3 Managing the deal in the long term
11. Most of the returns to the taxpayer from the
deal are still a long way off. It will be several years before
even the costs that English Partnerships incurred in maintaining
and selling the Dome between 1999 and 2004 should be recovered.
English Partnerships have spent some £14.5 million on external
advice and professional services during the two successive sale
processes (£6.7 million and £7.8 million respectively)
from March 1999 to June 2004 to enable them to reach the current
deal (Figure 5).
5: The total costs to English Partnerships of decommissioning,
maintaining and selling the Dome
|Total costs incurred by English Partnerships in the sale processes and in managing the Dome from July 2001 until the deal became unconditional in 2004 amount to £28.7 million.
|Nature of expenditure
|Total expenditure £m
|Costs associated with the first Sale process1
|Management and maintenance of the Dome2
|Decommissioning the contents of the Dome and its site3
|Costs associated with the second Sale process
Source: English Partnerships
1 Costs incurred up to February 2001.
2 Includes environmental insurance £0.59
million and Staff Costs in addition to the figures in Figure 13.
3 Exclude decommissioning costs incurred by the
New Millennium Experience Company, £6.3 million.
12. On present plans the first £30 million of
proceeds will be returned to the taxpayer during 2008, and the
remaining expected £3 million contribution due to English
Partnerships for having maintained the Dome from 2004 should be
available before the end of 2009. Thereafter English Partnerships
will derive returns in the form of a minimum land value from the
disposal of parcels of land as well as a share of profits from
land development. Only by 2015 is the deal expected to generate
a higher return than could have been received by just selling
off the land and demolishing the Dome. The Department and English
Partnerships hope that as the development takes off the value
of later parts of the development will increase further.
13. Since the financial returns are deferred, English
Partnerships intend to deploy robust management arrangements to
ensure that the taxpayers' interest is protected over the next
20 years in this complex profit sharing deal. The Department takes
confidence from several factors which are listed in Figure
6. More generally, the Department does not perceive the Greenwich
Peninsula contract as being any more complex than any other joint
venture might be which requires a return over time. For example,
the contract for a development in Barking Reach will be of a similar
nature. In terms of its profit share from the Arena and the possible
Casino, however, this particular deal may take English Partnerships
into unfamiliar territory.
6: How the Department expects to protect taxpayers' interests
in the deal
- All the parties
involved, including English Partnerships, are experienced players
and throughout negotiations English Partnerships were advised
by professional advisers experienced in making such contracts
- There are arrangements
for oversight, management and monitoring and the return of proceeds.
- There are fallback
clauses in the deal itself which would allow English Partnerships
to step in and retrieve the contract for the public sector in
the event of slow progress by Meridian Delta, and others that
would permit Meridian Delta to step in given slow progress by
- The deal is to
be managed by a special project team, sharing offices with the
Urban Development Corporation in the Thames Gateway.
12 Qq 10, 67-69, 85-88 Back
Q 13 Back
Qq 11-12 Back