progress which has been made in that regard. We have been working very hard to secure the involvement of our Interim Chief Executive, Mike O'Connor, on the officials committee and we have managed to secure that. Indeed, although it may not be appropriate for me to be a full member of the Olympic Board, we are seeking reserved membership of that and indeed I have been invited to meetings to observe, so that is progress. The reason I think it is important is that clearly the time span of the lifetime grant is going to be very important for us to monitor and if we are going to be in a position to make timely grant payments to the ODA so as not to hold up progress, then we need to be aware of any problems that might be emerging in order that we can deal with that and know about those in advance. Our role is after all to be the guardians of Lottery cash and, therefore, we need to be as informed as possible about progress and problems as they arise so that we can make sure that when we award the grant, we do that in a timely fashion and in a fashion that will not impede progress. Q22 Janet Anderson: That seems to me to make an awful lot of sense. Why do you think you were excluded at the outset? Ms Paraskeva: One can understand that one does not want to make committees any bigger than they need to be and I think we were fairly new into the arena. I also think this is the first time it has ever happened I believe in the history of the Olympic movement that a national lottery is going to contribute in a very significant way to the success of the Games. I think it was a new concept and I think there was a natural and understandable resistance not to make committees larger than they need to be. Q23 Janet Anderson: How would you describe your relationship with DCMS and the ODA? Do you have a good working relationship with them? Ms Paraskeva: So far they are very good. We are in regular contact with both of them and particularly obviously with the ODA, it is going to be very important for us to understand their business plans as they develop and to keep in very regular contact with them at official level and with DCMS too, relationships are very cordial. Q24 Mr Evans: Did you have any input into the forecasts of the projected annual income from the Olympic themed games? Ms Paraskeva: That is not part of our remit. Our role essentially is to receive the money that is raised by the Lottery that goes into the Olympic Lottery fund and of course after 2009 the top-up monies which have been identified through the National Lottery distribution fund. Our role then is to make sure that money is given in a proper fashion against an effective application. The budgeting process is really outside of our role. Q25 Mr Evans: You would be interested, would you not, that the estimate is about £750 million which is the amount that you are expecting to get. Therefore you clearly have some interest in whether that is going to be achieved, what sort of games are taking place, whether there is going to be player fatigue since it is the first time that people have contributed through the Lottery for an Olympic games. You are at the cutting edge here. Ms Paraskeva: We are very interested in it and while we have no formal role, of course we will only be able to give out the money that we get in and therefore it is in our interests, again in terms of the reputation of the Lottery, the reputation of the Olympics and our accountability to the general public, to make sure that their money is useful. Of course, we have an interest in whether or not that £750 million will be realised and will be enough. Q26 Mr Evans: Are you confident? Ms Paraskeva: We are looking very carefully at the projections by Camelot and any future operator of the money that they intend to raise through existing or new games. Q27 Mr Evans: I should declare an interest that I own a small retail store in Swansea which has a Lottery outlet. Therefore I will ask you this question, do you find it at all difficult in the negotiations that you have had, by the fact that there is going to be an announcement shortly about a new bidder and maybe somebody taking over from Camelot, we do not know yet, do we, who is going to be there in 2009? Ms Paraskeva: We do not know who the operator will be and we have to have confidence in the process and the work that the Commission is doing looking at the applications before the new licensee. We must have confidence in that process, that they will look at the ability or otherwise of any applicant to make sure not only that they can deliver in the long-term but that they do not give us any kind of dip in productivity that would seriously impede the kind of cash projections that we will be working to. We are fairly confident that will be one of the things in their sights as they select the new licensee. Q28 Mr Evans: You are happy at the moment then and you think that should they choose somebody else other than Camelot it will slot in nicely and everything will be agreed beforehand? Ms Paraskeva: As I said, I do believe that the National Lottery Commission will make the decision and have got firmly in their sights the need to make sure that all of the applications that they might consider seriously have this written in as a very significant part of their objectives. Q29 Mr Evans: To date, how much money has come in? Mr O'Connor: To date almost £60 million so far. Q30 Mr Evans: £60 million? Mr O'Connor: Yes. We were slightly up on target at the end of the last financial year and this year we have received about £43 million to date. Q31 Mr Evans: In total you have had £60 million since the Olympic game started? Mr O'Connor: That is right, since the game started and we have made one grant to the ODA. Q32 Chairman: Given that the success of the Games is very dependent on the Lottery's finance, are you relaxed about the idea that potentially in going through the disruption and the change of operator, that one shares crucial funding targets? Ms Paraskeva: I do not think we can be relaxed about it, I think we have to put our confidence in the selection procedure and in the way in which the application will be looked at. I do not feel relaxed because it is our job to make sure that we are able to give out the money that comes in and therefore we are obviously as anxious as any of you will be that the projected cash will be raised and that there are no disruptions to that income generation because of the way in which any changeover happens. Q33 Chairman: Clearly the disruption would be minimised if Camelot were to retain the contract. Is that going to influence the process at all? Ms Paraskeva: I have no idea, that really is outside our remit. Q34 Chairman: Can I ask you about your funding policy. You clearly do not see yourselves simply as being a body that writes cheques to the ODA when the ODA asks for them. What discretion do you feel you have and on what grounds would you consider rejecting a request from the ODA? Ms Paraskeva: We do have discretion, we are an independent body. Of course, the Secretary of State lays down policy directions and at any moment I think she does have the right to exclude particular kinds of funding arrangements. Apart from that, we have absolute discretion to look at any application before us and fund or not fund all or part of it depending on whether we believe as a Board that it meets the criteria that are laid down for a successful delivery of the Olympics. We certainly would feel confident enough to say no to the ODA if we believed that what they were presenting to us was unachievable. In a way it is very linked to the question I think that I was asked right at the beginning, it is the reason that we need to be as involved as we possibly can in the groups that are talking about progress. If something looks as if it might be going wrong, the sooner we know about that the better. We do not want to find ourselves receiving an application and suddenly, completely from out of the blue, comes something that we have to say no to because obviously that would be in no-one's interest because the funding could then slow down the building of the site itself. Q35 Chairman: You are pretty confident, given the arrangements which you were explaining earlier that have been put in place, that you could resolve any disagreement between the ODA long before it got to the point at which they were asking you to write the cheque. Ms Paraskeva: I think given that they would know that we are going to write the cheque, although we may decide not to write the cheque, they may listen to us fairly seriously during the negotiations. Q36 Chairman: Who else might benefit, do you think, from your distribution of funds. Are there other players in this process who are likely to come forward? Ms Paraskeva: At the present moment we have decided, in fact, not to open any kind of application line because we fear that would encourage applications that we could not necessarily meet. At the end of the day, if the Lottery manages to exceed its expectations and we are projecting a greater cash pot than is required, then clearly we might look to other applications. There is nothing to prevent anybody at the present moment, even though we not seeking applications, making that approach to us. Mr O'Connor: Parliament gave us the power to fund anything which is necessary or expedient for the delivery of the Olympic Games so we have quite a broad range of powers. Clearly we see those people who are delivering the physical infrastructure being the first priority call on our funds. We could do other things and in fact to say that we would never do other things would be to go in the face of what Parliament has said we should do. Clearly, the review of costs which are going on at the moment will be very important to us. I think we would like to see the outcome of that before we could even consider whether there would be room for anything else. Q37 Mr Saunders: If a community wanted to host a training camp for a series of events or an event, would they be able to apply to you to upgrade their facilities in order to host that? Ms Paraskeva: I think that is the responsibility of LOCOG. Mr O'Connor: LOCOG have taken on the responsibility of ensuring that training camps happen but we also think that there will be local authorities, RDAs and also the National Olympic Committees who bring their team to a country, they should be willing to invest. At the moment we see it as LOCOG's responsibility, it is not something which we are considering. Q38 Mr Saunders: The success of ticket sales is absolutely crucial to everything we are talking about today. How much of a particular sale do you think is down to the fact that it is a Lottery ticket and people like a bit of a gamble, or how much of buying this specific Lottery ticket is down to the fact, "I feel part of the Games and I want them to succeed"? Ms Paraskeva: I am not sure that we know that yet, to be honest. I think the past history of Lottery players in relation to good causes shows that while people are interested in good causes and where their money goes, that is not why they buy the ticket, they buy the ticket to win and we know that because of the significant increase in ticket sales every time there is a rollover. Q39 Mr Saunders: This is different because this is the first time we have no evidence specifically of the benefits when you buy it. Ms Paraskeva: The reason that we do not know that yet is that although we have some scratch cards that are re-branded effectively, or new games replacing old games and we have the Dream Number ticket which apparently is doing very well, have not got anything which is very explicitly selling the Games on a Lottery ticket. Q40 Mr Saunders: Are you at all concerned that there is a need to get a message out beyond London that people are part of these Games in order to help promote ticket sales or do you fear there could be a backlash that people reject this Lottery because this is some London-based event which has got nothing to do with me and I will buy a different one? Ms Paraskeva: I think the people all through the country were terribly pleased when the London bid was successful. Personally I believe that there may well be a different situation now because the Lottery funding for the Olympics is a unique experience for people and I do think that there is an opportunity there for the operator, and one hopes that the operator will take that. Q41 Mr Saunders: Should you not be monitoring this and actually having a contingency in place if there is customer rejection of this Lottery? Ms Paraskeva: The difficulty for us is that we do not have a formal role in that regard but as I say we do have nervousness. We can in the end only give out the money if the money comes in and therefore one of our interests is trying to unofficially monitor exactly what Camelot at the moment and any future operator is raising for us. If the projections are such that we do not believe that we will be able to give out the money which the business case from the ODA requires us, we are going to have to make that known in the very early days. Mr O'Connor: If I may add, as my Chairman has said, it is very difficult to tell when somebody goes in and buys an Olympic themed game whether they would not have used that power to buy another Lottery ticket. I think it may change over time because the excitement around the Olympics should grow. There are some early positive signs. One of the Olympic games is the "Going for Gold" scratch card. That has been the single best selling scratch card which the operator has used. Also, the game Dream Number which is the main game replaced the game called Lotto Extra and the new Dream Number game is doing better than the old Lotto Extra. It is quite early to tell but we are very conscious that we need people all over the country to buy Lottery tickets if this income is to be maintained. One of the duties, as we see it, when we look at applications for the Olympics, is to make sure that the reason we won the games for London, selling the long-term legacy and inspiring young people all over the country, is delivered because if further down the line the Lottery player does not think the Olympics is bringing them some benefit, they are not going to play the Olympic games. We do see ourselves as not just being a conduit, we do see ourselves as protecting the Lottery players' interests. Therefore when we look at applications, we look at applications and we say, "Is this delivering on the promise London made?" Q42 Mr Saunders: All the projections are that the Olympic Lottery will have an impact on the amount that other Lottery distributors are distributing and the other Lottery distributors are nationwide so a fair amount of that money is coming back to communities that are a long way from London. I live 200 miles away from London, why should I buy an Olympic Lottery ticket instead of one of the other Lottery tickets where I know at least some of that money might come back into my community? Mr O'Connor: The question is, what is the Olympics doing for the rest of the country which was the question you discussed earlier. There is no doubt about it, the majority of the activities will be in London but there will be jobs to be had and there will be contracts to be won. Also, on a less economic tangible basis, what the Olympics must do, if it is to be worth money, is to inspire young people to become active, if they do not take part in the Olympics, to take part in sport, to change people's attitude and also it is a chance for Britain, when we will be on show to the world in 2012, to showcase all of Britain and to attract tourists to all of Britain. There has to be an integrated strategy across a number of bodies and the other Lottery distributors are also considering this. One of the things which the other Lottery distributors have done with Government is set up a £40 million trust fund to try and support activities across the country associated with the Olympics. One example is the UK school games which we aim to make an Olympic-type experience, a multi-sport activity for young people. The first one took place in Glasgow in September, the next one will take place in Coventry next year. Under consideration now is where those school games will be held running up to 2012. It is important, as you said earlier, that we rise to the challenge of making the Olympics meaningful to people all over the country and if we can do that, then I think we are more likely to get people to play the Olympic Lottery games. Q43 Mr Hall: The Olympic Delivery Authority mentioned in evidence to us that they have got a budget of £2.375 billion of which the majority of that £1.5 billion is coming from the Lottery, so it is a substantial amount. If I understand the evidence which we have been given today, the Olympic Lottery-themed games have so far generated about £60 million in one year. That is not going to get anywhere near £1.5 billion in five years, is it? What happens if there is a shortfall? Ms Paraskeva: I believe the Chancellor of the Exchequer has underwritten the whole Games. Q44 Mr Hall: We are relying on the Chancellor, are we? Ms Paraskeva: No, but again, as I say, our responsibility is against applications to make grants to deliver that money. We are obviously concerned about the income but we do not have any direct control of that. All we can do is to make sure that the business plans from the ODA and the amount of money that we know we are going to receive match each other so we are not in any position of exposing lack of funding. Q45 Mr Hall: If the Olympic Lottery Distribution Fund, which is the year 2012 pot, does not generate £1.5 billion, what actually happens? Mr O'Connor: Could I explain the £1,500 million from the Lottery which goes into the £2,375 million public sector funding package. That £1,5 billion from the Lottery is made up of £750 million new Olympic games, the other £750 million does not come from Olympic Lottery games, it comes from the mainstream Lottery. That main pot money is made up of £410 million which will be taken from the National Lottery Distribution Fund after 2009 and given to us; a further £50.5 million from Sport England to fund the aquatic centre and velodrome and the remaining £289.5 million will be the sports distributors across the country investing in community sport and elite athletes in order to maximise the benefits that we get from the Olympics. Only half of the £1,500 million is due to come from Olympic-themed Lottery games. Q46 Mr Hall: How do you ensure in the next five years that the Olympic Delivery Authority will get a predictable stream of income from the Olympic Lottery distributors? Mr O'Connor: They will apply to us for money. So far they have made two small applications £77.6 in total and they have only drawn down £15 million so far. Towards the end of this year they will make an application for full grant and if we like the application we will make a grant offer, although that grant offer has a clause in it which says "Here is a grant, if the money does not come in from the Lottery, we cannot give it to you". Q47 Mr Hall: There is a real question mark over the security of funding for that part of the £2.3 billion that they are expecting to have to spend over five years. Mr O'Connor: The Lottery is a business and there can be no guarantee that people will continue to play the Lottery, although the success over the last 12 years has been remarkable and that £750 million cannot be guaranteed but there will be best endeavours. I think it is also important to get the amount in proportion. This year the Olympic Lottery is supposed to generate £96 million, with the total Lottery delivering £1,400 million to good causes so we are only talking about six and a half per cent of this year's take. While it is a significant sum of money and there can be no certainty, we believe that Lottery is such a national institution now that it will continue to deliver. Q48 Mr Hall: The £750 million comes out of the Lottery games, if there is a shortfall in that, is it possible for Camelot to vire money from the mainstream pot to make up the shortfall? Mr O'Connor: The Government does have the power to take money from the main pot and put it into the Olympic pot and they have already said that they will take £4.10 million from the main pot after 2009 and put it into the Olympic pot, so the Government does have that power. It would be a positive resolution from Parliament so Parliament would have to agree. Q49 Mr Hall: So Camelot could not do it on its own behalf? It would need parliamentary authority? Mr O'Connor: Yes indeed. Even Camelot's designation of games being Olympic or not Olympic can only be done with the agreement of the National Lottery Commission who essentially own the Lottery and have licensed it to Camelot for the operation of this period. Q50 Mr Hall: I understand the process now that this money is not guaranteed and that the Olympic Delivery Authority has actually got to bid for it and make specific applications. If they find themselves with short-term problems, what can be done to help them? Mr O'Connor: We can only give them money which we have available. If we do not have the money we cannot give it to them. There is at the end of the day government underwriting. There is also the memorandum of understanding which you referred to in your terms of reference which says if costs exceed what is planned that will be shared between the Mayor and the Lottery, but we have not got that yet. Of course, we are not the only funder of that £2.375; there is also the GLA and the LDA. Q51 Mr Hall: By far the biggest proportion is coming from the Lottery. Would there be any way of drawing down on the £410 million that is promised post 2009 if that was necessary? Mr O'Connor: That would be for the Government to agree and they would have to come to the House to say they wished to do so. Q52 Chairman: If the appeal of having "Olympics" written across the top of the ticket proves to be less than you anticipate, do you foresee any possibility of making the Olympic game more attractive to people than the national game by altering the odds or prizes or somehow shifting the incentives? Ms Paraskeva: What we know is what sells tickets commercially is the size of the prize, and I am sure that Camelot and whoever wins the contract for the future will be thinking of that in terms of the contribution that they are committed to make. What we need to do is make the market grow, and of course that might mean rebranding the existing games but it might mean also additional games. One of the things that we are concerned about is making sure that, in as much as we can informally with Camelot and others that they are able to brand the games in the way that the public recognise. At the present moment Dream Number is not necessarily very well known as the game that is actually distributing money to the Lottery. One assumes that any Lottery distributor will want to build on that and rebrand over time because, as we know, every game needs refreshing from time to time as part of the marketing plan. We are looking to the operator to make the market grow. Q53 Chairman: Looking at your projected income figures, you clearly anticipate that there should be a boost at the time of the Beijing Olympics; is that correct? Ms Paraskeva: That is what we understand. The kinds of things that boost are indeed the rollovers but also the kind of marketing that one would do around people's interest in the Beijing Olympics would be exactly the time that one would expect there to be a hike in the sales. Chairman: I do not think we have any more questions, thank you very much.
Memoranda submitted by the Central Council for Physical Recreation and Business in Sport and Leisure
Examination of Witnesses Witnesses: Ms Brigid Simmons OBE, Chief Executive, Business in Sport and Leisure, and Chair, Central Council for Physical Recreation, and Mr Tim Lamb, Chief Executive and Director, Central Council for Physical Recreation, gave evidence.
Chairman: For the final part of this session can I welcome Brigid Simmons, the Chairman of the CCPR, who I think is also wearing her hat as Director of Business in Sport and Leisure, and also Tim Lamb, the Chief Executive of CCPR. Nigel Evans is going to start. Mr Evans: One of the legacies of the Olympic Games is supposed to enthuse people to get off their sofas, although clearly for the period of the Olympics they will be there with their Coca Cola in one hand and a McDonalds in the other --- Mr Sanders: And a Rothman's! Q54 Mr Evans: What are the chances, though, of the excitement of the Games, the legacy being that it is going to get particularly youngsters, I guess, participating more in sport because it did not happen in Australia, did it? Ms Simmons: I do not think there is any evidence so far that any Olympic Games has instilled that long-term legacy of participation. I think it is up to us to start that now. Let us define legacy first of all because there will be legacy in the East End in London. We have dire facilities; the nearest 50-metre pool is in Paris. That definitely will be achieved and they will have long-term use, and I think the Mayor has done a very good job in putting up revenue funding which will ensure that. In soft legacy terms I think you have to realise that we have a long sunrise and a short sunset, and if you think about it in those terms then it is absolutely vital that we get on and work on that sort of legacy now. DCMS has produced in tourism terms the welcome legacy of consultation for a national strategy, we hope well-resourced at the end of it because it closes in November. We have nothing like that in terms of sports participation and we need to have a national co-ordination with a plan because otherwise ten years after the Olympics we are going to find that some wonderful idea in Essex was completely unknown in Northumberland, and we have this timebomb of 14 million people caught into the NHS who will obese by 2010 before the Olympics which the Olympics has the power to change if we handle it right. Q55 Mr Evans: I find that in the summer when Wimbledon is on you cannot get anywhere near a tennis court because everybody is enthused by watching the tennis players and they are all out there playing. Give it about one or two weeks after Wimbledon is over and you can get on the tennis courts again. So how are you going to make this a lasting thing so that people are not just going to take this up for a few weeks because of the frenzy of the Olympics and this is this going to be something far more than that? Mr O'Connor: The answer is if you want a sustained legacy you have got to work at it, and if I can cite an example from the sport that I used to be involved in, which is cricket, in order to capitalise on the eventual success of the England team in winning The Ashes it was only because the ECB had put in place a whole properly resourced infrastructure and development at grass-roots level that the game was able to cope with the additional interest among youngsters in cricket which was the inevitable consequence of beating the Australians. Unless you have a proper strategy, unless that strategy is properly resourced, unless you have a co-ordinated plan right across government to make an increase in participation absolute top priority, you are not going to get that increase; you have to work at it. Q56 Mr Evans: Have you any idea about some sort of projected costs on that? This is clearly not just spread out over the period up to the Olympics and a few weeks after; this must be an on-going thing. Any ideas about how this is going to be achieved? Mr O'Connor: Disappointingly only literally in the last few days Sport England, or rather the DCMS, has published the detail of Olympic Objective 4.4, which is the one that is of the most interest to the CCPR because that is the one that deals with increasing participation, but Sport England are being expected not only to increase participation levels anyway, regardless of the Olympics, by 1% a year to 2020, they are being asked to undertake a whole load of initiatives and projects in relation to London 2012 without any additional resourcing, which to the CCPR's mind is absurd. Q57 Mr Evans: So it cannot be achieved without the resources? Mr O'Connor: That is very much the view of the CCPR. Q58 Alan Keen: Good morning. It is obvious that a lot of money is being transferred from other sports under Sport England's control so other sports are going to be hit and the CCPR seems to think that that is pretty definite. Could you expand on that? Ms Simmons: Yes, I think if we are talking about legacy, legacy has got to be UK-wide and not London and the South East, but it has also got to be across all sports and kinds of recreation, not just Olympic disciplines. We only have 26 sports for the summer Olympic Games and somebody at the age of 50 who may not be interested in taking part in pole-vaulting but they are very much interested in looking at what are the opportunities for rambling and other activities, and so it is hugely important that that is part of the legacy, as well as providing opportunities to raise our participation which will help us to become elite in the long run. Mr Lamb: I think the other point to make is perhaps we have had some of our worst fears confirmed by the evidence that was heard just before now and that is the amount of money that is being taken away from the main Lottery to pay for the Olympics. Let me make it absolutely clear, the CCPR is totally behind the Olympics. We want it to be a very, very successful event, we want to win lots of medals, and we want it to be the best ever Olympics but, equally, we want to see a real legacy of participation. Our understanding is that there is going to be a migration in terms of the buying of Lottery tickets from the traditional Lottery to the Olympic Lottery of 59%. Ms Simmons: That came out in the Regulatory Impact Assessment within the Olympic Bill so that is the Government's own figures; that is not figures that we have just made up. Mr Lamb: The amount of money coming from the Lottery into sport has actually halved in real terms over the last ten years and what we are concerned about is the additional hiving off, if I can use that phrase, of £340 million from the main Lottery to the Olympics is further going to exacerbate the situation and leave Sport England without the resources to be able to generate that legacy of participation which, let us face it, was absolutely a main plank in the successful bid last year. Q59 Alan Keen: The last report we issued before the summer recess started was one on women's football. I think it has been accepted by the DCMS and the FA that a task force should be set up. Based on recent history in the States, women's football is immensely popular. I think if things are done right we could encourage over the next ten years one million to 1.5 million women to participate in sport through that, but the Olympics, as you say, is going to inspire relatively few. Ms Simmons: It really could be used to inspire and, just as Paul Deighton was talking about going into schools all around the country and finding school children totally enthused, it could be used, but it will not naturally happen if all you do is go round and say we all think the Olympics is fantastic. That will not translate into participation. The reason why I think it needs national co-ordination is that this is not only an issue for DCMS. If you want to have new cycle paths, if you want to have new walkways, if you want to have local authorities putting more funding (who are mainly responsible for funding at local level of community sport) then DCLG has got to have a role, Defra obviously looks after recreation in the countryside, the Department of Health has got a massive interest in participation. We have Caroline Flint as the Minister for Physical Activity. I do not think that these are all resources that necessarily have to go through Sport England but there has to be a national co-ordination of resources which sees that prize of 2012 and says now we can galvanise people into taking action and indeed participation. Mr Lamb: Just to underline that point, the Department of Health have just this week I think published their Healthy Living campaign and it does not even mention the word "sport". Q60 Alan Keen: In a way, the Department of Health has more to gain from sports participation than anyone else. Should not they make a contribution to make up for the less money that Sport England will have for grass-roots sport? Ms Simmons: I think they should and I think there has been a lot talked about in the Department of Health. They have given a lot of money to PCTs but it has disappeared, if they are not careful, into budgets which have been required for other things in the NHS. I think one of our real concerns is there has to be real resource behind it. Mr Lamb: I think there is a good precedent in the school sports and PE arena where I think £250 million has been made available through the education budget for school sports and what we need is an equivalent amount, if not more, from the health budget as a preventative measure in order to do something about this so-called timebomb that everybody is talking about in terms of childhood obesity, diabetes and being overweight. Q61 Alan Keen: You are saying to me there is still a lack of co-ordination right through the whole of sport and physical recreation? Ms Simmons: Certainly making that link to the 2012 legacy. Mr Lamb: I think the problem is that because sport until quite recently has enjoyed somewhat of a low priority (or not enjoyed) in government circles, Sport England, given the nature of Sport England as a body, just does not have the political stature to influence cross-departmental agendas. It needs a powerful mandate from the top of government to make this whole area of increased participation a priority. I do not want the Committee to think we are just banging on about money all the time. It is about organisation, it is about planning, it is the timing of that planning. Most local authorities seem to have an Olympic director who is travelling around the place trying to attract teams to come and train in their locality. If the same amount of energy was being devoted to strategies and plans to increase participation, then I think that, in our view, would be a better thing for local authorities to be spending their time and their money on. Q62 Alan Keen: One final question to Tim, as Joint Secretary of the Lords and Commons Cricket Team --- Mr Lamb: I have my tie on specially, Alan! Alan Keen: How many Test matches are we going to win? Q63 Mr Evans: What question was that? Mr Lamb: Although I am no longer involved directly, I would still obviously wish the England team every success. I think it is going to be very, very hard, but I sincerely hope that The Ashes will be retained because we all know what a great boost that is to cricket, and I am sure that if the Olympic Games are equally as successful in terms of their organisation and medal tally then that will have the same galvanising effect on sport across a wider spectrum. Q64 Chairman: I am accepting that the CCPR are fully in support of the Olympics in London and the boost that that is going to give. Are you suggesting that because of the decision about the way in which the Games is to be funded there is a real danger that any benefit which is gained in terms of inspiration of young people to participate in sport could actually be outweighed by the damage done through the loss of funds to grass-roots sport from the main Lottery? Ms Simmons: I think when you are looking at the legacy 20 to 30 years on, yes there is a danger. We will be inspired as a nation if we win medals at the Olympics, and the CCPR is totally behind all the efforts and the money that is being put aside for participation and to get those performances right. I do not think necessarily, however, that that is a rung at the bottom that somehow increases participation with that funding. If you look at the gap that we have got, a lot of money, as Tim has said, has gone into schools, where we have a gap is we still have 70% of young girls who drop out post-16. We have not got those club links right. We have an awful lot of people who post school never participate again. It is that sort of area that I think we are concerned about. Mr Lamb: Leaving aside the funding issues that I referred to five minutes ago, if you look at the delivery plan for England at least and the Olympic Programme sub-objective 4.4 which was produced last week, there are some very good initiatives and projects which are going to be overseen by Sport England, but Sport England is expected, as I said before, to fund all these initiatives and programmes without any additional resources. In fact, probably less bearing in mind the migration away to the Olympic Lottery and other Government decisions. Q65 Chairman: If there is a cost overrun, which certainly previous Games suggest is likely, the Government's decision that that overrun must be met at least in part out of the Lottery will do further damage. Do you think that that should be met out of central government funding if the overrun occurs? Mr Lamb: It is perhaps not for us to offer a solution but I think I was quite concerned when we had that confirmed 20 minutes ago by Janet that indeed the Government can exercise the right to make that payment. I think that would be of grave concern because it would be even less money going into the grass-roots and the development side of sport which is what the CCPR feel most passionately about. Q66 Mr Hall: Who actually funds the Central Council for Physical Recreation? Ms Simmons: We have a budget of about £1.9 million of which about £1.2 million comes from Sport England. Q67 Mr Hall: I understand your concerns then. Mr Lamb: It is actually £1.5 million, if I can just get that right for the record. Ms Simmons: To explain the history to that, we owned all the national centres like plas-y-Brenin that existed in this country and in 1972 we exchanged them for funding in perpetuity. Q68 Mr Hall: A fine job that is done in those centres. In the memorandum that you submitted to the Committee you talked about ways of increasing participation. I do not actually share your pessimism that the Olympics will not inspire people to participate in sport, I am sure it will do, and as somebody who plays tennis regularly, Nigel, you are absolutely right about what happens in the week of Wimbledon. Could you give the Committee some more information about the pathfinder projects that you are planning to increase sports participation? Mr Lamb: I think it is a question of each locality determining its own needs. Bearing in mind the enormous spectrum of activity that the CCPR represents, from, as we say, football to folk dance, I do not think we mind too much what people are engaging in. As has already been said, there are only 26 Olympic sports; there are well over 100 other recognised sports, plus all recreational activities who are in membership of the CCPR. Just taking the tennis example, I think the Lawn Tennis Association has estimated that it will cost £1.2 billion to provide a similar number of tennis courts as in France and the estimated cost of maintaining the existing stock of community sport facilities in good shape is £0.5 billion. We welcome the extra money that is being spent on elite athletes, we welcome the money that is being spent on school sports, but there needs to be additional investment at the community end as well because the danger is that we will have more kids playing cricket at school, we will have more people wanting to enjoy the excitement of the Olympics and being inspired to pick up a sport or a recreation. The danger is there will not be any decent facilities for them to play them. If I go back to the example of cricket, you have to work at putting an infrastructure in place, the infrastructure, facilities, coaches, and development plans in order to cope with the inevitable increase in numbers, otherwise it will be a two-week wonder whereas what we want to ensure is that the legacy from the Olympic Games is sustained over many years thereafter. Q69 Mr Hall: What about your pathfinder project ideas, how are they going to work? Mr Lamb: Sorry, I did not get that? Q70 Mr Hall: In your evidence you submitted the concept of increasing participation by pathfinder projects. Ms Simmons: I think there are two answers to that. One is it is the community sporting networks and how they work on the ground. In the BSL evidence we had this document What About Sport which talks about legacy co-ordinators on the ground. If you look at how it works on the ground, you have the regional sports boards and you have the regional offices of sport, you then have county sport partnerships, and below that you have a whole network which involves voluntary sector organisations and the CCPR has persuaded Sport England that there should be a champion on each regional sports board for the voluntary sector and for all the sports which do not naturally fall under county sports partnerships. What we are talking about is having some pathfinder-type project sat that low level and having that co-ordination, so that moves into the regional sports boards, the regional sports boards have a link to nations and regions, which I think is a wonderful idea but at the moment it is looking more at with tourism than looking at the sporting legacy. Then that moves up the field towards a local Olympic board to the DCMS. Mr Lamb: I think we are concerned about the emphasis of nations and regions, which again has been mentioned a couple of times this morning because my understanding is that, as Brigid has said, the nations and regions group seems to be much more about economic regeneration and tourism than sport and recreation, and in fact until very recently there has only been one member of the entire group who has had anything to do with sport. I think David Hemery is now going to be attending as the vice chair of the BOA but up to now there has been only one representative from sport. If the nations and regions group is part of the vehicle for driving up levels of sporting participation, then the make-up of that group needs to be changed. Ms Simmons: Pathfinders will look at what works and what does not work. At the moment we do not know that and I go back to the point I made originally, we could in 20 years' time find that something worked really well in Essex but nobody had picked it up anywhere else around the country. Q71 Philip Davies: In the CCPR evidence you express some concern about the extent to which the Olympics protect their symbols and marks and all this from what I think is known as "ambush" marketing where other people ride in on the back of it. In your evidence you gave an example of a primary school which chose to call their annual sports day a "Mini Olympics" which might be caught under this overarching effort to stop anybody else apart from the main sponsors from benefiting. Have you taken any legal advice as to how far the legislation does protect the Olympic symbols and to what extent your members can or cannot use the Olympic name? Mr Lamb: I do not want to overplay this point. We did mention it but it is not a major point in our submission. We totally understand that the Olympic symbols and marks have to be protected. £750-million worth of sponsorship, as I know from my background in professional sport, is an enormous amount of money and those rings have to be protected in order to attract the right level of investment. However, I think brand enforcement must be proportionate. LOCOG deserve credit actually for having clarified some of the rules regarding the protection of the marketing symbols to governing bodies. I just think that we need to keep things in perspective and ensure that we do not turn people off or in any way temper their excitement about the Games by taking things a little too literally, but it is not a major concern we have. Our major concern is to ensure that the legacy of participation is as we would expect it to be. Q72 Philip Davies: What have LOCOG said to you in terms of what can and cannot be done? Ms Simmons: The same rules apply to a private sector organisation as they would to voluntary organisations if they were to sponsor us so Venter Panter (?) cannot say that they are supporting an Olympic sailing team even though they are sponsors of the RYA. One way of getting round this very lower level might be that each 1%, say, of that funding that was given by the top-tier sponsors went towards grass-roots sports, you could have an association there where some of that grass-roots sport may benefit from an Olympic sponsor. That may be one idea that is worth looking at. Q73 Philip Davies: Have you made that suggestion? Ms Simmons: We have made that suggestion within the Olympic field, but I think at the moment the key emphasis, as Tim has rightly said, is around finding those sponsors and so maybe it is something that should be considered as we move down that road. Q74 Philip Davies: Will you or have you been sending out advice to your members about what they can do and what they cannot do? Mr Lamb: There have been meetings involving national governing bodies and lawyers from LOCOG and we would like to commend LOCOG for doing their utmost to answer any queries that national governing bodies have. Ms Simmons: They have produced some advice too which we have disseminated to our members. Q75 Mr Evans: I just want to come back to the main thrust of what you have had to say because it has been hugely depressing, quite frankly. Can you give us any indicator as to how much the total spend by the state is now on sport? I want to separate it out from the National Lottery if we can because I was on the Committee that started up the National Lottery and there was supposed to be a thing called "additionality", that National Lottery money was always going to be additional to whatever the state spending was going to be. Clearly that has not been quite kept to the word. If the amount of money that is now being added in from the National Lottery is going to be poached even further, then clearly grass-roots sport is going to be completely sacrificed. It seems to be the easy hit. I know we have spoken about let us take a bit from the health budget. We all know the pressures they are under so I cannot see much happening there. The education budget, yes, something is being done there but we are still talking about the same institutions, are we not, that lock up school playing fields and facilities during the summer because they cannot afford the money to pay insurance for youngsters to use these facilities when the schools are closed. I am just wondering where we take it from here because, as I say, this is hugely depressing. I do not know what discussions you have had with the DCMS to take this somewhere forward but clearly if Sport England is being denuded of funding at the same time as they are being asked to do more, then they simply cannot deliver. Mr Lamb: I think the DCMS are well aware of our views. They are certainly well aware of Sport England's aspirations to have more Exchequer funding. There has been a significant increase in Exchequer funding for sport but it was starting from an extremely low base, and of course that has been offset by, as I say, a reduction of approximately half in real terms of Lottery funding going into sport. Spending per capita of the population, as we mentioned in our submission, is £21 per person per year in this country, compared with £51 in Australia and I believe £80 in a model European country, Finland. Ms Simmons: We know the DCLG has this comprehensive performance assessment of local authorities, certainly at metropolitan level, where they have to provide facilities within 20 minutes' walking or driving time depending on which particular authority you are. There is a need to provide more facilities and the DCLG has a part to play there. At the end of the day I would also say we must use the private sector more. That has not been a strategic priority and we are out there providing facilities and doing an awful lot without being fully integrated into that total system. Q76 Chairman: Is there a report you have done which says, "Listen, if we do not invest the money into exciting youngsters and people generally to do more sport" - and you have talked about the ticking time-bomb of obesity and diabetes and all the health costs that the country is going to have to face if we do not wake up to it. Has there been an opportunity cost done on that, that if we do not spend the money this is how much it is going to cost in a few years' time? Ms Simmons: I think a lot of work is going around this area and I sit on a steering group of a Foresight Project which is a DTI project looking at obesity and what we must do over a period of years. I have read pages and pages of scientific evidence but the difficulty is that a lot of this scientific evidence says different things, but I think at the end of the day everyone is clear that if going to deal with obesity it is not just about healthy diets, it is about people taking more physical activity, and the whole of government is going to have to own that agenda at the end of the day. Mr Lamb: Yes, I mentioned that the Healthy Living Strategy recently published by the Department for Health does not mention sport. I am pleased to say that we are about to sit down with the Department of Health with a group of selected governing bodies of sport and recreation in order to talk through these issues. I know that the cost of increasing participation to the sort of level that was envisaged even before July 2005 will be very, very considerable and yet Sport England, who are the vehicle for the delivery of those objectives, are not getting any additional funding to assist them to do so. Q77 Chairman: You said right at the beginning that no host country had managed yet to achieve the objective of a lasting increase in participation in sport and that is one of the four key strategic objectives which was set in the pledge in Singapore and yet your evidence suggests that we are not going to be any different from any previous host country. Do you think it can be done? Ms Simmons: Yes, I do think it can be done and I think with some national co-ordination and national consultation we could pool all the very good ideas together and make some plans about how we can actually work, as I have described, from the ground upwards. So, yes, I think it can be done but remember what I said right at the beginning, which is that we have a long sunrise and a short sunset and we must start on that. Mr Lamb: There has to be the political will. It is not just about the Games but the whole sporting system around the Games must be ready to accommodate the inevitable increase in participation. Chairman: I do not think we have any more questions. Thank you. |