Select Committee on Culture, Media and Sport Minutes of Evidence


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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