Select Committee on Public Accounts Second Report

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).

Figure 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 6.7
Management and maintenance of the Dome2 7.5
Decommissioning the contents of the Dome and its site3 6.7
Costs associated with the second Sale process 7.8
Total costs 28.7

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.[12]

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.[13]

Figure 6: How the Department expects to protect taxpayers' interests in the deal[14]

  • 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 work.
  • 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 Anschutz.
  • 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

13   Q 13 Back

14   Qq 11-12 Back

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