House of Commons - Culture, Media and Sport

Select Committee on Culture, Media and Sport Second Report

2 Progress with land preparation and construction

6. The scale of the construction work in and around the Olympic Park site, both planned and underway, is awe-inspiring. As the ODA pointed out, the site consists of land criss-crossed by major infrastructure, including railways, sewers, power lines and roads.[4] Work to establish the extent of its contamination is proceeding but is still not complete. The Secretary of State described the Games project as "the largest public building project in Europe.[5]

7. The ODA has adopted an overall timetable for the Games project based upon the advice of its former Chair, Mr Jack Lemley. This timetable - known as the "plan that Jack built"[6] - broadly assumes two years of planning and developing strategies, four years to prepare the land and build venues and infrastructure, and one year for commissioning and testing events. The ODA told us that "the lesson from recent construction programmes is that time spent in careful project planning is never wasted" and that "by being clear about the specification for our projects before we commence construction, we will enable their successful delivery".[7] Mr Higgins, Chief Executive of the ODA, expanded on this, saying that "if you start construction and then people start changing the scope and briefs, then costs escalate and things get out of control".[8]

8. For the purposes of this report, we consider the work under three broad headings: work to provide the necessary infrastructure within the Olympic Park (starting with site clearance); work to link the Olympic Park to the surrounding area under regeneration; and local regeneration which is incidental to the Games.

Progress with infrastructure in the Olympic Park

9. Within the Olympic Park itself, the construction effort covers acquisition, survey, preparation and remediation[9] of the site itself; construction of sporting venues; and construction of associated facilities (including the combined International Broadcast Centre/Main Press Centre).

Site acquisition

10. In late November 2006, when the Secretary of State gave oral evidence to the Committee, 93% of the Olympic Park site was under public control.[10] The remaining land is the subject of a Compulsory Purchase Order (CPO),[11] a protracted process which is expected to bring the whole of the site under public control by July 2007.[12] Mr Higgins, Chief Executive of the ODA, told us that the CPO process was "on track".[13] We note that, in this respect, the London 2012 effort is already ahead of that of Athens, where slow progress in obtaining the compulsory purchase orders severely delayed construction.[14]

11. Although much of the site has until now been wasteland, it contained pockets of residential development and industrial space. Around 300 businesses were located on the site of the Olympic Park[15] and not all agreed willingly to be relocated. The London Development Agency (LDA) was charged with much of the work on acquisition, before the ODA had been established. Mary Reilly, Chair of the LDA, told us in November 2005 that some of the businesses on the site "did not want to have a dialogue" but that the LDA had forced them to do so.[16] A decision by the ODA in January 2006 to "reduce the land take" drew nearly 100 businesses out of the CPO process.[17]

12. The task of negotiation with individual businesses which fell to the LDA was challenging, as there were inevitably disputes over the value of the land on which those businesses' premises lay. The case for compensation was not confined to land values: certain firms claimed to have difficulty in finding an alternative site which offered the advantages of their present site. The LDA pointed out that the Lands Tribunal was an independent body which could consider appeals from any party which was not content with the price for land offered under a Compulsory Purchase Order; and the LDA also agreed to look at "reasonable" requests for relocation costs.[18] The Mayor of London added that if a firm were to be forced into liquidation by a prolonged failure to reach a satisfactory solution, the costs which would then be borne by the LDA would be substantial; he saw this as exercising a "very strong pressure on the LDA", which would face "real financial penalties".[19]

13. The vast majority of businesses have now been relocated, many of them in sites purpose-built by the LDA.[20] Mr Higgins noted that it was not unusual for businesses to reach agreement on relocation as the end of the public process approached.[21]

Site survey and remediation

14. Parts of the Olympic Park site are contaminated, and remediation work is required.[22] Most of that work is due to be completed by the summer of 2008, when construction of the main venues will begin.[23] Mr Higgins contrasted the previous land use of the Lea Valley site with that on the Greenwich Peninsula, where gasworks and chemical works and heavy contaminants had been present.[24] The memorandum from the Department for Culture, Media and Sport identified site remediation as one factor which could cause costs to rise.[25] Following his departure, Mr Jack Lemley, the former Chair of the ODA, claimed that the cost of site clearance could be far more than had originally been estimated.[26] However, this was repudiated by the Secretary of State, who told us that the current estimated cost of remediation was £220 million, very slightly less than had originally been budgeted for.[27] The most recent figure is lower still: £200 million.[28]

15. The Chief Executive of the ODA also expressed confidence in his evidence to us that remediation costs could be met from existing resources.[29] We were also told, however, that nearly 50% of the site had yet to undergo detailed analysis and investigation.[30] When we asked the Secretary of State whether it was possible to be confident that existing resources for remediation would be sufficient, when nearly half of the site had yet to be surveyed, she assured us that what had been discovered so far was "in line with the expectations of the engineers who are carrying out the work".[31] When asked whether the work on site survey and remediation was proceeding according to timetable, the Secretary of State replied: "I have no reason to believe it is not".[32] In a further memorandum she observed that, as much of the land had not been under London Development Agency ownership during the bid process, "it had not been possible to gauge accurately the time requirement for site surveys".[33] We note the confidence of the ODA and of the Secretary of State that remediation costs will be contained within the existing budget. However, given that the site survey work is little more than 50% complete, uncertainty will remain. The authorities should be more specific about the precise nature of contamination at the site, and the Government should report back as soon as the survey is completed.

Construction of venues

16. The Candidature File outlined five permanent sporting venues to be built within the Olympic Park: the main Olympic Stadium, the Aquatics Centre,[34] the Hockey Centre, the Velodrome and an indoor arena. The Hockey Centre is now expected to be part of a combined tennis and hockey facility.[35] Other arenas to be constructed within the Park will be relocated to other cities in the UK to provide a sporting legacy in the regions after the Games.[36] The other major permanent new facility, the International Broadcast Centre and Main Press Centre, the cost of which has already attracted controversy, will now lie within the perimeter of the Park and will have a legacy use as light industrial space.[37]

17. We return to the venues later in this report when discussing costs (at paragraph 41) and when assessing legacy plans (at paragraph 98).

Linking the Park to local infrastructure

18. In addition to the costs of preparing and staging the Games themselves, £1.044 billion of public funding has been set aside for "linking the Olympic Park to local infrastructure".[38] No detailed breakdown of the £1.044 billion expenditure was given, although Mr Higgins (Chief Executive of the ODA) told us that it had been set aside to "cover things such as the power lines undergrounding and some of the work".[39] The sum was not included in the Candidature File although it had been identified at the time that it was submitted. Some of it has been already drawn down.[40]

19. The Secretary of State told the Committee that the £1.044 billion "sits within the budget of the Department for Communities and Local Government" and that it was "routed through the Olympic Delivery Authority".[41] In response to a request by the Committee for clarification, she explained that the funding was for projects set out in the ODA's annual budget and that programming and delivery of the projects was a matter for the ODA, subject to the approval of the Olympic Board. Funding is made available from DCLG through DCMS to the ODA "subject to evidence of spend".[42]

20. We note that there remains a lack of clarity about the expenditure of such a significant sum, and we recommend that the Government issue a detailed breakdown of how the figure was reached and how it is to be spent.

Regeneration of the surrounding area

21. The Lower Lea Valley, where the Olympic Park is situated, sits within the Thames Gateway, which is described by the Government as a national regeneration priority.[43] It was the prime target of the London Development Agency's efforts at regeneration in London before the Host City contract had been bid for, let alone secured.[44] The Mayor of London set out the reasons why the Lower Lea Valley was receiving such attention: the area suffered from the worst poverty in London, perhaps the worst in Britain (and the ODA told us that three of the five boroughs surrounding the Olympic Park are among the most deprived local authorities in England);[45] and the land offered vacant sites and ready potential for development. The ODA told us that change was already coming to the Thames Gateway area, irrespective of the London 2012 Games; but it pointed out that the Games project enabled the ODA "to deliver higher quality infrastructure, in a systematic way, and faster than we could otherwise hope to".[46]

22. The Candidature File identified $11.5 billion/£7.18 billion of investment in road and railway improvements.[47] This investment was committed independently of the Games and includes projects which were to proceed regardless of whether London won the bid. That work is for the most part already funded and work is under way;[48] a small portion ($600 million/£375 million) relates to road and rail improvements in and around the Olympic Park itself and will be funded from the Public Sector Funding Package.[49]

23. The Games have clearly been a stimulus to the drive to improve local transport links. In 2004, the Department for Transport agreed with Transport for London a £10 billion investment programme for transport infrastructure across London. The Transport Committee concluded that this commitment had "almost certainly helped to convince the International Olympics Committee that London's infrastructure would be able to meet the needs of the Games".[50] Arguably, by linking capital projects to an unalterable Olympic timetable, costs may end up higher than they otherwise would have been; but equally - as the Mayor of London has said - the Olympics may well make sure that many of them, such as the extension of the underground to Hackney, will actually finally be implemented.

24. It is less clear that the Games have added impetus to the Crossrail project. The Crossrail Bill is presently before a Select Committee, which expects to report to the House later this year. Assuming that the Bill receives Royal Assent and that the scheme is taken forward, there will be some impact on the Games project: the Transport Committee noted that "much of the construction will be adjacent to the construction of the Olympic Park".[51] Crossrail services are not expected to be in operation by the time that the Games take place.

25. The remit for our current inquiry into the Games project specifically excluded transport issues and we make no comment here on the merits of the proposed transport links to serve the Games or on progress towards those goals. We note, however, the conclusions of the report by the Transport Committee in 2005 and its recent follow-up evidence session with the Olympic Delivery Authority on the Draft Transport Plan.[52]

26. Funding for local regeneration in the Lower Lea Valley has been allocated over a long timespan. The Chief Executive of the ODA, David Higgins, argued strongly that the ODA would not be taking a responsible approach if it were to carry out a superficial regeneration of the Valley, fit only for the purposes of the Games and not for any legacy use; and he called for more co-ordination of expenditure between the ODA and other Government departments which intend to invest in the area over the next five to ten years, on the grounds that it would ultimately prove more cost-effective.[53] When we put this point to the Secretary of State, she did not dismiss it; but she stressed the importance of distinguishing between the costs of the Olympic Park, which had to be met in order to fulfil commitments to the International Olympic Committee, and the costs of associated regeneration, which were a matter for the Department of Communities and Local Government.[54] The DCMS written memorandum acknowledged, however, that it was "critically important to strike the right balance between minimising costs and securing the long-term legacy of the Games in terms of the wider regeneration of the Lea Valley and the Thames Gateway".[55] We commend the scrupulous approach by the Secretary of State in distinguishing between costs which are integral to the Games and costs which are not; but we nonetheless encourage her to look favourably on co-ordinating the expenditure of ODA funds with local regeneration funds where long-term benefit for the local community can be shown.

4 Ev 3 Back

5 Q 143 Back

6 Q 139 Back

7 Ev 3 Back

8 Q 7 Back

9 The term used to describe any work necessary to treat the land on the Olympic Park site prior to construction Back

10 Ev 73 Back

11 See London 2012 Olympic Park Delivery Programme Back

12 Q 35 Back

13 Q 7 Back

14 Information gathered by the Committee in Athens in December 2006; See also HC Deb, Standing Committee D, 13 October 2005, col. 42 Back

15 In November 2005, there were 284 businesses in the Olympic Park area that the London Development Agency was "seeking to engage with individually to understand their relocation requirements"; HC Deb 7 November 2005, col. 157W Back