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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 69-i House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE CULTURE, MEDIA AND SPORT COMMITTEE
LONDON 2012 OLYMPIC AND PARALYMPIC GAMES
Tuesday 21 November 2006 MS JULIA BRACEWELL, MR STEPHEN CASTLE and MS JULIET WILLIAMS RT HON TESSA JOWELL MP and MR JEFF JACOBS Evidence heard in Public Questions 1 - 87
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Culture, Media and Sport Committee on Tuesday 21 November 2006 Members present Mr John Whittingdale, in the Chair Janet Anderson Philip Davies Mr Mike Hall Alan Keen Rosemary McKenna Mr Adrian Sanders ________________ Witnesses: Ms Julia Bracewell, Scotland Representative, Mr Stephen Castle, East of England Representative and Ms Juliet Williams, South West Representative, Nations and Regions Group Members, gave evidence.
Chairman: Good morning everybody. This session is part of the Committee's on-going inquiry into preparations for the 2012 Olympic Games. I am tempted to say that our opening session with the Nations and Regions Group is the starter before the main course - but the Committee does attach huge importance to ensuring that there is a benefit of the Games throughout the entire United Kingdom and, therefore, we do see the work of the Nations and Regions Group as extremely important. Can I welcome representing Scotland Julia Bracewell, from the East of England Stephen Castle, and from the South West Juliet Williams. Perhaps I can invite Adrian Sanders to begin. Q1 Mr Sanders: Given the interest this morning, I am beginning to wonder whether we ought to be asking questions about stadium capacity later on! You talk a lot about the working groups that are involved. I wondered how large are each of your working groups, and what steps you have taken in them to ensure that all relevant sectors are represented and not just the "usual suspects"? Mr Castle: Thank you, Chairman. Firstly, may I thank you very much for inviting us to be here this morning as your hors d'oeuvres. We are very pleased to carry out that role for you. The three of us have worked together now for around three years in the Nations and Regions Group, really since before London was successful in the Singapore bid. We are incredibly excited about not only the opportunity to help deliver a fantastic Olympic Games for London but also, more importantly, to actually drive the benefits of those Games outside of London into the wider country. This is very much sold as a UK Games hosted in London, and we very much believe that. A lot of the work we have been doing is to ensure that we deliver that. Each of us represents, I guess, different areas within nations and regions coming from: obviously Juliet's perspective and RDA background; my own local government background and Sport England background; and Julia from Scotland and sportscotland background. Each of us in terms of our own regions has slightly different structures in terms of the way we operate. From the East of England perspective we have a very broad church, a broad engagement, key government agencies - the "usual suspects" as perhaps you would describe them - but also just as importantly we have very broad geographical representation of the various of the six counties around the region. In each of those counties, and in our regional group, we have a number of thematic working groups that pick up certain areas of work. Sport is very strongly represented right the way through our region, and indeed nationally at a nations and regions level where some half of the nations and regions representatives are directly involved in sport as chairs of regional sports boards. There is also a broad range of other engagements: whether it be tourism through VisitBritain; tourism in my case through the East of England Tourist Board; tourism also being represented at a county level. There is a strand of different engagements, different involvement of different sectors depending upon the structure and the particular level we are looking at in the organisation. Ms Bracewell: Within Scotland I chair the Scottish Steering Group for 2012, and obviously I am the representative on the Nations and Regions Group. We have a full-time secretariat in the Scottish Executive, three people there, and one of those is our NRG coordinator who goes to the co-ordinators' meetings. On our Steering Group we have got arts, sports, business, tourism, volunteering, disability, sport and the business sector represented through a range of national bodies and national agencies. Below the Steering Group we have three permanent subgroups: an economic and business group; a sport group; and a culture and education group. We bring together ad hoc groups on specific issues, for example training camps (which may come up later) that look at specific projects. That Steering Group is about 14 people, and the subgroups range from about five to ten to twelve; but what we have tried to do is ensure that we have got the key influences and the key movers and shakers that can make things happen on those groups. Ms Williams: The situation is pretty similar actually in the South West. To give you just one example of the way in which we are bringing the sectors and sport together, we have somewhere in the region of 200 accredited beacon companies in the South West, and next week there is a conference chaired and facilitated by Sir Clive Woodward to actually help those companies be creative and innovative with the way in which they actually step-change their performance in response to the Games, in order to actually make 2012 a catalyst to the way in which business performance itself changes rather than necessarily having a direct influence. Q2 Mr Sanders: Would you say you have all got a strategy at this stage and have agreed a strategy? What is your timetable for carrying that forward? Mr Castle: Each of the regions has just completed developing their strategy. Those strategies are currently being reviewed by Government and by LOCOG and, depending upon which region that is, some will have more immediate issues around delivery. A good example, for instance, in the East of England I addressed some 100 businesses in your Chairman's constituency a couple of months ago because businesses in the East of England are very interested in their engagement in the supply chain. We have a big SME base there, particularly in the construction industry, which really wants to engage in part of that process. In other parts of the country that delivery phase, the timetabling of that delivery, will be different for different elements; but each of the regions has now submitted their initial plans through into LOCOG for review by LOCOG. Ms Williams: One thing I can add to that is that we all shared our plans at the Nations and Regions Group meeting last week. In terms of the strategic process what we are trying to do is ensure that our strategies have a real bearing at the grass roots and on the ground. We have, for example, looked at legacy perhaps separate from the need to take tourism as a particular initiative. What we are trying to do is to be sensible and appropriate with the kind of strategic processes that we are actually adopting. Ms Bracewell: Within Scotland we are very clear that what we are trying to do is maximise the benefits of the Olympic Games to Scotland and everything flows from that. Looking at what we are already doing through the Scottish Executive and through different national agencies to make sure there is an overlap and where we can make things fit within normal strategic objectives we can do that. We have set the vision and set the objectives quite clearly, but for us one of the huge benefits is actually bringing those people together, sprinkling the magic dust of the Olympic Games over it and getting lots of cross-cutting work done and bringing bodies together who traditionally maybe should have worked together but have not been able to find a way to do that in the past. The Olympics are enabling us to join up and do that. We have a strategy for what we want to achieve; we set objectives; we are working through that with nations and regions obviously to work out what the overall objectives for the Nations and Regions Group should be but within each of that there is also an opportunity for us all to do things that we want to do ourselves anyway. Q3 Mr Sanders: How much of these strategies are actually being driven by guidance through DCMS and LOCOG, and how much is actually being driven by grassroots interests? Mr Castle: The strategies are very bottom-up. Certainly in my experience in terms of pulling that together it is a combination within East of England of the county working groups working with the regional group. The county groups have got their own strategies; indeed the Essex one is being launched in two weeks' time; and in fact the East of England one is being launched today and I am rushing back to chair that particular session. It is very much grassroots, but at the same time clearly it tackles issues and priorities that we have been asked to look at by DCMS, but it is localised because every region is different. Ms Williams: I would very much endorse what Stephen has said. Ours is very much from the bottom up. The first summit that we had, which was cross-function and cross-interest, was actually in March of last year, three or four months before the bid was won, in order to actually start to build the kind of interest and the buy-in to the whole process. I would say that in every single strategic process we have put in hand it has certainly been driven through a consultation process at the point where it is actually going to make the greatest difference. Ms Bracewell: We are probably slightly different because we started with Nations and Regions Groups. We were all involved in the consultation on the setting of the Olympic objectives by DCMS, LOCOG and the Olympic Board. We have looked at those Olympic objectives within Scotland to see where they fit with what we are doing. We have obviously got some stuff that is coming from the bottom up; but when the LOCOG strategy was written we were given a document to fill in so we were guided by LOCOG in the areas that were part of the Olympic objectives anyway. Although some of the stuff is coming from the bottom it is certainly sitting within an overall national planning framework. Q4 Alan Keen: Good morning. Stephen Castle started off saying he was excited but Tim Lamb, Chief Executive of CCPR, seemed to be just the opposite; and he said that most local authorities seem to have an Olympic director tearing about fighting other local authorities trying to get what they could grab. Is there a lack of coordination? Is Tim Lamb completely wrong, or is there some truth in what he is saying? Mr Castle: I am surprised, from reading his evidence, that he was not positive about it. Local government have an interesting relationship with the Games. The decision was taken at a fairly early stage during the bid phase that an engagement outside of London would be driven through by the Regional Development Agencies and by the Regional Sports Boards and that has, I think, caused some issues about the way in which local government is now part of that process. A lot of the work I have been doing back over the last two or three years is to really engage local government. I am very pleased that Chris White, who chairs the LGA's Culture, Tourism and Sport Board, has now been appointed to LOCOG. I have been there representing local government, but I have also now got a colleague from the West Midlands who is a senior Cabinet member there as well. Local government is now being very much brought into it. In the East of England it always was, because we saw this as very much a local government-driven exercise, but I think in other parts of the country that has been an issue. I am pleased now that local government understands it has a key delivery role in terms of delivering the benefits outside of London; and it is putting some serious investment into it. My sense is that local government is being wrapped closer and closer into the nations and regions structure but some things take a little while. Some parts of local government are very entrepreneurial; sometimes my own authority is a little too entrepreneurial as well but they wanted to go and engage perhaps outside of the structures that would help them to do that. My experience now is particularly of the work of the LGA. Local government is now much more engaged and plugged into nations and regions and I am very pleased about the appointment of Chris coming onto the Nations and Regions Board nationally. Q5 Alan Keen: Can you just give an example of investment by local authorities? Mr Castle: In Essex in this financial year we put investment in of £250,000. We have employed an Olympic co-ordinator, who is actually our strategic sports development officer. We have put significant investment into supporting the structures. We see that as a really key community leadership role. Obviously the benefits for Essex are very real. We have a venue actually in the county, and we are the closest county to the Games site; so it is very much in our interest to put that investment in. Other counties and other local authorities further away are also investing. They have a sense across a broad range of agendas and issues, whether it is volunteerism, whether it is culture, whether it is education, that the Games can have an impact and actually what they need is somebody in their organisation who can often challenge, within their organisation, as well as going out in a more wider community leadership role, and enable people to understand what those benefits are. I think the critical thing now is we are seeing that group of, if you like, representatives at a local government level and officers, coming together, networking particularly around the Local Government Association. I am really pleased with the way in which the LGA, LOCOG and Nations and Regions are now working closer together to facilitate that. Ms Bracewell: In Scotland we have COSLA sit on our Steering Group and then we have local authority representatives on each of the subgroups as well and they are obviously key to getting anything delivered. Earlier this year when the London 2012 Road Show came to Scotland, Dumfries and Galloway and Stirling put on huge sports festivals to coincide with the bus arriving to really engage their local communities. Aberdeen put on something special. In Edinburgh there was an existing event going on, a volleyball event. The local authorities were very involved doing that. Within Scotland clearly we have got a national and regional facility strategy so we have got a lot of top-level venues and training facilities coming onboard in 2009/2010. Those have been driven a lot by local authorities, and local authorities are investing in those. We would hope to be able to use them in some shape or form around the 2012 training camps and tester events as well. Q6 Alan Keen: Are there any guarantees yet from certain nations as to what they are going to do in the regions for training camps and that sort of thing? Ms Bracewell: For training camps there are a number of different things happening. First of all, LOCOG has offered each of the National Olympic Committees the sum of about £25,000 to come and use the facilities in Britain. That sum of money for some of the smaller countries will be fantastic. There is a formal process whereby the top facilities in the country will go into a brochure that is sent to National Olympic Committees in 2008 marketing the facilities. There are a couple of things out there I would like to hit straightaway. One of them is that National Olympic Committees will come in their droves and in their entirety to training events. That is not going to happen. What we are expecting is that individual teams or groups of sports will come, but it will be very rare to sign up a National Olympic Committee in its entirety. The experience in Australia, which was very unique, was that some NOCs went together, but predominantly the one that does it best is Britain. We set the standard for training camps by taking the whole British team together. We are not anticipating others doing that here. For us in Scotland we have done an audit of all the facilities we would expect to be used; we would go through the official LOCOG approach; but we would also have informal relationships that we have already got with international federations, with sports that we know who already use us as training venues who would come; and have velodromes built and we would get cycling teams and things like that. The strategy will be working on what facilities you have got and which teams or different countries you can bring in, and then how do you link that into community programmes, sport development programmes, cultural programmes and everything. LOCOG will give us the big framework and will give us an opportunity to market at one level, but a lot of it will also be working on our own links we have got to maximise. Ms Williams: Perhaps I could contribute a couple of things, the first of which is that particularly with a sport like sailing, for example, training camps actually have to be within the area where the experience of the type of water and the type of environment in which the teams are going to have to sail is to happen. In a sense perhaps some of the opportunities would be limited in that case, perhaps to the south coast. Of course, we have already got world championships and so on in the various classes taking place year by year so, in a sense, that whole experience is starting to build. In common with my colleagues, we also are starting to build a list of applicants, of those who actually have the right facilities to offer particular specialist services to national teams. We have I think about 13 applications at the moment and would expect about 40 perhaps going forward, but they will all become part of the brochure that then is submitted overseas. In a sense we are all going through a similar kind of process which will then create that database. Q7 Alan Keen: I will not dwell on this because we have got so much to cover. I have argued less strongly before we were awarded the Olympics than I will argue afterwards: I think we need to learn lessons. I cannot see that it is going to be held in nations with fewer resources than we have got, ever, in the future. I think that is caused by the IOC demanding that the village is within half a mile of the main centre, and it is a city Olympics rather than a national thing. Very quickly, would you not be happier if Scotland were actually hosting part of the Games than just looking for people to come and train with you? Without any extra cost, what part of the Games could you have hosted had it been not a London Games but a national Games? Ms Bracewell: We are already hosting some of the football matches at Hamden. Q8 Alan Keen: I am talking about the other stuff. I would not argue about the football. Ms Bracewell: Ultimately the IOC want a City bid and therefore we are happier that for us the way the Scots are going to take part is as athletes and volunteers. Q9 Alan Keen: I know you have to say that. I am asking what events could you have hosted in your regions without having to spend any extra money, apart from a few coats of paint? Ms Bracewell: All we are doing is going flat-out for the 2014 Commonwealth Games. I am going to dodge that one! Alan Keen: I expected you to! Q10 Janet Anderson: Turning to tourism - there are various different estimates of the financial benefit that is likely to accrue as a result of the Games. The Tourism Alliance has in fact said that they think "most inbound Olympics-related tourism will be in substitution for leisure and business tourism that would otherwise occur". I wonder if I could ask all three of you whether you think that is correct, or whether there will be additional benefits and whether they will be during the Games themselves or post the Games? Ms Williams: In many respects I think it is up to us in the preparations that we actually make. I think over previous Games there have been a huge raft of very different kinds of experiences in terms of tourism and the whole visitor economy. What it does tend to do, of course, is actually to provoke different kinds of experiences and behaviours even within the domestic market as much as it does within the international market. What we have done is to go about this in a sense by actually including tourism. The Chief Executive of VisitBritain actually sits with us on the Nations and Regions Group. The strategy for tourism for 2012 has actually gone through a really robust consultation process so that we have all had the opportunity to input into it, to give it the kind of substance that in the beginning looks at the whole welcome that we may have the opportunity to give; cleaning up our act very often in terms of points of entry, like airports, stations and so on and so forth; but actually taking on board the quality agenda; promoting the kind of skills opportunity and skills development opportunities within tourism to create a better and more robust product that then will have greater resonance perhaps with those incoming visitors overseas. I think in terms of the numbers themselves it is really quite difficult for us to make any particular protestations at this particular point in time. I think the key issue is that the whole visitor experience will actually be underpinned by a really robust strategy, and the kind of action into which all of us buy; rather than necessarily just the tourist industry itself. Q11 Janet Anderson: In the South West will you have additional visitors as a result of the Games? Ms Williams: I actually think perhaps as a region we might be in a slightly different position because we do have the sailing events at Weymouth. I do see that attracting sailors to particularly those waters that have a good reputation for sailing anyway. What I would like to feel is that London is a gateway to the South West, as much as it is to other regions of Britain. I think it is up to us to promote it as such so what we have to offer in the region outside the M25, if you like, is an extension of the kind of stay of those who actually come to the Games but that the welcome is the same throughout. Q12 Janet Anderson: I think your point about the gateway is very interesting, because the Mayor of London of course has a responsibility to promote London as a gateway and always has. Stephen and Julia, what do you think? Mr Castle: Certainly from the East of England's perspective we would see the gateway issue to be very important, not only in terms of gateways to London through the regions - so Stansted Airport and our port facilities, and we will be seeing a lot of people coming through those gateway access points into the UK - but the challenge for us is to say, "This isn't London Stansted, this is Stansted Airport which is in the East of England, based in Essex, and we would like you to turn right as well as turning left down the M11 to see and understand what the rest of the region has got". I think we see it very much as an opportunity to use as a shop window, particularly for parts of the region that perhaps have not quite as good a reputation, and I am thinking John and I are sort of home county in that sense, where parts occasionally suffer in people's perceptions. There is an opportunity there with 20,000 journalists being based there to sell the beautiful parts of Essex that John comes from and, indeed, the rest of the region. I think we see it also as an opportunity for business tourism, again touching the gateway, around the Thames Gateway. That is hugely important for our region and the opportunity to attract business travel, to put the Thames Gateway on the map as gateway to the Olympics. I think this is a real opportunity. We see a number of different areas and share some of the issues Juliet has got but, as much as anything, it is about using it as a window. Ms Bracewell: For us it is very much looking at the four years of the Olympiads, starting in 2008 and then going right through to the years afterwards. With the London Olympic Games how does that reposition and remarket Britain overseas? What you would hope is that we are trying to increase our tourism revenues by 50% by 2015 so we are saying this is a long-term strategy whereby, as Britain gets replaced overseas with an image of being dynamic, a great place for the youth to come and things like that, we would hope again we are able to market Scotland in that way to increase visitor numbers across the whole thing, not just the six weeks that the Games are running. Certainly over the six weeks of the Games, having gone to the Olympic Games, you can get fatigued by it all. We would hope that people would be quite happy to come up to the Edinburgh Festival, which would be happening round about that time as well. During the Games there might well be a chance for people to go and do other bits, but the real gain will be how to use the Olympics over that eight-year period to do something really fundamental. Q13 Janet Anderson: Your point about the Olympic procedures is interesting, because do you think that some potential visitors will actually be put off and might think, "Oh God, it's going to be overrun by Olympic visitors so I'm going to go somewhere else this year"? Do you think that is a likely effect? Ms Williams: I am absolutely sure that that is a potential effect. I think it actually depends on the way in which a) we promote ourselves nationally to the incoming public to make sure there is an extension of stay; and b) there are other parts of England actually outside London. I think it is how we promote and market the message, but make sure that the country as a whole is providing the welcome regardless of where the gateway is? Q14 Janet Anderson: Generally, do all three of you think there will be additional visitors? We are not talking about just substituting visitors who would have come anyway? Mr Castle: The evidence of previous Games is that during the Games period that is questionable. As Julia has emphasised, over a longer period I think there is an opportunity for additional visitors. Ms Bracewell: Look at Barcelona - I was lucky to be out there last week - tourism increased significantly after the Games. You have a six-week TV commercial for Britain going out and people around the world, as they look at their TV screens to watch events, are going to get some of the sorts of footage around Athens showing beautiful pictures of the country. There is a big advertising opportunity for us, as well as people going back and saying, "I had a fantastic time". Allied with strategic marketing, I would hope we do get an increase in visitors. Q15 Mr Hall: From evidence that we have received already and from what you have mentioned this morning it looks like you have reached a firm conclusion that there will be many competitor nations in 2012 requiring pre-training camps in the UK. What is the basis of that sort of assumption? Ms Williams: I think it is difficult for us to ascertain and I think it will take us a couple of years before we really know. I think there are a few basic premises we have to adopt - the first of which is that we are in Europe and not in Australia, which is the point that Julia made; because a lot of the big teams are close by, but there are those who need special facilities and special opportunities that we can offer. I think the opportunity is different. I think what we were meaning to indicate was that there will be an awful lot of small teams from other countries who will need hosting as much as they need facilities; but also there will be the specialist team requirements as well. In a sense there are two parts to this, but I suggest that there will be a different map and a different geography, if you like, perhaps from previous experiences at other Games simply because of our circumstances. Mr Castle: I think it is also true to say it is a moving feast. It is developing and different teams will look at what we have done as a nation and seen whether that was successful or not and taken a view as to whether it is more the kind of activity they want to engage in. Julia was right, in the past it is has been very much a Team UB area of work but my sense is that there will be more interest in it. Particularly with Juliet's point around this issue of single sport teams, more smaller nations wanting to come and engage and the opportunity for communities where they have already got strong cultural links to build on those and to actually be involved in hosting, not just as a team but perhaps people who are supporting them, people who are travelling with them, I have heard of one community that is particularly interested on working on its existing business links with Korea, for instance, and got some thinking around opportunities for sponsorship and business that are based within that community around particular sports that are popular within Korea. It may not be enough hosting a team but what they are thinking about is how they can build their existing cultural links off the back of the Olympics into different areas of work. Q16 Mr Hall: Part of what you are saying is what we ought to be targeting our market at are event-specific venues, rather than all-nation training camps? Ms Bracewell: Correct, I think that is right. Certainly you could bring three or four countries over to train in any particular sport around a venue probably more easily than you could bring a whole country with all its different teams - I think event-based, geography-based ones, and the sailing example you have had. I think the opportunity is to work on which teams you have already got existing links with. In Scotland obviously we have got international links with certain countries. If you did it properly you would have the athletes over and the athletes doing some media training, having some cultural stuff round about it and the local schools involved learning about those countries. The benefits for training camps go a lot wider. Certainly with some of the nations that we bring over during the course of a year to use our national centres in Scotland, when they come they have to run open training sessions so any coach in Scotland can go and watch how these top level teams train and exchange knowledge in that way. For us the training camps are not about an economic benefit; they are much more about involving the community in its widest sense. Q17 Mr Hall: I think that is a very important point. We are not looking at this as an economic benefit; but there is a whole range of other benefits that will come with it. What about being proactive in the competitive nations and going to them and saying, "What is it that you actually want?" You are cataloguing what we have actually got, but what about asking them what they want? Mr Castle: Part of the work we are doing around that cataloguing process is talking to national governing bodies and NOCs and finding out what kind of facilities they do need and what would they like to see in terms of preparation camps. That is being dealt with nationally. I think the political issue your colleague Mr Keen was referencing is that we do not want too many people running around independently trying to build those links and, therefore, dropping outside of the ability of us to have a single UK offer; and also not necessarily being able to understand what it is that visiting teams actually need. That work is certainly going on at a local level, and that is part of the preparation camp process that both Julia and Juliet describe. Ms Williams: The research has been well managed actually. Q18 Philip Davies: The ODA procurement is apparently going to start in early 2007, which is not that far away. Are you confident that businesses in all parts of the UK have got all the information to hand and are aware of all the opportunities of providing goods and services so they can submit tenders in good time; or are they going to miss the boat? Ms Bracewell: I have no doubt that businesses will not miss the boat. I think we have all handled businesses slightly differently. A few things just to put this into context: LOCOG has set up a one-stop shop the 2012 website, so any business that wants to register for regular e-mails on what is happening, to learn about the procurement process, they can do that today to get information directly from LOCOG. Obviously back in the regions and the nations, Scottish Enterprise for us, the RDAs for others, are working with businesses as well. The second aim is to set up a business opportunities network which will do a number of different things. Where going down the supply chain you might have a small business that could work better with another one, you put them in touch so that they can go and deliver a service together. What we obviously have to do is to build up the support services and networks to make businesses which are not fit for purpose get fit for purpose so that they can tender and win contracts. I think the whole business thing is going to be quite interesting because it is going to drive a sea change in the way businesses do business. For me, in Scotland we have had great success for just the three companies who were supplying LOCOG prior to the bid: High Fly, Navy Blue, who did all the documents, and Pagoda, who did some communications, have all reported huge increases in revenues and new businesses opportunities. Navy Blue, for example, has accessed markets in the US and the Middle East that it would not have done without having got the international exposure it did from working on the LOCOG bid. When success stories like that get out at the appropriate time then other business will come on. We have set up conferences for next year because we think in Scotland by then we will know more about the procurement strategy; we will know more about the timetables; and then we will be able to help our businesses get in. I think there is still time and I do not think they are going to miss the boat at all. Ms Williams: I think we have actually taken a slightly different view, in the sense that we have a large number of small to medium-sized enterprises in the South West. What we have encouraged them to do is look to using the Olympics as a catalyst to the improvement of their own performance. For example, we have research and development in composite structures for the aerospace industry and we are using the 2012 opportunity and sailing in the South West to actually make sure those are introduced on a much broader scale to the marine and maritime industry; so there is a better use of resources and the building of relationships between various business sectors which, in a sense, perhaps also develops what we were saying to Adrian a while ago. It is the view that we have taken because we see that as a more immediate impact that we can actually give our businesses. Mr Castle: It is fair that there has been some anxiety, particularly around small businesses, that they might be missing the boat. Certainly a lot of the work we have been doing, and I have described some of the meetings I have addressed in your Chairman's constituency and have talked to some 600 businesses over the last six months, it is really about helping them understand the structures coming forward, and indeed pick up this idea that their Olympic legacy may not be supplying into the Games, but it might be about becoming fit for purpose for future Government contracts. There is a lot of interest and excitement around this. Q19 Philip Davies: Have you set any targets for how much of the Olympic procurement will be taken up by businesses in the nations and regions? Have you any idea of how much we can expect to see? Mr Castle: I think each of the nations and regions have probably got their own target. How much of that is around what is either deliverable or is perhaps ambitious I do not know. In the East of England we are looking at 10%, but I suspect all of my colleagues have probably got similar figures. Ms Williams: I suspect actually that it will have a lot more to do, to be honest with you, with geography and actually the sectors that each part of the country actually happens to major in. I think they will be different for us. Ours is nought; we do not expect a large percentage. Actually I would imagine that perhaps some of our large corporates might be involved in terms of not just the construction and development of the Games but also perhaps in sponsorship and so on. Certainly what we have done is taken much more trouble to work with the vast raft of small to medium sized businesses that we have to actually make them, as Stephen says, much more fit for purpose. Q20 Philip Davies: On a slightly different subject, are you receiving any feedback at all that the protection of the Olympic symbol and the thing they have set up to stop this ambush marketing is having any impact on local authorities or local organisations in terms of benefiting and promoting the Olympics? Mr Castle: The issue around branding and the association with branding I think is one of the most important issues for us to tackle in terms of delivering benefits of the Games outside of London. On the one hand I think we are all absolutely focused on the fact that protecting the Olympic brand and the revenue that is derived from that is actually critical for us to be able to deliver the kind of Games we have talked about. I think everybody understands that the way in which the key sponsors are involved in that, and the protection of their interests in that, is critical to the future viability of the Games and in particular 2012. On the other hand, we have a very sophisticated and deep civic society here where there is a real opportunity, and perhaps in a fairly unique way, to drive the benefits into donation generally. In order to do that there has to be some association with the Games themselves. You have got these two competing tensions around the branding issue. I have recently been doing some work with the guys who are looking at branding at LOCOG and I have been very impressed with the work that they have done so far. If they are able to deliver, I think the access to a brand that provides association to local government in particular but also to the voluntary sector in the way they are describing, then it is going to be unique and it will set a new template for handling brands around the Olympics. I think it is quite a big leap for the IOC to actually agree to that, but the reality is that these Games were sold on the fact that it was about a legacy that would reach right out into the community on a lasting basis. If we are to do that, in particular if the local government and the voluntary sector are to do that, then we have got to find a way of association. As I have said, the work has gone on and it really is groundbreaking. If the IOC is prepared to step up to it I think we will move on to a completely different way with the Olympics in the future in which the brand is handled and is used and is driven out. Ms Williams: What we found in the South West - because we have such a large region, being the best part of 20% of the land area of England and a large number of dispersed communities - was that we needed something to actually corral the interest across the piece; and in the absence of a brand, and fully understanding the stance that LOCOG have had to take in terms of the national brand, we decided ourselves to work with them in order to produce something that would corral interest. We developed our own brand for the South West's interests in the Olympics in order that each of the counties and each of the local authorities could themselves put their own name under the actual logo itself. That is now used right across the South West to denote any connection with our initiative in terms of the buy-in of the region to the Games. Q21 Rosemary McKenna: Clearly all of you are very enthusiastic about getting your part of the country being involved and benefiting as much as possible from the Olympic Games, and we are very pleased about that because that was one of our criteria in the Committee. Can I ask you what is happening in terms of the Cultural Olympiad? What is being planned in the nations and regions in terms of the Cultural Olympiad? Ms Bracewell: What is really interesting about London is that we have heard already it is the first Olympics doing a number of different things. The Cultural Olympiad historically has not been a high part of the Olympics at all. It has been something which has struggled. There has been stamp/coin/medal competition, but actually the Cultural Olympiad itself has not been a huge thing; whereas London set out its role very early that they are looking at it from the time that flag gets handed over in 2008 in Beijing, and there is a three-tier approach to culture. We were very fortunate, as were all the nations and regions, Bill Morris, recently appointed to LOCOG as Head of Culture, Education and Ceremonies, has done a tour of all the nations and regions and has brought together all the arts and cultural bodies. For us it was great in Scotland because we again had cross-working happening all of a sudden; the museums saying, "We can run sporting exhibitions for the year, going into the year, during and the year after" which has not happened before. The idea of having live sites around the country with cultural activities round about that will be something new for the Olympic Games as well. I think there is a lot going on around the Cultural Olympiad, and we have certainly been really pleased to be involved in that; and be involved early enough to plan it - because a lot of the cultural activities, the museums, they need four or five years to plan this. We are actually at the right point to be engaging them. If it was left any later we might have wanted to do it but been unable to do it. Mr Castle: I think it is also important to remember, picking up Adrian's comments earlier about the "usual suspects", within the various regional groups culture is very much embedded. The Regional Cultural Consortium are one of the key partners, and we have an arts culture strand within the work we do in Essex as well. There has been an engagement from the point that London was successful in Singapore, and indeed frankly before that during the bid phase of the various cultural organisations. Ms Williams: The same thing is very much true in the South West. The cultural consortium is very much part of our wider advisory board. Our initiatives certainly come as much from them as much as it does from anybody else. In fact I am sure you will remember the Eden Project in Cornwall was very much a part of the bid going forward; and we have already started to have the kind of events there that are starting to build participation particularly amongst the wider community. The ideas are starting to come forward and what we are looking at is potentially developing a decade of culture. Q22 Rosemary McKenna: The MLA has indicated that there is a concern about local authorities funding the museums and galleries etc. Is that a genuine concern? Is there any evidence to suggest the local authorities will be reluctant to do that? Ms Bracewell: Certainly what we have done in Scotland is, being able to plan this far ahead, we are working with all the national agencies about looking at: what are your priorities going to be during that time; is there a budget you have already got you could use in this way? This becomes a big theme. We are still at the stage where we are planning and working it all out to work out what the costs would be and whether they are met by national agencies, local authorities or whatever. I think we have got time to try and figure that one out. Q23 Rosemary McKenna: If they work out their strategy it does not necessarily have to mean that they have to put in a lot of additional money but that they skew their strategy? Mr Castle: I think one of the critical principles certainly in the East of England we have always engaged in as far as the Games are concerned is that it is not necessarily about doing lots of new things; it is about achieving existing targets and priorities and using the Games, as Julia described, as the "magic dust" to try and actually accelerate the delivery of some of these existing priorities. From my own experience of my own local authority, the museums and libraries have been very involved and very engaged as part of our communications plan; but it is actually about how the relationship between the libraries, for instances, changes with the community anyway; and they have been part of the bid phase. Q24 Mr Sanders: A very quick one. Should not the Cultural Olympiad start the day after the closing ceremony in Beijing and actually run all the way through? Should you not be planning that actually this aspect of the Games is as important as any other; and is the bit that can reach the communities that cannot be reached in other ways? Ms Williams: Absolutely. That is very much the view I think we have taken right across the nations and regions. It, probably more than anything else actually, is capable of touching every last individual in the country. We have certainly taken that view, and that is the way in which the plans and strategy for the Olympiad are starting to take shape. Mr Castle: The work Bill has been doing, which is knitting together the work that had already been occurring in terms of the regional cultural consortiums and the way they have been playing a role within each of the regions, that agenda is there. I described the fact the Olympics is not going to start in six years' time; the Olympics start for the East of England in probably 80 weeks' time once we get the handover of the flame and the Cultural Olympiad starts. That is just sharpening people's sense of urgency around it. I have been very impressed at the way cultural organisations have stepped up to the plate. Also it is very interesting the way local government have tied in with that as well. In my own personal experience local authorities actually say, "How do we take, for instance, linking China with London, the Beijing Olympics with what is happening in 2012 in this country?" In Essex we have very strong links with China, so there is a major cultural festival being planned in Essex off the back of the Beijing Games. Linking that through, that is the local authority taking a very strong lead, working with key cultural agencies. Ms Williams: The other thing too is that the whole visitor economy is something we have to look at in the round. Certainly as far as tourism is concerned it is just one element of a much broader picture and us needing to look at the product offer as it touches the visitor, on the one hand, and the community provider, on the other. I think there are bridges to build. Chairman: Can I thank the three of you very much. The Committee wishes you every success with your work. Memorandum submitted by the Department for Culture, Media and Sport Examination of Witnesses
Witnesses: Rt Hon Tessa Jowell, a Member of the House, Secretary of State, and Mr Jeff Jacobs, Chief Executive, Government Olympic Executive, Department for Culture, Media and Sport, gave evidence. Q25 Chairman: Could I welcome the Secretary of State to the Committee. I understand, Secretary of State, you have with you Jeff Jacobs, the Chief Executive of the Government Olympic Executive. Secretary of State, you will be aware that quite a number of questions have been asked in the last few weeks, and there is a certain amount of controversy around some of the issues in the preparations for the Games. I understand you would like to start by making a short opening statement. Tessa Jowell: Chairman, thank you very much indeed. If I may, I would just like to make some brief opening remarks, and to thank you very much indeed for asking me to give evidence today. What I would like to do in the session that we have is to give you an update on the progress of the Olympic project and focus on our ambitions for the legacy beyond the Games themselves; to give you further details of the cost estimates; and also to tell you how that bill will be paid. I will give you as much clarity as I can. It is certainly my aim over the coming months to disclose as much information to your Committee as I am in a position to do. I would be very happy after today's session to provide further written information to the Committee if that would be helpful. This is important for a number of reasons: not least the right of Parliament to know, but also the importance of maintaining the public's enthusiasm for the 2012 Games, and their confidence in the planning for the Games. Before I do that let me just make two observations. I spoke to Jacques Rogge who is the President of the International Olympic Committee¸ and in the course of our conversation he reiterated a point that he has made on many occasions about the progress of London 2012 since we won the bid. He said that the IOC has full confidence in the good progress of works; and that the IOC Commission, under the leadership of Denis Oswald, has said that we have hit every milestone to date. They know that we are further ahead than any other Olympic City at this stage; that we are two years ahead of where Sidney were at an equivalent point; and three years ahead of Athens. Just in the interests of accuracy I can just assure the Committee in today's Evening Standard that "the IOC is to probe the soaring costs of the London Games" is unusually untrue. Secondly, on costs, the work on reviewing costs began within a matter of days of our winning the bid. Talks with the Treasury about the detail of funding continue. You will also be aware that CML, the delivery partner appointed by the ODA to undertake a rigorous scrutiny of current and likely costs, is underway; and we expect their report early in the New Year. Clearly, their report will be extremely important in guiding the final decisions about the ODA's budget for next year and the indicative budgets for the two years after that. We expect the work on the costs review to conclude soon, and when it does I will report to Parliament in detail about the conclusion of that cost review. I am quite sure the Committee understand that we cannot reach a conclusion about costs for a number of reasons, but very specifically including the importance of the delivery partner, CML, concluding their work. The NAO have also agreed to work closely with us. I have invited them to do this, and would be very happy to report to the Committee on a timescale that matches the reports and joint work that we do with them on costs and ensuring value for money. In the meantime, I am obviously here to answer your questions, but if you would find it helpful to understand the swirl of figures that are being reported I can start by taking the Committee back to the original bid of £2.375 billion to build the Olympic Park and to explain where that is today. Chairman: Secretary of State, thank you for that, and I think we would certainly like to take you up on your offer of supplying further written evidence as soon as that is possible, but your statement, obviously, does give rise to a number of questions. Q26 Mr Sanders: Thank you, Secretary of State. Obviously, there are no clear figures in that statement, and therefore the only thing we really have to go on is the statement by Jack Lemley, who resigned as Chair of the ODA in October, who said in an interview with the Idaho Statesman (and we do not quote the Idaho Statesman very much in Select Committee meetings): "There's so much time being lost now, the costs are going to go up on an exponential basis and I'm just not going to be part of it ... I do not want my reputation for being able to deliver projects on time and on budget ruined." Do you believe that there was any truth in what he was saying? Tessa Jowell: I do not accept what Jack Lemley was reported as saying in his interview with his local paper. In relation to your point about costs I am very happy, Mr Chairman, to take the Committee through a fairly detailed statement about the costs as they now are at whatever point in your questioning that would be helpful. Let me deal specifically with the Jack Lemley point. Jack proposed a development plan for the Olympics called the 2-4-1 plan ("the plan that Jack built", as it has come to be known), which was two years of planning, four years of construction and a year for test events. That is the plan that is being followed. While he was Chair of the Olympic Delivery Authority he was very clear about the importance of rigorous planning and not getting on to site too quickly and giving rise to potential cost increases because the initial planning work had not been done with sufficient care and rigour. I had hoped that Jack would take some pleasure and some pride in the fact that his template for taking forward the Games has been followed, and on his departure I would quote him as saying: "I have every confidence that London will stage a superb Olympic Games and Paralympic Games in 2012 and leave a legacy that the country can be proud of". So, no, I do not accept the criticisms that he made when he left the ODA and went back home. Indeed, the rigorous investigation of the delivery partner, I think, will help us to answer at an early stage any outstanding further questions. Q27 Mr Sanders: Did he not also say that the 2012 programme "was so political that I think there is going to be a huge difficulty in the completion, both in terms of time and money"? Are you saying something completely contrary to his view? Tessa Jowell: I am saying I do not agree with him, and it was not ever a point that he raised with me while he was Chairman of the ODA in the meetings that we had, or in the meetings of the Olympic Board. Indeed, none of these concerns he raised at meetings of the Olympic Board. What he was referring to there, I understand, is the frustration he felt about the length of time it was taking to, first of all, undertake the CPO inquiry in relation to the Olympic Park and then the length of time that would be taken in order for the CPO to be determined. I think that there is just simply a cultural difference there. We, in this country, and very particularly here in London, recognise that if you are taking people's homes and businesses away they have to have an opportunity to make their own representations, to take part in the process. That is what we do. Secondly, yes, of course, the Olympic Park is being developed in very close collaboration with five elected local authorities. The support of those local authorities and, more particularly, the support of the communities that they represent is absolutely essential to the long-term sustainability and, indeed, realising the long-term and incredibly ambitious legacy of these Games. Q28 Philip Davies: Can I just press you a bit further. The quote that Adrian read out was: "I do not want my reputation for being able to deliver projects on time and on budget ruined." On the point about cultural differences, surely "on time and on budget" means the same whichever culture you are talking in. Are you saying here, then, that you disagree with that; that you are saying categorically that the projects will be delivered on time and on budget? You are categorically stating that today. Tessa Jowell: I am saying that the Olympic Games will be delivered on time. I am saying that we are developing the Olympic Games through the Olympic Delivery Authority within the framework that Jack Lemley himself recommended, of two years for planning, four years for construction and one year for test events. We are already through the first year of the planning phase. On the "on budget", yes we are setting a budget for the Olympic Delivery Authority that will be informed by the best available information and, therefore, we expect the venues and the development of the Olympic Park to come in on budget. Q29 Chairman: Secretary of State, perhaps we should move on to the question of the budget and the funding. When you appeared before the Committee just over a year ago we discussed the £2.375 billion figure for the building of the Olympic facilities. You said to the Committee: "I can confirm again the rigour that we are applying to the costs in order that they are contained within that overall expenditure limit". It has already been reported that, apparently, the figure has risen some way above that original estimate, and in terms of the total cost there are figures flying around of £5 billion, £8 billion - even £10 billion. Tessa Jowell: £18 billion you may hear tomorrow! Q30 Chairman: Perhaps you would like to tell us what you estimate it to be. Tessa Jowell: Can I begin by saying that I think you have taken evidence already from Paul Deighton, who is the Chief Executive of the Local Organising Committee, and having read his evidence, yes, he dealt in some detail with the budget for the Local Organising Committee. I think it is helpful to see this, if you like, in three parts: there is the budget for the Local Organising Committee; there is the budget for the development of the Olympic Park (the £2.375 billion to which I referred at my last appearance here) and then there is the further budget for the regeneration of the Lower Lea Valley and the cost of linking the Olympic Park to the site that will, as part of the Thames Gateway, be regenerated. I will focus on the costs of the Olympic Park, if I can, and just, therefore, take you through. Again, I am very happy, Chairman, to provide you with a written submission to deal with any further questions you may have on this, which will set out where the costs now are. So our starting point was a public sector funding package of £2.375 billion. That was a figure that was signed off across government and approved by PriceWaterhouseCoopers, who also submitted it to a probability assessment, which is an accountancy device with which you may be familiar. The bid book - and I think it is, from memory, Section 66(2) - that we submitted to the IOC also made clear that separately from the £2.375 billion there would be significant contributions from the public and private sectors for regeneration. That, as I say, is in two elements: first of all, the connection of the Olympic Park to the Lower Lea Valley and then the costs of funding the estimated 40,000 homes that will be built in the Lower Lea Valley. The Memorandum of Understanding between the Government and the Mayor of London, which was also in the bid book, allowed for the possibility that costs would increase. Before submitting the bid we identified £1 billion that was needed to cover the regeneration costs - these costs to link the Olympic Park to the Lower Lea Valley. That includes, for instance, the undergrounding of the power lines which is currently under way, with the demolition of some 53 electricity pylons and 450 people engaged on the site. Obviously, we are keeping these kinds of costs under review but I would just underline that these costs are separate from the core costs of the Olympic budget. Since we won the bid a year ago in July there have been no increases in the cost of venues. However, we have had to allow for increases in costs to take account of increases in commodity prices - the price of steel, for instance, has doubled. We have revised the figure for construction inflation and we have also adjusted the transport figures so that they reflect 2012 prices. An additional cost of around £400 million that was not included in the original bid is in order to fund the delivery partner, whose overriding responsibility will be to ensure that the costs of the Games are kept within budget and that the timescales that we have so far been so successful in keeping to are kept. In other words, to answer your question, that the Games are delivered within time and on budget. So we are investing a further £400 million in order to secure the services of the delivery partner. Further costs arise specifically from the need to secure greater public funding for the Olympic Village and the international broadcast centre. These are, at the moment, both subject to commercial negotiation about what the level of private sector investment will ultimately be. I am sure you will understand that these figures are, for the time being anyway, commercial and in confidence, but I would, of course, be very happy to let the Committee have sight of those figures. To conclude, the overall impact of these changes is an increase in the costs of the Olympic Park (and let me be absolutely specific about that: we are not talking about regeneration; we are only talking about the Olympic Park), but an increase in costs of around £900 million, which translates therefore the £2.375 billion to £3.3 billion as the costs of the Olympic Park. This is the account that I can give you at this stage. There are, as you know, also further funding requirements not yet translated into firm costs which are a matter for discussion in government. First of all, the allowance that was made in the bid before 7 July for security is inadequate. Under the aegis of the relevant Cabinet Committee which has responsibility for security, which you will be aware of, discussions are taking place between my department, the Home Office and the Metropolitan Police about the likely costs of security. There are then two other potential liabilities: one is discussion which is taking place within government with the Treasury about the size of programme contingency, as opposed to the project contingency which is included in the costing of the venues. Again, the availability of a programme contingency is important in a project like this, which is the largest public building project in Europe and has to be delivered to a fixed time, but I want to be absolutely sure that nobody draws any conclusion that "programme contingency" translates inevitably into "additional cost". I certainly would not want the construction industry to get that message. Then the final point, about which there has been quite a lot of speculation in the press, is the question of tax liability. That is being discussed within government and I do not think I can do better than refer the Committee to the Chancellor's own words on the Today programme last week that this issue is not part of the overall bill as far as the taxpayer is concerned. That is where we are, both on the costs of the Olympic Park and further potential funding liabilities that arise: from VAT (to be resolved); from programme contingency, (to be resolved) and from security. So this is work in progress, but at this point it is worth just recording, because, again, this has been a matter of some speculation, we are way ahead in our financial planning and budgeting for these Games. Sydney submitted its budget for the Games two years before the Games in 1998; Beijing waited four years after publishing its budget and last year, in 2005, signified that there would be further amendments to the budget which have not yet been published. So that is the position as of now, but you will understand that this is work which is continuing, and the cost scrutiny is part of the everyday discipline of these Olympic Games. I will certainly be very happy to come back to the Committee at any time you wish to brief you further on the costings. Q31 Chairman: Thank you. Restricting ourselves, for the moment, to the cost of the Olympic facilities, the £2.375 billion figure, which is the one that you said you were applying absolute rigour to ensure that it was not exceeded, 15 months later it appears that that figure has now risen by about 40%. We are still five years away. Presumably, it is unlikely that we are going to be able to stick at that figure; it is going to go on rising. Tessa Jowell: I do not assume that at all, Chairman, but the cost review which has been undertaken with my department, with the Treasury, with the Olympic Delivery Authority and with the support until August of last year of KPMG, has identified these further costs. The rigour, as I say, is a daily discipline of the Olympic Games. However, I think it is important to remember that when the bid book was submitted in November 2004 it was not possible to make any amendment to the figures that the IOC had at that stage in the light of any changing or further information. So the figures were effectively frozen between late-October/early-November 2004 until the point at which we won the bid in July 2005, at which point I then initiated a fundamental review of these costs. For instance, one of the investigations that we were unable to cost - and I think David Higgins from the ODA gave you the position on this - was the degree of contamination of the land. We could not undertake the necessary tests which are now being undertaken because the land was not in our ownership and it was also the subject of a hotly contested land acquisition. So that is an example of something that changed during the course of the period during which the bid book had been submitted but we were unable to make any review of the costs. Q32 Chairman: On the £2.375 billion figure which previously was quoted for the cost, there was a very specific breakdown applied as to how that figure would be met: £1.5 billion from the National Lottery, £0.625 billion from the London Council Taxpayer and £0.25 billion from the London Development Agency. Where are you going to find the extra £900 million which is now required? Tessa Jowell: That is allowed for in the Memorandum of Understanding, which was signed between my and the Mayor. This is currently the subject of discussion between me and colleagues in government. Q33 Chairman: The Memorandum of Understanding states that any overspend will be met through the London Council Taxpayer and the National Lottery. Are you saying that those two elements are going to have to meet this additional cost? Tessa Jowell: Just to remind you of the precise words: "a sharing arrangement to be agreed as appropriate with the Mayor of London and through seeking additional National Lottery funding in amounts to be agreed at the time". So as part of the continuing review of costs and the way in which we meet further funding liabilities the formula that is set out in the Memorandum of Understanding is, yes, certainly being considered, but I would underline that no conclusions have yet been reached on that. The fact that this is work in progress has no impact on the smooth progress of this stage of planning the Olympics. Q34 Chairman: However, it is still your intention that that money is going to have to come out of a combination of sources, being the National Lottery and the London Council Taxpayer? Tessa Jowell: I have never ruled out more money being taken from the National Lottery, and I have had a number of Parliamentary questions on this. However, all this has to be within balance and sustainable. That is why we are looking at the options within the broad framework of the agreement of the Memorandum of Understanding. When those discussions within government and with the Mayor are concluded then I will be very happy to come back and tell you of the outcome. Q35 Chairman: The Mayor has said that he does not wish to see an increase beyond that already agreed in the Council Tax and he does not think that any more money should be taken from non-Olympic Lottery funds. He suggested that the first port of call should be that the Treasury forego the 12 pence per ticket tax take from the Lottery. Would you accept his point there? Tessa Jowell: Some of this discussion that is taking place, Chairman, will take place in public - the Mayor will make his views known; other parts of this discussion will take place in private with the public setting out of the conclusions, and if you do not mind I would prefer to keep my counsel and to assure you that the discussions are taking place within government. I am in discussion with the Mayor about this, and what we have to have, at the end of this, is a solution which is seen as fair, proportionate and sustainable. Q36 Chairman: So there is a probability that the Treasury may, in one way or another, contribute towards the cost of the £900 million? Tessa Jowell: The Treasury is already contributing to the costs of the Games through the LDA, through the Exchequer funding that has allowed us to acquire 93% now of the land that is necessary. I am sorry that these are discussions which are in train rather than discussions which are at this point concluded, but these are discussions which, compared to other Olympic Games, are taking place much earlier in the planning stage. Q37 Alan Keen: You do not mean we are having overruns of cost much earlier than other Olympic cities? There are two things I am sure you will agree with: it would be difficult to find a more laid-back Member of Parliament than I am, nor one who is more enthusiastic about sport, but I have to say I am beginning to get extremely anxious about this. I was anxious about Tim Lamb's comments, which I raised this morning with the people from the regions, that there are people running about all over the place in the regions trying to find justification for their involvement. He thinks the time would be better spent on getting people involved in sport. CCPR reported to us that the latest statistics say that hardly anyone is going to be inspired to take part in sport from the Olympics. That is worrying. It was not the fault of the people this morning; they have got a job to do and I expect they do it very well, but they seemed to be clutching at straws in answering the questions. I am concerned about it. We do need to learn lessons from the Olympics for the nations in the future. I know I have raised these points with you before, and I raised them less enthusiastically before we won the bid because we did not want to offend the IOC, but if I can come back to the question I asked before: we must learn for other nations in the future. Just a very simple question: what has it go to do with the IOC, a small, self-elected body, whether we regenerate East London or not? What has that got to do with putting on a wonderful sporting event? To me, do you not agree - and I know you have got to be careful in what you say - the IOC is taking on more and more and demanding more from nations. How on earth is it going to be possible for nations less wealthy than we are ever to host the Olympic Games? Would you agree we need to learn lessons for the future from the tremendous cost that we are being involved in in this? Tessa Jowell: Can I deal, first of all, with your final point because it is an extraordinarily important one? It is one of the reasons why applying control to the costs of the Olympics, being absolutely clear that time is not lost and, therefore, costs increase through lack of careful planning and being very clear about the legacy - what it is that you want the Games to achieve - are very important, not just in order that we have a great Games in this country that are enjoyed by people watching at home around the world but the Olympic movement is an international movement. I think it is incumbent on any host city in the developed world to think about the Olympic ambitions of cities in the developing world. We have two great cities, South Africa and Delhi. Delhi is hosting the next Commonwealth Games and South Africa is hosting the next World Cup, and these are cities, I am quite sure, together with cities in South America and other African cities which have the ambition of hosting the Olympic Games. They must be affordable and scaleable to the economies of both cities and countries like these. That is one of the reasons why all of us who are involved in the Olympics take the issue of controlling costs and value for money so very seriously. The second point is that when we bid for the Games we bid for two reasons: first of all, that this would be a catalyst for the regeneration of East London. However, secondly (and this is the benefit that will extend to the whole of the country) that we would inspire an active generation of young people to take up sport. We are already under way with that. Quite contrary to the claim about declining investment in community sport in the Lottery, the last five years have seen a net increase of £350 million of investment in community sport. You will be aware of the development of the Schools Sport Programme; the development of competitive sport in schools; the development of links with sports clubs; the work that is being done by the governing bodies to identify young talent and to bring it on; the investment in our talented athletes' scholarship scheme and now the investment in our young Olympians, some of whom are only 12 or 13, so that they are ready for 2012. I completely reject this pessimistic view that it is all terrible, this is all a waste of money; we are not going to get anything out of it. Go into any primary classroom in this country and talk to children there of 9, 10 or 11; they all know about the Games, they are all looking forward to the Games; two-thirds of them will be expecting to take part of the Games in some way and half of them are expecting to be medal winners. We have got about three million kids in this country who think they are going to be medal winners. Most of them will be disappointed, but I hope that those who are disappointed will feel that they had the opportunity to become young sportsmen and women in a way that kind of shapes their enthusiasm for sport for the rest of their lives. Q38 Alan Keen: I agree with absolutely everything you have said, and I appreciate the amount of investment that is going into sport all the time from this Government, but that is not the point I am making. I am saying, really, if we are going to put on an Olympic Games it is that which is going to inspire the kids; the regeneration of East London is not inspiring kids round the whole of the country. Why should we have to spend £3.5 billion regenerating and building a sports centre in East London when we could have spent that money not just in the regions in this country but we could have helped South Africa and other nations? It is easier for South Africa to host football because they have got stadia already, but the Olympics is completely different. We have to build a new main stadium in East London when we have already got one at Wembley which can take athletics with temporary modifications. We have been through all of that on this Committee - five separate inquiries. What I am saying, Secretary of State, is that we seem to be having to follow these rules the IOC have laid down when, in fact, we could save a massive amount of money to be used in sport. Tessa Jowell: I do not accept the point that you are making. The Olympic stadium will take 80,000 people but it will not after the Olympic Games; it will be reduced down to 20-25,000. In Legacy it will be a stadium for those local communities but it will also, technically, be capable of being built back up to take 80,000 people so that we are never again in the position, as a country, that we were in with Pickett's Lock where we had to withdraw from hosting the World Athletics Championships because we did not have a world-class athletics stadium. That is part of the Legacy. The second is: hon Members from all sides of the House are always raising with me the question of 50-metre swimming pools. We will have a state-of-the-art aquatic centre on the Olympic site that will be adapted for community use but will also be suitable for competition. So where there is no long-term use for the facilities they will be built as temporary facilities and they will be taken down. For instance, it was our original intention that the broadcast centres and the media centre would be temporary facilities; they are much cheaper than the costs now but they create a legacy by spending more on them now because, in the long run, they will provide light industrial space in the East End of London which has one of the highest unemployment rates in the country. Round the country (I think this is your other point) investment will also be made as a result of the Olympics from every single region of our country. People have already volunteered as part of the 100,000 to take part. The Local Organising Committee will be promoting the development of training camps all round the country for the 200 visiting teams and will provide a £26,000 incentive for teams to do that. So the regeneration of the East End is a justification, but enthusing and involving and creating very specific opportunities for young people to take part in sport right up and down our country is another, and we would not have the degree of excitement were we not hosting the Games. Q39 Alan Keen: I agree with all of that. I am for the Olympic Games, I am one of the enthusiasts for it, but the point I am making is how much of the increase in costs (you probably know this already) has come because we have got a time schedule to meet? Because we have to build a village by the start of the Olympics we are paying a premium to businesses we are throwing off the site. There are a lot of costs that are being added to because we have got a time schedule to meet. What I am trying to say is that we should learn this for the future. I expect you to be defensive, obviously, of decisions that have been taken. Tessa Jowell: I am not defensive; I feel so strongly about this. Q40 Alan Keen: If we did not have to have a village then the cycling would take place in Manchester. I am all for building another cycling venue in London, but we could build it in our own time. If the Olympics were held nationally rather than in a city we would not have these timescales which are forcing up the costs, because people know we have to deliver on time, so it is costing us more. Tessa Jowell: We are guarding against the risks that athletes faced where they were right up against the deadline and their venues were not finished. I go back to the 2-4-1 template that Jack Lemley created at the beginning. Also, I think we have had enough in this country of things being finished in their own time. I want to be able to say to people that the UK School Games in 2011 or 2012 will be held in the Olympic stadium because it will be finished. One of the most impressive things of going to Terminal Five is that they will give you the time and the date by which things will be finished. We need that kind of rigour, and if it takes the Olympics to provide it then, as far as I am concerned, that is a wholly good thing. Q41 Alan Keen: You are putting a wonderful case forward, and I agree with 99% of it, but you still have not answered the question: are we not incurring much heavier costs because we have to work to the IOC's specification for the Olympics when, really, they should make changes, should they not? Tessa Jowell: I do not accept that the IOC requirements involve a substantial increase in the costs of the Games. We are building an Olympic Park that will be a legacy to the East End of London forever, with facilities for those communities but, also, facilities that will be available to our world-class athletes. They do not have them at the moment and they need them. Chairman: We are going to come on to talk further about Legacy, but just going back to the specific costs, perhaps I can invite Rosemary McKenna to come in here. Q42 Rosemary McKenna: Instead of going over the history of the decision, can we move on to something that we can actually do something about, and that is the issue of VAT. What options are open? It has been said that there is a real problem with the VAT that is going to be charged to the ODA. What options are open to the Government? Tessa Jowell: This is, ultimately, obviously, a matter for the Treasury. The reason that VAT was not included in the original bid - and this was agreed by PriceWaterhouse and by the government departments that were party to the bid - was that there are certain bodies, local authorities (and, after all, the ODA was going to exercise a number of functions of local authorities), and the Environment Agency which do not pay VAT. If we take other Games, the Athens Olympics did not pay VAT; the Commonwealth Games in Manchester did not pay VAT; there were VAT concessions for the Turin Olympics and the Sydney Olympics did not pay VAT. So there were plenty of precedents in order to inform the initial judgment. However, this is now a matter of discussion between my department and the Treasury. The Treasury is responsible for taxation levels, and we will reach a conclusion with them. As the Chancellor has said, this argument (?) is not a cost to the taxpayer. Q43 Rosemary McKenna: So there are options available. At what point will the Chancellor make that decision then? Will we have to wait until much nearer the time? Tessa Jowell: Soon. Q44 Rosemary McKenna: Soon, but no date is fixed. Tessa Jowell: Unlike the opening ceremony, by which all the venues will be completed, we do not have a precise date by which these questions will be settled, but we are heavily engaged with them and, I have said before, we are way ahead of where other Olympic cities have been in addressing these kinds of issues to anticipate precisely the risks that Alan Keen raised. Q45 Rosemary McKenna: Can I just say that I think the people who were here this morning, the nations and regions, were absolutely totally committed to making it work. That, to me, has been a real step forward. When we took the decision we were not absolutely sure but they certainly want to make it work. Tessa Jowell: Good. Q46 Chairman: Before we leave VAT, would you like to comment on the report that it was the structure chosen by the Government of having two bodies that led to the fact that VAT is chargeable, and that had there been one overall body it would not have been necessary? Tessa Jowell: The answer is actually much simpler than that, which is that it was not included at the time because the tax status of the ODA at that stage could not be determined. We had not even legislated for it. Remember, this is before we had won the bid, before the Olympics Bill had been considered by Parliament and before the ODA had been established as a non-departmental public body. Q47 Chairman: Going back to your comment that you are applying rigour to the £2.375 billion estimate of the cost, surely the oversight of the necessity to pay VAT is not very rigorous. Tessa Jowell: It was not an oversight. Q48 Chairman: It was never quoted at any time. Tessa Jowell: It was a judgment that no decision, at that stage, could be made about VAT. So, as we made clear in the bid itself, the bid was submitted net of the cost of VAT. At that stage, as may well continue to be the case, VAT was not thought to be likely to be payable, nor payable. This is an issue that we will resolve but it is an issue that will not have an impact, as the Chancellor has said, on the taxpayer. It is much more of an administrative matter than it is a substantive funding matter, unlike some of the other issues that we are continuing to address. Q49 Chairman: The Chancellor saying it is not going to have an impact on the taxpayer is, obviously, reassuring, but if it is the case that VAT is going to have to be paid it obviously has to come from somewhere. Tessa Jowell: If it has to be paid by the ODA, I think what the Chancellor has made clear is that he is not looking to the Olympics to provide a VAT windfall for the Treasury. We have to continue to discuss this and move to a resolution of it in government, but what I can absolutely assure the Committee is that it is not a matter which is having an impact on the planning and the delivery of the Games at this stage. Chairman: Thank you. Q50 Rosemary McKenna: Can I talk now about the regeneration and remediation work, particularly regeneration. It has been suggested that the Government bring forward the investment planned for the area and begin the investment now, and that should make a more efficient use of public money. Do you think that is right, and at whose disposal would the expenditure be? Tessa Jowell: This is, obviously, a matter for the Secretary of State at the Department of Communities and Local Government, who leads on all the matters to do with the regeneration of the Thames Gateway, of which the Lower Lea Valley is part. That is why, in a sense, I have expressed the development of the Olympic Park independently of the regeneration of the Lower Lea Valley. As you will all know, the Olympic team visited Barcelona last week in order to see there, first hand, the scale of the prize that hosting the Olympic Games 14 years ago has provided for the city. The regeneration has been very bold and very ambitious; it has a very high level of public support and I think by general consent has transformed the city; they have seven-times more tourists and the economy is growing. The interesting analogy is that the population of Barcelona is broadly in line with the population of the five Olympic boroughs. As we were arriving, one of the people with us who has been involved in the regeneration of Barcelona from the outset said that actually - and it is almost impossible to imagine now - the Stratford site in East London looks like the Barcelona site looked before the regeneration began. Q51 Rosemary McKenna: I know that because I have been there before and since, and it is fantastic. I just feel that we need to make sure that the money begins to be spent - not so much that they cannot actually spend the money, but that the local authorities know that they can begin the investment now, so that they really do benefit and it is ready. Is that a real possibility? Do you think we will be able to do that? Tessa Jowell: That is certainly the intention, and the timescales for the regeneration in relation to the rest of the Thames Gateway will obviously be matters for the Secretary of State to decide. Q52 Rosemary McKenna: The local authorities are working together. I remember in Barcelona this great tension between the Mayor of Barcelona and the President of the autonomous region of Catalonia, but here at least they all seem to be working together. Tessa Jowell: Yes, I think the working relationships are very good, as they are between government, my department, the Mayor and the Local Organising Committee. Maintaining that is extremely important for the smooth running of the Games. Q53 Rosemary McKenna: Are you confident that remediation work can be carried out under the existing budgets? Tessa Jowell: Yes, the estimated cost of remediation is £220 million. It is very slightly less than was originally budgeted for. The preparatory work has started, it is scheduled to finish early in 2009, but most of it will be completed by the summer of 2008, including the critical areas of the aquatic centre and the stadium. Q54 Chairman: When is the site survey going to be completed? Mr Jacobs: About half of it has been carried out so far. I cannot give you a precise date for when it is all going to be completed but we can provide that to you. Q55 Chairman: If only half of it has been completed, for half of the site you do not actually know what is underneath there at all. Tessa Jowell: The advice that I have had on this is that what has been discovered so far is in line with the expectations of the engineers who are carrying out the work. This is obviously part of the work that the delivery partner is overseeing. Q56 Chairman: Returning to our friend Mr Lemley, how would you respond to his comment: "not a spoonful of dirt has been turned all summer. We have not yet touched the site and this is a huge problem. What if there is unexploded ordnance from the war? We have to identify what is in the ground to get the programme moving"? Mr Jacobs: The answer to that is very much what the Secretary of State has already said, that Jack Lemley's own proposals involved two years of planning, of which the first year has been completed, and the planning work is continuing. The site survey work is being undertaken now; nothing has been turned up so far which has not been in line with engineers' expectations, with a very large, professional team being employed to analyse this work. Obviously, as it moves forward, the delivery partner, CLM, will look in more detail at what they are coming up with. When we get to the end of the 90-day review period that the delivery partner is currently in the middle of we will have a better idea still. Tessa Jowell: The Committee might like to visit the site and see the eight drilling rigs which are on site doing this. I would just add to that the assurance to the Committee that the remediation work is not having any detrimental impact on the milestones against which the delivery plan is being judged. Q57 Chairman: Is the remediation work and site survey in line with ---- Tessa Jowell: I have no reason to believe it is not. Q58 Janet Anderson: Secretary of State, you referred to contingency provision earlier, and you did say that you felt very strongly this should not be translated into additional cost, which I think is a very sensible approach. You may know that the Mayor of London said to the London Assembly earlier this month that he was opposed to contingencies in principle as he believed that they encourage contractors to depart from agreed prices for work. I wonder if, perhaps, you could just tell us a bit more. There is a figure of £955 million which covers security, elite sport contingencies and inflation. Are you able to say how much of that is actually for contingency as a percentage, and whether you are happy with that and confident it will cover any unforeseen expenses? Tessa Jowell: The range of contingency in each part of the project was judged in light of the likely level of contingency. Each part was judged, and the range of contingency is between 20% and 23%. That is project contingency, as part of the core costs of the Park. The proposition which is now being discussed is for what is called a programme contingency, which would not be allocated to any particular part of the project. There are different views about, first of all, is a programme contingency necessary. I think the broad consensus is that it is; it was certainly the view of KPMG that it is. It was not, however, part of the original advice that we had in drawing up the original bid. The level at which the contingency is set, again, is something where different experts have different views - anything between 20% and 60%. That, at the moment, is a matter which is the subject of discussion with the Treasury. I hope, also, we can take advice on that from the delivery partner in light of the scrutiny that they are currently carrying out, but it is absolutely essential to see the various elements of these costs for what they are. The Mayor is absolutely right that we will take every available step to avoid and prevent a contingency being translated into a cost. Q59 Janet Anderson: You said in answer to an oral question recently that you had established formal systems in place to ensure sound budgetary control, and that expenditure and income would be monitored monthly. I wonder if you could, perhaps, tell us a bit more about those systems and whether you are confident that they are in control of what is going on. Tessa Jowell: Yes. Jeff Jacobs is the Accounting Officer, and I will ask him to take you through those. Mr Jacobs: There is a range of controls. Clearly, at the top of the process is the Olympic Board, which the Secretary of State Chairs with the Mayor, and the Board is responsible for approving and analysing the overall budget of both the ODA and LOCOG before it is set. The ODA itself is, of course, a non-departmental public body accountable to the Secretary of State through Parliament and, therefore, its budget is also subject to direct approval by the Secretary of State. In support of the Board itself, the stakeholders, the Olympic funding group on the Board, have set up an Olympic Programme Support Unit which is jointly funded by the stakeholders to provide across the piece to stakeholders jointly an analysis month-by-month of progress - both physical progress and financial progress - across expenditure and delivery. At a more detailed level in relation to the ODA, specific consent is required from both the Treasury and the Secretary of State for projects above the £20 million mark, and therefore projects like the power lines, which are already under way, have gone through an in-depth process of analysis before they have been given approval. Q60 Janet Anderson: Are reports produced monthly and, if so, to whom do they go? Mr Jacobs: There are reports produced monthly, both on an official basis where there is an Olympic Board Steering Group, which I chair, which brings the chief executive of LOCOG and the ODA, plus others, together and, more importantly, that is a filtering system for the Olympic Board who receive monthly reports both on programme and on funding. Tessa Jowell: We do, in addition, have continuing oversight by the Office of Government Commerce which I have sought to involve in the Games from the earliest stage, so they also on their analysis of risk provide continuing oversight. I have referred also to the initiative that we have taken in establishing a close working relationship with the NAO to ensure continuing oversight in relation particularly to value for money. Q61 Janet Anderson: And the NAO will be producing a report in the New Year, I understand? Tessa Jowell: Yes. Q62 Chairman: Can you tell us what is the expected level of maximum spend on the project? Tessa Jowell: I have given you today the figure for the Olympic Park. The regeneration costs have not been determined beyond the £1 billion that I referred to that was identified at the time that we bid. That is cost which is not Olympic but which is necessary in order to link the Olympic Park to the rest of the Lower Lea Valley, and in fact some of that money has already been drawn down to fund work which is of longer term legacy and regeneration benefit. Q63 Chairman: That is the £1.044 billion. Tessa Jowell: Exactly. Q64 Chairman: And who has control over that? Tessa Jowell: That sits within the budget of the Department for Communities, Local Government and the Regions, routed through the Olympic Delivery Authority. Q65 Chairman: And how do you respond to David Higgins' suggestion to us that we should put these two together and that there should be an overall budget to ensure a longer-lasting legacy for that area of London? Tessa Jowell: Well, I mean, you can do that. You can add any figure you want to, depending on the purpose, but I think that what we need to do in order to be forensic in controlling these costs is to separate out the various elements because, remember, this is a very important distinction. We are obliged now by the host city contract to deliver the Olympic Park within the terms of the Olympic bid. That is expenditure which is an obligation on us, with all the provisos and caveats about our continuing work to drive down costs and to secure value for money. The amount that is spent on regeneration is a decision that is taken electively in order to realise the full legacy benefit and the regeneration prize of the Olympics. It is not an Olympic cost as such, but it is an opportunity which arises because we are hosting the Games. If you take the costs of Barcelona for instance, I think from memory only 9% of their total expenditure at around the time of the Games was directly attributable to the Games. It is a little difficult to get precise details on the Beijing budget but obviously we are very interested in that. For those of you who have been to Beijing, you will see that they are in effect rebuilding a third of the city and so the Olympics again for Beijing is an opportunity, an opportunity linked to an enormous and ambitious regeneration programme which, to go back to Alan Keen's point, probably would not have been taken at this time had it not been for the Olympics. Athens rebuilt its tram system and built a new airport. You should not attribute those as Olympic costs; they are costs that arise from the opportunities. Q66 Chairman: So the £1.044 billion remains separate from the cost of building the facility and at the moment that figure is unchanged? Tessa Jowell: That figure is at the moment unchanged. Chairman: Thank you. Philip Davies? Q67 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. Q68 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 Sidney, 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 Sidney, 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. Q69 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. Q70 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. Q71 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. Q72 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. Q73 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. Q74 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. 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. Q75 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. Q76 Mr Hall: Is it on target to reduce the £750 million? Tessa Jowell: I would not say that, no. Q77 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. Q78 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 ---? Q79 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. Q80 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. Q81 Mr Hall: They do expect it to meet the targets? Tessa Jowell: Yes. Q82 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 Sidney did in quite the same way. Q83 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. Q84 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? Q85 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. Q86 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. Q87 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. |