Examination of Witnesses (Questions 180
- 200)
TUESDAY 21 NOVEMBER 2006
RT HON
TESSA JOWELL
MP AND MR
JEFF JACOBS
Q180 Philip Davies: Can I first just
check I heard correctly an answer that you gave previously which
was that you are investing a further £400 million to make
sure that the Olympics run on budget.
Tessa Jowell This covers the appointment
of the delivery partner, CLM, who are overseeing every single
contract that will be let. There will be hundreds and hundreds
of contracts. They will be responsible for cost control and timeliness.
The appointment of a delivery partner is one of the reasons that
T5, for instance, has been such a successful project in terms
of coming in within budget and on time. So, yes, we are spending
£400 million in order to make sure that this is done properly.
Q181 Philip Davies: Moving on to
LOCOG, they have got a budget at the moment of £2 billion
to spend on the actual Olympic Games. If they do not get their
£2 billion of income in, would you allow the taxpayer, as
happened in Sydney, to bail out the Olympics to make sure that
it was as good an Olympics as possible or would you urge them
to cut their cloth according to how much money they get?
Tessa Jowell: First of all, there
are some ambiguities and there are some disputes about the actual
costs of Sydney, and what was attributed to the Games itself and
what was attributed to regeneration, but specifically in answer
to your question—and I met Paul Deighton again yesterday—they
are very confident that they are going to reach not just the sponsorship
target but they will reach the necessary budget. As you will obviously
be aware, the LOCOG budget does not comprise only sponsorship
income, which they are now going out to get, but also income which
comes from the IOC as a matter of course as part of being a host
city, from the sale of television rights, from other forms of
worldwide sponsorship, and from ticket sales.
Q182 Philip Davies: Given that confidence,
will you at this stage then rule out the prospect of the Government
stepping in at the last minute and giving some extra money for
the Games if it does run short of funds?
Tessa Jowell: Five and a half
years out it is very foolish to rule anything in or anything out.
What I am telling the Committee in the clearest possible terms
is that this project is under control, that cost control is a
daily part of the rigour, and that LOCOG are confident that they
are going to raise their sponsorship target. Yes, of course there
is provision and this is why it is important—and I am grateful
for the Committee's inquiry—that the Government is so engaged
in this. The Government has underwritten the costs of this but
just because the Government has underwritten the costs does not
mean that the Government is going to have to step up to the plate
and write LOCOG a cheque because LOCOG are confident—and
those of you who have heard about LOCOG's plans will understand
they have reason to be confident—that they are going to
meet their sponsorship target.
Q183 Philip Davies: Can you confirm
today to us that this "nanny state" ban on the advertising
to kids of junk food will not have any effect on Olympic sponsors
and what they are expecting? McDonald's and Coca Cola are big
sponsors of the Olympics. Can you confirm that Ofcom's proposals
and any ban on junk food will not affect the income for the Olympics?
Tessa Jowell: First of all, no,
I do not think we expect it to have an impact because a number
of sponsors are worldwide sponsors for the IOC and they will support
not just London but Vancouver at the Winter Olympics before London,
and obviously the IOC are well aware and have made their sponsors
well aware of the developing proposals in relation to restricting
the advertising of particular foods, high in salt, sugar and fat,
to children.
Q184 Philip Davies: So it will not
make any difference to the income? They will not be asking for
some money back?
Tessa Jowell: I do not believe
that at this stage LOCOG believe that they will have to adjust
their sponsorship estimates in the light of Ofcom's announcement
on Friday, but I am absolutely sure that this is something that
as these changes take effect they will keep under review.
Q185 Philip Davies: Obviously it
is going to be a big, expensive business, advertising during the
Olympics and all the rest of it. Have you made any assessment
of the effect that that might have on businesses' and companies'
support for grassroots sport during the year that the Olympics
is on?
Tessa Jowell: We are certainly
looking at this very carefully. First of all, the Olympics is
a very attractive sponsorship offer, but part of the way in which
we avoid the situation to which you refer is by making it absolutely
clear that, for instance, the Cultural Olympiad, which will start
when the Beijing Olympics closes and Liverpool becomes the Capital
of Culture, is also part of the Olympics. Sponsors also understand
and there is a lot of interest from sponsors in engaging with
us in our development of sport in schools and sport for young
people. That, too, builds a non-commercial association with the
Games, so we are engaged with this, we have the Olympic legislation
which, in order to maintain the value of Olympic sponsorship,
forbids a commercial association with the Olympics where no commercial
association exists, and within those strictures, yes, we would
seek to reassure, encourage and inspire sponsors to look at the
very wide range of activity that the Olympics will give rise to.
This, again, was another lesson at Barcelona. There are all sorts
of decisions that will be taken to bring forward projects and
to do them now because of the 2012 timeline, and many of our great
companies want to be associated with those. I would be grateful,
Chairman, if I could add a quick postscript on that because one
of the things that I am very exercised by, and I think the Committee
has raised this before, is that in order that the association
and the involvement of the Games is felt by towns, cities and
villages right across the country, we are looking at how we can
create a brand which does not fall foul of the commercial relationship
as part of sponsorship that people can use, that schools can use,
that local sports clubs can use, that drama groups can use, that
village schools can use, and so forth, so we do get the sense
over the next five and a half years of the whole country having
the opportunity to be engaged in this. The fact that we have 100,000
people already signalling their enthusiasm to be considered as
volunteers from all over the country is just but one measure of
how extensive this is.
Q186 Philip Davies: I used to work
in marketing for a large company before coming into Parliament
and we used to have our budget each year set for us. Do you not
share the concern and fear that because of those fixed budgets
the amount that is going to be invested in the Olympics will have
to be at the expense of advertising and elsewhere, and that what
could be affected is grassroots sport, and sponsorship and support
of those things? You do not have any fear at all of that?
Tessa Jowell: No, I do not accept
that. I think you only have to go and look at the local partnerships
that have been established between sponsors, local firms and many
of our school sport colleges, for instance, and so forth, to be
reassured by that, but this is something that of course we will
watch closely. In this business of running an Olympic Games you
can never ever say just because we have thought of that problem
we can stop it becoming a problem. You have to keep it constantly
under review.
Q187 Mr Hall: Just to move on and
look at the effect the Olympics is going to have on the National
Lottery and the impact that that will have on organisations like
Sport England, in your opening statement you said that there is
a possibility of an overrun on the Olympic facility itself of
about £900 million and there are three contributors to that:
there is the National Lottery; there is the London council tax
payer; and there is the London Development Agency. If Sport England
are going to have to contribute £295 million out of their
budget to the Olympics and actually suffer a loss of income because
of the Olympic Lottery sales, how are Sport England going to continue
to develop community sport and help that to be the legacy of more
people participating in sport after the Olympics?
Tessa Jowell: I think you need
to start by looking beyond just the community sport programmes
that are funded by Sport England. You have got to look at the
new opportunities, including the physical education and sport
programme, which has invested £587 million in England in
new sports facilities in schools, all of which as a condition
of funding are also available to the local community. There are
then the Active England multi-sports centres which are being established.
There is then the work which is being funded through the Community
Club Development Programme. There are then the capital resources
of the National Sports Foundation and the investment by the Football
Foundation. In total, together with what Sport England is making
available, that means that we are seeing what I think it is safe
to describe as an unprecedented level of investment in sporting
facilities and in coaching, and arguably coaching is even more
important than sporting facilities. To go to your particular point
about the impact on Sport England, when we announced the bid I
set out just what the impact will be on the Lottery, and we have
examined this closely with Camelot and with the National Lottery
Commission and in discussion with all the Lottery distributors,
and the estimate was that the establishment of the Olympic Lottery
Game, which is performing very well and from which we need to
raise £750 million, would cannibalise (in other words displace)
about 5% of spend on other Olympic good causes. It is not quite
at that level from the last figures that I saw because we have
seen an increase in the level of Lottery ticket sales so that
is the first point. The second is that at the beginning of July
I made clear that the second tranche of funding, the £410
million, would be top-sliced from the NLDF between 2009 and 2012.
That will have an impact of reducing the amount because it will
be shared equally across all the distributors that they have for
good causes by about £12 million[3].
However, in order to create the circularity of this argument,
it is important then to understand, as I made clear in response
to your point, that community sport, that culture, that heritage
in this country are all going to benefit from the Olympics in
a way that no other global event would create benefit. So I think
it is important to see it not just in terms of the money that
is going out of the door in order to fund the Olympics but the
benefit that is coming back to those good causes because we are
hosting the Olympics.
Q188 Mr Hall: I am sure that Sport England
will be reassured by that because they are the ones that are actually
facing a reduction in their Lottery income. If I have understood
the process right, there is a predication, as the Secretary of
State has said, of £750 million from the Olympic Lottery
sales. What if it does not actually generate that amount of money?
Where does the shortfall come from? Who is going to meet that
difference in projected income? Will that fall on the shoulders
of Sport England or will that fall across the whole of the sporting
recipients of Lottery money?
Tessa Jowell: In what I think
is currently considered to be an unlikely event that that happens,
we would obviously have to review the position and we would have
to make a judgment about the capacity of the NLDF to make good
any shortfall in the contribution, but, again, I would say that
just because we are prepared, if the circumstances arise, to make
those judgments at the time does not mean that we are predicting
that those circumstances will arise. The Olympic Lottery is doing
extremely well thanks to the support of Lottery players up and
down the country.
Q189 Mr Hall: Is it on target to
reduce the £750 million?
Tessa Jowell: I would not say
that, no.
Q190 Mr Hall: I do not think we have
had that evidence either.
Tessa Jowell: As I said at the
beginning, Chairman, you have to see this as a running film over
the next five and a half years in which we can take still photographs
at a moment in time, but we have to have the degree of rigour
and oversight that enables us to adjust and change if circumstances
alter, and I am very happy to share with the Committee, and would
be delighted to, the information available to us about the performance
of the Olympic Lottery.
Q191 Mr Hall: How much of the £295
million that Sport England are putting directly into the Olympic
bid is new money or is it just recycling money that was spent
previously?
Tessa Jowell: The money from the—?
Q192 Mr Hall: The £295 million
from Sport England?
Tessa Jowell: That is money that
will be part of the Olympic bid. It is slightly more than £295
million. That is money that will actually be spent on part of
the cost of the aquatic centre and the velopark on the Olympic,
site but also in order to develop more community sport and Olympic-related
community sport activity in other parts of the country. I should
also add to the potential funding streams Legacy Trust which,
as you know, is being established with the residual income from
the Millennium Commission together with contributions from the
Arts Council and Sport England, in order to establish a fund that
will be able to fund cultural activity in different parts of the
country to support the Olympics.
Q193 Mr Hall: But is it money that
has been spent previously on other Olympic initiatives? For example,
on Athens it will be spent on helping our elite athletes participate
in Beijing.
Tessa Jowell: No, the Beijing
funding is handled by UK Sport and you will be aware of the very
substantial increase in funding between the Beijing Games and
the London Games made available by the Chancellor's announcement
in the last Budget. Can I just also confirm for the Committee's
record that in relation to the expectation that the Olympic Lottery
will deliver, the Lottery Commission (the regulator that oversees
this) have also confirmed that they expect it to meet the targets.
Q194 Mr Hall: They do expect it to
meet the targets?
Tessa Jowell: Yes.
Q195 Mr Hall: As somebody who has
been interested in sport all my life I am absolutely convinced
that the Olympics will generate more interest in sport and get
more people to participate, but the evidence that we have been
given is somewhat contrary to that. When you look at what has
happened in Sydney and in Athens, there has not actually been
an uptake in sporting activity across the nation. Have you got
anything to say about that?
Tessa Jowell: I certainly do.
We put this legacy—the active generation of young people
taking part in sport—at the heart of the bid and we have
planned on that basis, because it would be the most shocking waste
if we had young people who were inspired by the Games, took up
sport before the Games, and then all that fell away after the
Games, and that is why the legacy planning which is taking place
not only in relation to the Olympic Park, not only in relation
to the building of thousands of new facilities and the development
of coaching, but also through the development of sport in school
and competitive sport in school is all part of ensuring that we
realise a legacy of participation and sporting excellence in our
young people that neither Athens nor Sydney did in quite the same
way.
Q196 Chairman: Just on the sport
in schools issue, can you confirm that the Government's target
is as announced by the Chancellor of the Exchequer, that every
school child should do at least four hours a week by 2010?
Tessa Jowell: That is our hope.
Q197 Chairman: The Chancellor suggested
it was rather more than a hope, that it was declared Government
policy.
Tessa Jowell: That is the kind
of leadership and ambition that we expect from the Chancellor!
We are delivering and we have already achieved two hours of sport
in schools and 80% of young people are taking part in that. We
have also made clear that by 2010 we expect that to take place
in curriculum time, and clearly through things like the Community
Club Development Programme and other investment we want to see
that increase. I cannot at this stage give you a cast iron guarantee
that four hours will be all in curriculum time, but certainly
we have already got a very substantial number of young people
who are doing much more than the two hours, about 61% are doing
two hours in curriculum time, so this is a steady and rising curve.
However, but I am very happy to sign up to the Chancellor's ambition
of four hours a week for every child, but we all note that there
may be funding requirements that arise from that.
Mr Hall: A very good answer!
Chairman: We have only got a couple of
minutes left. Can I ask if any of my colleagues have any final
questions?
Q198 Alan Keen: What is the latest
forecast of cost for the Olympic Stadium?
Tessa Jowell: It is at the moment
out to tender, as you probably know, so we can supply the Committee
with a range but given that we are at the moment in the tendering
process I would prefer not to give you a specific figure.
Q199 Alan Keen: Are you waiting for
the new owners (from this morning) of West Ham to make up their
mind up as to whether they would like the stadium before you go
too far down the road?
Tessa Jowell: As you know, at
the moment we have got work underway on the various legacy options
for the stadium and how those legacy options will be funded. We
have had no approach from West Ham in relation to the ambitions
of their new owners. Were they to make a proposition, the Olympic
Board would have to make a decision that it was going to consider
it, and then obviously that would become part of the legacy consideration
which is underway, but we are pretty close to developing the legacy
plan so, as I think I said in Barcelona last week, the window
of opportunity for any substantial change is closing.
Q200 Chairman: Secretary of State,
can I thank you and Mr Jacobs very much. I am sure that we will
want to re-visit this issue again in due course, hopefully not
for you to announce another 40% rise in costs!
Tessa Jowell: Thank you very much.
3 Footnote by witness: No final decision has
yet been reached on how and when to transfer the £410 million.
It is not possible to confirm precisely what the monetary impact
on the good causes, and on individual distributors, will be. The
basic proposition, however, has always been that we will take
the £410 million from the good causes as fairly as possible
and in a way that minimises the impact on those causes. Back
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