Select Committee on Public Accounts Second Report

2  Evaluating the value for money of the deal

6. English Partnerships estimated the current market value of its 170 acres of land incorporated in this deal at £170 million, or £1 million an acre. The equivalent value of the 48 acres occupied by the Dome might therefore have been in the region of £48 million, but in the view of the Department and English Partnerships they would not be able to realise this value by simply demolishing the Dome and building on the vacated site. Other factors led them to conclude that it would be better to preserve the Dome. [6]

7. The London Borough of Greenwich made it clear that they regarded the Dome as an iconic building giving recognition to the Peninsula. If there had been any suggestion of taking it down the Borough would have sought to have it listed. In the longer term, beyond 2018, the Borough would have to consult locally if there was any suggestion of taking down the Dome and using the site in some other way.[7] But by 2018 the Department and English Partnerships expect there to be more clarity over things like a new third river crossing, together with evidence on whether the Dome has been successful.[8]

8. The Department and English Partnerships did not deny that there would be some opportunity cost in retaining the Dome. But in their view the assumed £48 million value of the land occupied by the Dome was not money lost to the taxpayer. The current Meridian Delta scheme was a dense one that would use the capacity of the Peninsula up to the maximum level within the known transport constraints. Any proposal to increase further the amount of residential development on the site of the Dome, if the structure had been demolished, would not have been permitted because of the increased movement of traffic at peak hours. Although demolition might appear to free up an area of land for further valuable business uses, it would not in fact have created additional capacity on the Peninsula for such uses. The Blackwall tunnel was already at peak capacity during rush hours, and all that would have been possible was a redistribution of the total amount of space now given development consent. The deal yielded the maximum possible development because traffic to and from the Dome would take place at different times to peak rush hours for occupiers of homes and offices on the Peninsula. And the Mayor of London, in deciding not to direct refusal of permission for the scheme, stated that "there is no doubt that the plan seeks to maximise land use opportunities on the Peninsula".[9]

9. Finally, the cost of any demolition of the Dome after 2018, currently estimated at £19 million, would fall to the private sector, as opposed to a burden on the taxpayer which would be the case if the Dome were demolished now.[10]

10. There are various elements in this scheme which may generate future profits to the taxpayer, but which English Partnerships did not assume when evaluating the deal. For example the extent to which there might be a share in future profits from the Dome Arena and Waterfront is uncertain. Also in 2003 the Anschutz Group expressed interest in placing at the Dome one of the eight large Regional Casinos proposed in the government's draft Gambling legislation. At the time of Meridian Delta's original proposals there had been no discussion on casinos. A casino would require both planning permission and a licence under the recently enacted Gambling Act. The Government has indicated that there will only be one Regional Casino, and it is not yet clear whether the Dome will be successful in obtaining a licence. The Department has no firm view about whether a casino would be a positive or negative factor in terms of value to the deal. It is not party to any related negotiations with the Anschutz Entertainment Group, but recognises that Anschutz are pursuing it because they expect it to increase their profits, in which English Partnerships would take a 15% share after the operator had made a prior return. English Partnerships have not however assumed any return from a casino.[11]

6   Qq 33-35 Back

7   Qq 36-37 Back

8   Qq 41-43; Ev 13 Back

9   Qq 81-83; Ev 13 Back

10   Qq 51-55 Back

11   C&AG's Report, para 3.20; Qq 89-93, 99 Back

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