UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 104-iii

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

CULTURE, MEDIA AND SPORT COMMITTEE

 

 

LONDON 2012 olympic and paralympic games

 

 

Tuesday 15 January 2008

MR NEALE COLEMAN and MR MANNY LEWIS

SIR ROBIN WALES, MAYOR JULES PIPE, CLLR DENISE JONES, CLLR CLYDE LOAKES and MR PETER BUNDEY

Evidence heard in Public Questions 252 - 338

 

 

USE OF THE TRANSCRIPT

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Oral Evidence

Taken before the Culture, Media and Sport Committee

on Tuesday 15 January 2008

Members present

Mr John Whittingdale, in the Chair

Janet Anderson

Philip Davies

Mr Nigel Evans

Paul Farrelly

Mr Mike Hall

Rosemary McKenna

Adam Price

Mr Adrian Sanders

________________

Memorandum submitted by the London Development Agency

 

Examination of Witnesses

Witnesses: Mr Neale Coleman, Director of Business Planning and Regeneration, Mayor of London's Office and Mr Manny Lewis, Chief Executive, London Development Agency, gave evidence.

 

Chairman: Good morning, This is a further session of the Committee's inquiry into preparations for the 2012 Games. We are today focussing specifically on the benefits to London. I would like to begin by welcoming Neale Coleman, Director of Business Planning and Regeneration from the Mayor's Office, and Manny Lewis, Chief Executive of the LDA.

Q252 Mr Sanders: We note there are going to be elections this year for the Mayor of London. To what extent are the commitments and policies of the present Mayor relating to the Games binding upon any successor?

Mr Coleman: My understanding of the position is that the commitments which the Mayor made as part of a preparation of London's bid for the Games, that were included in the candidature file submission, and indeed other commitments that he may have made in whatever form during the period of London's bid, those are all incorporated as commitments into the host city contract between the International Olympic Committee, the Mayor of London representing the host city, and the organising committee and British Olympic Association. To that extent my understanding is that those legal commitments bind the Mayor, whoever he or she may happen to be, through until 2012.

Q253 Mr Sanders: We know that the two main challengers, Lib Dem and Conservative, are going to carry on. What if an Independent stood on a ticket of wanting to break that contract and not host the Olympic Games and they were successful in that election? What would happen in those circumstances?

Mr Coleman: That is an interesting question. I must confess, if it is not impertinent, my speculations are probably no better than yours about that. These are binding legal commitments, so plainly any candidate for Mayor who took this point of view would be putting forward a pretty irresponsible approach; and would clearly be advised, by the people whose job it is to advise a Mayor of these things, that this was not a lawful way to go on. I think it is worth saying I take comfort from the fact that at the moment not only have we broadly pretty clearly in London maintained very strong all party support for having the Games in London - obviously a lot of debate and, at times, disagreement around particular parts of what is going on - but there is a broad consensus there. Also it remains the case, despite a very lively and, at times, awkward series of debates in the media, that all the opinion polling shows very strong support from Londoners for the Games. Despite, as I say, what has often been quite a difficult time in the media and press, the latest opinion polling shows support higher even than when London won the bid. I am not sure it would be the most attractive proposition for someone to go to the electorate on; although who can say what happens between now and 2012.

Q254 Chairman: You will be aware that in the immediate run-up to a General Election the opposition parties are given access to the civil servants to discuss with them their plans should they win the Election and form a Government? Is a similar arrangement in place for the candidates for London Mayor?

Mr Coleman: Yes, my understanding is that it is. Certainly I think the candidates have access (and many people already have had some meetings with the Chief Executive of the GLA) and certainly have the same sort of facilities you describe as being available in the run-up to a General Election. I am also aware that both the Olympic Delivery Authority and the Organising Committee have made contact with the other candidates in the Election to offer briefing and any assistance they would find helpful.

Q255 Mr Sanders: The LDA has a number of disparate roles in the 2012 Games programme: are you confident that it has the specialist expertise to cover such a wide field?

Mr Lewis: I am confident because what we have experience of is bringing in the right levels of expertise on these more sophisticated development projects - with a track record, for example, for large-scale investments in Wembley as an illustration of that. We are engaging some of the key consultants who advise us, including Knight Frank on land development surveys, including Grant Thornton on business planning for the Park, and Deloittes on the constitution of the Lea Valley Regional Park Authority. Combined with the experience we have in the Agency and utilising the expertise of the private sector, we are confident we can deliver. Of course our track-record to date on acquiring the land and relocating businesses and development of business parks and handing over to the ODA on time last summer demonstrates that.

Q256 Adam Price: May I ask Manny Lewis if he thinks the allegations of corruption and collusion currently involving the LDA, although not directly related to the Olympics, will impact on public confidence in your ability to deliver such a large-scale programme as this?

Mr Lewis: I do not think it impacts on public confidence in terms of our delivery capacity and our delivery record. I think the issue it goes to is about the LDA's reputation and about the aspects of managing projects that are targeting diverse communities and local community groups. There is no suggestion that the scale of delivery we are responsible for in terms of the Olympics is affected by this sort of coverage. Of course we are concerned to demonstrate that the LDA's smaller level of projects are adequately managed; that there is no fraud, collusion or impropriety; and the review of our Chief Finance Officer has demonstrated that, insofar as our LDA grant-giving process is concerned. So far as the evidence has been evaluated to-date there is no suggestion of fraud, collusion, impropriety or corruption; but we will continue to review every single case that is referred to. In terms of the proportion of LDA's spend, we spend £400 million a year; those projects amount to less £2 million; so that is the sort of scale we need to bear in mind.

Q257 Adam Price: What additional steps are you taking to ensure transparency?

Mr Lewis: The LDA Board has already signed off a programme of improvements which are well published in terms of our new ways of working. This implementation programme has been in process since 2006; it is nothing new. We have a whole suite of project management systems. We have reorganised the Agency to base it on project management disciplines. We have brought in senior expertise in terms of the new group management team. We have a policy and a preference now, as the Board has endorsed, to publish all of its reports increasingly that go to the Board. We have a very strong audit and scrutiny function. We have internal auditors. Of course this whole process which has been focussed on most recently has been overseen by the district auditor, the Audit Commission.

Q258 Chairman: Sticking with the LDA, the first stage of the process, the land assembly, appears to have been completed relatively smoothly. Have all the outstanding compensation claims now been settled?

Mr Lewis: They have not all been settled, but the vast majority have reached either full or final settlement, or advance payment; 85% of them in effect have been settled. That 85% demonstrates a spend profile, a cost profile, in accordance with our predictions. We will complete those settlements within the overall land settlement budget we have already set and published. Of the 15% of cases that have not yet been determined, a small number are because they have a right to proceed to a Land Tribunal, to negotiate and to challenge any offer that we have made, and a small number are reserving that right. The majority that remain to be settled are actually because they are in the second tranche of relocations. There is a group of businesses that will be relocating from 2009 in accordance with the overall Olympic plan, and that is the majority of the ones that we have not yet dealt with.

Q259 Chairman: How much have you paid in compensation?

Mr Lewis: I cannot give you the disaggregated figure immediately, Chairman, but we can certainly give you that in writing straight after the meeting.

Q260 Chairman: Do you have a total, a ballpark figure of how much it has cost to compensate businesses?

Mr Lewis: Our overall land assembly figure is £1.1 billion, of which the actual land acquisition is £650 million plus fees, plus interest on our borrowing. That is the range. The remainder of that budget comprises the remediation costs of about £220 million, and the LDA's contribution to the public sector funding package of £250 million.

Q261 Chairman: If you take those three figures, the difference between 1.1 billion is going to be how much you will have paid?

Mr Lewis: No, you cannot extrapolate it like that, because there are other ancillary costs. We would have to give you an itemised report on that, Chairman.

Chairman: If you could do that that would be helpful.

Q262 Mr Hall: Could I address the issue of the public funding package. In the initial Memorandum on the funding of the Games the Mayor was committed to paying £625 million towards the Games, and in the revised Memorandum agreed in June of last year that has gone up by £300 million. He said he is not going to put the Council Tax up or increase bus fares so how is he going to find £300 million?

Mr Coleman: What we will be doing there is essentially factoring the need to make that additional payment into the overall financial strategy that the LDA has. That strategy for funding the total cost to the GLA group of the gains is met by both payments from grant from the LDA, and by capital receipts coming in after the Games. In order to match the actual money that we need for the time when it is needed, the LDA has a borrowing programme in place. Effectively what is happening here in order to meet that additional £300 million is that it is being included in the overall package being funded by borrowing as necessary, to be met either by Government grant to the LDA or by the capital receipts coming in after the Games.

Q263 Mr Hall: So the Mayor does not have to spend any extra money then?

Mr Coleman: Obviously he has not had to raise any additional money from the Council Tax and fares. There will obviously be consequences in that the fact we are meeting that money in this way will mean that other LDA programmes which perhaps could have been carried out over what is quite a long period of time (it is a 20-year borrowing period) will not be able to be carried out because the first call on that will be the money that is necessary to meet this additional £300 million.

Q264 Mr Hall: Is the Government aware that the Mayor may be expecting the Government to provide additional grant aid to meet this £300 million?

Mr Coleman: We are not expecting additional grant aid. This is based on assumptions about the normal level of grant aid that we would expect in any event from the Government. We are not looking for additional grant from the Government for this. As I say, we have a package - a financial strategy the LDA has developed - which includes taking account of the grant it would normally expect to receive in the normal course of business; and taking account of borrowing that it will make and will repay over a 20-year period. There is a real cost obviously involved in this because, as I say, it will involve over the lifetime of this period other things that would have been done in London not happening.

Q265 Mr Hall: Did I hear you correctly say you also would look to raise money from land sales after the Olympics?

Mr Coleman: Yes.

Q266 Mr Hall: Is that not already in the package, raising money from the sale of the land afterwards? You are not double-counting this, are you?

Mr Coleman: No, I assure you, we are not double-counting. This is a matter which has been gone through in detail by the LDA, and Manny can add to what I say. What we have done is take account of the need to repay all borrowings that the LDA will have had to incur in order that it can meet the various obligations that it has to contribute to the Olympics - whether that has been for the acquisition of land, the existing £250 million contribution, or the £300 million additional contribution.

Q267 Mr Hall: Can I question you now on the contingency because the Mayor of London said a 20% contingency is probably upper limit; the Olympic Delivery Authority said 30%; and the Treasury have said 60%. Is the Mayor of London now persuaded that the 60% is the right level of contingency?

Mr Coleman: I think the position now really is, first of all, to say that everybody who is involved in the Games and on the Board has agreed and endorsed the funding package in the budget as it stands now, including the 60% contingency. I do not think the Mayor has departed from his view, but he does not want to see anything like that full level of contingency spent or utilised; which was really the basis for his original view that he did not believe so substantial a contingency as has now been in effect agreed was necessary. On the other hand, the Government has made clear in discussions that it wants to take an extremely prudent approach to this, and that is the budget which has been reported to the Olympic Board which everyone is now content to work with. I know that the Mayor will certainly continue to press everyone involved in delivery very strongly that that contingency amount should not be fully drawn on, and that costs should continue to be driven down at every opportunity.

Q268 Mr Hall: Mr Lewis, could I now just take you onto the £250 million the LDA is going to get from the Olympic Delivery Authority. Is that going to be linked to any particular purpose for the Games?

Mr Lewis: No, there is no earmarking of that sum. We are obliged under the Fund Package to make a contribution of £250 million and that will be through £50 million tranches between 2008 and 2013, but there is no earmarking. In our negotiation with the ODA, obviously we have said we expect that to be spent on London development related to the Olympics, because it is funding from the London Development Agency, and they are supporting that approach.

Q269 Mr Hall: Do you foresee at this stage that you may have to vary the times the money is drawn down or the amounts paid, or are you happy with the current arrangements?

Mr Lewis: We are happy with the current schedule. The agreement does give the opportunity to vary in discussions with the relevant parties; but actually, as Neale Coleman has said, we have factored that pattern of commitment into our funding strategy and we are confident with it.

Q270 Philip Davies: Can I just clarify what you said in answer to Mike Hall about this £300 million. Did you say the £300 million would be borrowed?

Mr Coleman: What I said was that the LDA is going to be meeting a number of costs, and is meeting and has already met a number of costs, towards the Olympic Games. It has had to meet the cost of the land acquisition; it is going to have to meet the £250 million and £300 million contributions to which we have referred. In order for it to do that, it has been necessary for the LDA to agree to enter into a programme of prudential borrowing under the prudential borrowing regime, because quite a lot of this money, for example the land acquisition, is required much earlier than would be possible if the LDA was relying only on its grant. These costs, including the £300 million, will be being met through a combination of payment out of that prudential borrowing, and out of the Government grant that goes to the LDA every year. The LDA has agreed a financial strategy involving a 20-year period of borrowing which, together with the capital receipts that it will receive from the land, enables it to meet those costs.

Q271 Philip Davies: I am not sure I am any clearer now than I was before! The point I am trying to get to is, if you borrow the money, it ends up costing you more than that in total, does it not? What are the interest payments on this £300 million you are borrowing? It will not actually be £300 million; it is going to cost £300 million plus interest. What is the total cost?

Mr Lewis: In terms of our overall borrowing costs over the 20-year period interest is about £330 million.

Q272 Philip Davies: Is this on the £300 million?

Mr Lewis: No, this is on the global something like £1.7 billion investment that the LDA is making. On that overall amount, over 20 years, interest is about £330 million.

Q273 Philip Davies: So on £300 million it is about another £50 million or so?

Mr Lewis: No, you could not work it back from that.

Mr Coleman: You cannot really take out one element of this. The LDA is having to meet, as Manny says, a programme of spending and investing, something like £1.7 billion in the Games. The great bulk of that is for the land acquisition, and then there are these two additional contributions to the overall cost of the Games. In total it has a strategy which involves borrowing to meet some of that. You could say the £300 million is met completely out of grant. You can really only look at it in the round.

Q274 Adam Price: Legacy is the watchword that everybody focuses on these days. The London Assembly published a Report A Lasting Legacy for London? with a telling question mark at the end. It made for some, at times, quite depressing reading. Barcelona came out as the best, but even in Barcelona it found that many of the main beneficiaries were actually international property investors. What does the Mayor think of the Report? Does he share its conclusions and recommendations?

Mr Coleman: There are a couple of things I would say about the Mayor's view of this. Broadly, obviously we welcome the work the Assembly does in this area. I think we were pleased there was a clear recognition in the Report that London had made a strong start in terms of securing a physical regeneration legacy from the Games, which is probably one of the most important areas of legacy in terms of regeneration, and also the transport benefits that London will get. I think the areas where, you rightly say, the question mark appeared was in the challenges of delivering the softer elements of legacy that everybody has aspiration for, around employment, skills, around sports participation, community participation, tourism and the like. It is true, if you look back at the history of some previous Games, people have not delivered as well as they had hoped and planned for there. The Mayor certainly agrees that it is absolutely crucial that we put in place very strong plans, investments and programmes to make sure we do get the legacy commitments. We did publish last week, and we can make available for the Committee, a document called Five Legacy Commitments from the Mayor, which looks in detail at some of the programmes and plans we already have in place, and some of the targets that we have set here. I think we do know that the "soft" legacy commitments, if you call them that, will not fall into our laps, and we have to take action now to deliver those benefits. That is why we do have a very wide range of programmes underway. I do not know how long you want us to talk about these. I would say, for example, dealing with stuff that is more directly under the GLA's responsibility, although much of this is funded by the LDA, we have some ambitious programmes around sports participation where we are working very closely with Sport England. We have run two years' worth of a programme called the Summer of Sport which 130,000 Londoners benefited from and participated in, 60% of them under 16. We are just about to start a new Winter of Sport programme which involves 50 new after-school clubs right across London, and that is part of an £80 million a year programme of investment in London's young people, jointly funded by the Mayor and Government. That is a very important area of the sport participation. The area where I should probably let Manny speak, if you are content with this, is on the very important area of what we are doing around employment, skills and opportunities for people who are currently out of work in London.

Mr Lewis: About 18 months ago we published a taskforce report on how we should capture employment and skills outcomes from the Olympics. Basically that had an aspiration and foresees how we can deliver a reduction in London's worklessness by over 70,000 between now and 2012, using the Olympic Games as a catalyst. The Olympic Park itself will generate 11,000 jobs. That is clear from the development work we have been doing and the level of development in terms of commercial mix on the Park. Of course the legacy has already started, because one of the things we have done successfully is to build out the three Business Parks - one in Eltham, one in Beckton and the other in Enfield - to capture the businesses relocating, to protect 98% of the jobs in the area. The follow-through steps to make the legacy of the future happen involves the "compete for" system, which is a website portal enabling all of the Olympic contracts to be advertised and promoted to all of London's SMEs. That is going to be launched this week. We already have a track record with the ODA of delivering about £1 billion worth of contracts to SMEs, 50% of which were London beneficiaries. We envisage £6 million worth of contracts coming through between now and 2012. We have a programme of employment and skills training which includes the volunteer programme to produce something like 15,000 young people beginning to get into employment and skills thinking about volunteering, using that as an incentive for the first time to help remove barriers to employment. We are well en route to constructing a training programme with two construction centres - one construction centre already open at Eaton Park in Walthamstow, and the second one to open this year in Leyton. There is a whole swathe of programmes on employment and skills to deliver that objective of a 70,000 worklessness reduction in London overall, and 20,000 of those focussed in the five boroughs, working closely with the boroughs. Finally, there is a very comprehensive jobs brokerage programme already running and working in the boroughs. Each borough has a dedicated employment brokerage service linking people in their community to the jobs that come up. The good news is that out of something like 2,000 jobs now on the Olympic Park, 55% of those jobs have gone to Londoners, and that is quite a success rate.

Q275 Adam Price: Can we switch quickly from the soft to the hard legacy. The Committee has toured empty, redundant, unloved buildings in other former Olympic cities. This is a question for Neale Coleman really. Do you think it makes sense to sign off on the design of venues before it is clear who the long-term tenant is going to be?

Mr Coleman: Let me start briefly, as you have said it is a question for me. I am probably going to ask my colleague to say most of it. The reason for that is, we are actually looking to the LDA at present to act effectively as the legacy client; it has that role; that is what is agreed with the ODA; the LDA to be carrying out a series of negotiations with potential end-users, whether they are tenants or whether they are users; and to be doing the detailed business planning work around the future of the venues. It is probably best if I let Manny deal with that.

Mr Lewis: The first thing to say is that the relevant sport governing bodies and stakeholders with a legacy interest have been involved already in the design work with the ODA and the LDA. If you take the example of the Aquatics Centre, British Swimming has been closely involved in all of those discussions about design, delivery and procurement of it. The overall vision for how we can ensure that the venues are suitable and appropriate for legacy has been taken forward up until now by the ODA. We have published a very clear document setting out that sustainable regeneration strategy with the ODA, but will be taken forward from this point by the LDA. The main vehicle for that is the legacy master plan framework, this statutory planning framework, which will guide the development of the Park. The framework will be completed in March 2009 and will set a vision for the character areas of the Park; how you connect the venues in the Park to the communities; how you make sure it is high quality, sustainable, high environment that people want to live in; how you make the commercial and residential developments work with the venues as well. There are several streams currently operating: one is a whole series of business planning, venue by venue, working closely with the governing bodies in some cases, taking account of some of the professional potential tenants for those venues. That work has been done. There is, secondly, an overarching business plan for the whole Park, being led by Grant Thornton, which will lead us to some proposals around future management of the Park which will enable the venues to be successful, and to minimise the revenue subsidy. All of that work is going to be followed through by the LDA. We have now created a dedicated directorate joining together both the employment and socio-economic issues, with the venues and the hard capital issues, led by Tom Russell, who has got tremendous experience from Manchester of integrating the Commonwealth Games into an urban environment. Tom brings that knowledge and experience to us. It is a very substantial programme whereby all of the design work of the ODA is constantly evaluated and appraised with the user, beneficiary and legacy in mind.

Q276 Adam Price: A lot of work is ongoing but when do you think you will be in a position to make a definitive statement about the legacy master plan in relation to the main venues?

Mr Lewis: There will be different key milestones there. The first one will be this month when we will announced the appointment of a legacy master plan. We have gone out to OJEU Procurement and we are appointing a legacy master plan that will give us that professional expertise on master plan, where they have designed major schemes of this nature in the past. That is the first milestone. The second milestone will need to join together the development strategy for the Park - in terms of: how do maximise the overall returns - with the best Park management arrangements, which is work that Grant Thornton and Deloittes are working up for us. With the completion of the legacy master plan itself, which will be March 2009, from there you will get actual planning applications coming forth for venue redesign, for venue conversion. There are a series of milestones leading through to March 2009. In the spring next year we expect to make the major announcement of all of those things in an integrated way. I have to say, achieving that target will put us so far ahead of any other city that I think it will be a major success story for London.

Q277 Mr Farrelly: Mr Lewis, when we toured the Olympic site the organisers stressed how big the undertaking was and how much bigger the site was, as an Olympic site, than, say, Wembley. Does that not make the Olympic Stadium unsuitable in terms of physical size for a football or rugby club to use afterwards?

Mr Lewis: It is very important that all of the legacy usage both demonstrates a high proportion of community involvement and engagement as well as elite sports. We want the venues to be successful, to be embedded in the communities and also to minimise the revenue subsidy. They are some of the key objectives. As part of that you want to maximise the usage of the venues. If you take the Olympic Stadia we think, based on the business plan that has been done, a mixed use of football, athletics and rugby is the right combination. The Stadium will move to a 25,000-seater. The initial business plan demonstrates that that mix is deliverable. We are now in the process of finessing that in terms of negotiations with actual potential tenants. We think it would be a perfectly effective stadia based on that sort of level of usage.

Q278 Mr Farrelly: Are people not physically going to be seated too far away, depending upon which end of the Stadium the pitch is located?

Mr Lewis: Not from the business plan work and the discussions we have had both with football clubs and rugby clubs in relation to it. Clearly athletics is a major commitment as a result of the overall agreement with the IOC. The level of serious negotiated interest from rugby and football professional bodies in this instance I think demonstrates they believe it can work.

Q279 Mr Farrelly: How many people are seriously interested, without disclosing any names?

Mr Lewis: We are in discussions at a serious level with three potential anchor tenants.

Q280 Mr Farrelly: Football and rugby clubs?

Mr Lewis: Yes.

Q281 Mr Farrelly: Mr Coleman, you talked about legacy and what you were doing in terms of sports participation with UK Sport. One of the messages that the UK sought to project in winning these Games was very much legacy now. I live in Hackney and I can look around and, like so many inner-cities, there are so many schools that do not have a blade of grass on them. I have asked this of everybody who has appeared here and I will ask the London boroughs next: I cannot think of a better way to get the Olympics anchored in children's minds in particular, and to encourage participation, than to make sure at the very least all those schools, in those five boroughs as a start, that do not have a blade of grass are identified and they can at least be provided with a rubberised surface so people can actually play sport in those playgrounds. What are you doing from your Office to help the boroughs coordinate efforts to do that sort of thing and to make sure that the Olympics are there in the minds of children now?

Mr Coleman: I think we are trying to work with them and to coordinate activity in a wider range of ways, both through providing funding, through providing encouragement and looking, where appropriate, for us to support new facilities. The boroughs themselves are doing a great deal of this. Our main focus has been on trying to provide some overall programmes, which I have already referred to, where we can provide both some significant help with marketing, but also bring new funding in. For example, I have talked about the Winter of Sport programme; we are talking here about 54 new after-school multi-sport clubs, and this is just the first year of this programme. It is a pretty big investment and we will particularly there be targeting young people who are currently not engaging in sport; obviously working with schools, but working with clubs; and we are bringing in funding from the Youth Sport Trust to do that, as well as putting in money directly from the LDA. We have been talking, for example, to Hackney Council about improvements that we can assist with on Hackney Marshes where there is a lot of grass but certainly, as everyone agrees, we could do with further improvements to facilities there to allow them to be better used. I think the boroughs would accept this; and I think they do a great deal of good work here. I live round Hackney as well, but if you go to Clissold Park on a weekday, or whatever, I do see a lot of Hackney school kids playing in the park using the facilities there. I do think the primary responsibility for developing that, for looking at new facilities, for identifying needs, is with the boroughs. We have brought together a group of all the organisations working on sport in London, which an officer from GLA chairs, which includes Sport England, the Youth Sport Trust, and London councils, to try and ensure we have better coordination of this. We have commissioned a new strategy jointly with Sport England to look at a London legacy sports strategy, and obviously one of the main focuses in that will be youth sport. In addition to that, as I have also referred to, the Mayor has announced a new programme which will invest a total of £80 million a year in new youth activities in London. That is the biggest single investment in youth facilities that we have seen for a generation in London. It starts this year and one of the focuses for that, not the only one, will be sport. That will provide further opportunities for new facilities to be developed, I hope.

Q282 Janet Anderson: How many of the venues are going to be temporary, and what is going to happen to them afterwards?

Mr Coleman: It is probably easiest if I say which of the ones are going to be permanent, if you do not mind. What we are left with after the Games in terms of permanent facilities are the Stadium, one of the arenas, and that means there are, therefore, two arenas in the Park which are temporary; the Velodrome remains; the Aquatics Centre remains; so there are arenas in the Park which are temporary and they are the main large temporary facilities. Those will be constructed in such a way that they are capable of being dismantled and used elsewhere; the components of them can be used elsewhere. The responsibility for making those arrangements - and for, if you like, brokering that with other areas of the country which may or may not have an interest in that - it has been agreed should rest with Sport England, and that is something they will be doing. Obviously, as I think happened in Manchester, there is a huge amount of what can appear quite incidental but is actually very valuable equipment and the like, that will be left after the Games and which will need to be reused: huge amounts of sport equipment for all these sports which will be part of the overlay in all the venues, permanent and temporary. Again, we will be looking to Sport England to lead the process of making sure that can be used right across the UK.

Q283 Janet Anderson: Do you know how Sport England will decide which areas of the country are going to benefit? This is all very well for London but as someone who represents a Lancashire constituency I would like to think that there might be a legacy for other parts of the country as well?

Mr Coleman: Absolutely. I think that is really why it is a judgement that it should not be, for example, for us to be involved in determining that, but it is a function which should be carried out by Sport England. I think I would be cautious about being drawn about how they are going to do that, but I am sure they would be able to talk to you about that.

Q284 Rosemary McKenna: Can we talk about the permanent structures that are going to be required to be converted. Obviously you have given us a clear indication as to the plans you have for that. Who will actually let the contracts? Will it be the ODA or the LDA? How will you do that?

Mr Lewis: We have agreed with the ODA that the LDA will take forward the legacy transformation. In terms of the deconstruction of non-permanent venues then the LDA will take that forward. Your question focuses on the permanent venues, of which there are five.

Q285 Rosemary McKenna: For example, the media centre?

Mr Lewis: There are five permanent venues, which Neale described, plus the media centre, the broadcast centre. The overall Park management, which will embrace the management of those venues, and the model for that Park management, is one that we are still developing with the boroughs and with the Mayor, getting expert advice from Deloittes and from Grant Thornton. One of the options, for example, is that you would have a special purpose vehicle that may take overall management of the Park, including the venues. The key thing here is that you have to build in strong stakeholder engagement, and strong community interest. You want a model which balances commercial delivery as well as community and socio-economic outcomes.

Q286 Rosemary McKenna: It will not be a commercial organisation which will take them and just make lots of money out of them?

Mr Lewis: Absolutely. You would have to gear the constitution of the organisation to have a strong community interest, strong socio-economic interest; but you need commercial expertise because you want it to be as revenue-neutral as possible in minimising the subsidy.

Q287 Rosemary McKenna: Hopefully the five boroughs would represent the communities and the stakeholders?

Mr Lewis: Absolutely.

Q288 Rosemary McKenna: Will the national governing bodies of sport be involved in that?

Mr Lewis: It is very important that they are involved, because they are involved in our discussions at the moment about use and occupation of the venues. They would have a clear interest in the long-term management of the venues. Of course, another important part is the Lea Valley Park Authority where a number of those permanent venues are on their land; and they would be a key partner in the long-term management as well.

Q289 Rosemary McKenna: I think everybody is concerned, with the amount of money that is going in, that there ought to be the maximum benefit for the local communities and for all of London?

Mr Lewis: Absolutely.

Q290 Rosemary McKenna: With the transport system surely it is possible to allow all the boroughs, the education authorities, to participate and take advantage of all these facilities. Is that a major part of your thinking?

Mr Lewis: It is distinctly part of our vision. In the Olympic Park Regeneration Steering Group meetings which we hold with the boroughs (the borough leaders are completely party to this) we have been discussing how can we enable the Park to be a destination location in its own right, not just in terms of sports, and one of the biggest new European partners that will appear, but also in terms of the whole tourism offer, and the whole visit London offer. That is part of a vision the legacy master plan framework will bring forward.

Q291 Chairman: You will be aware that this Committee recommended a year ago the taxpayer and the Lottery subscriber should see some benefit back from the increase in value in land which takes place as a result of the investment. You will also have seen on the front page of The Times the speculation today that the Secretary of State's ambition to realise £1.8 billion is now looking unlikely to be achieved. Would you like to tell us what your current estimate is of how much can be raised?

Mr Coleman: I did indeed see the front page of The Times today and was surprised to see that it was claiming to be reporting news, because last April the Mayor, in a statement at a press conference, put on record every single figure that is in The Times today and explained the position; which is that clearly we are looking here to forecast receipts from sales of land that will be taking place in the period up until 2030. Anyone who could claim to put a single estimate with any degree of reliability on land receipts over a period like that would, if they did it successfully, turn out to be an extremely wealthy person. Clearly it is only possible to estimate a range at this time. That is all the more so because the actual proceeds are not dependent simply on increases in the price of land over this period, but on a very large number of other factors: including exactly the type and quantum of development that takes place; the density of those developments; the particular land uses and the split between commercial and residential and other uses; the amount of planning obligations that have to be paid for as part of the process; the level of affordable housing required in the developments; and the amount of social housing grant that might be paid to facilitate those residential developments. So there are a huge range of factors which have to be taken into account. As I say, as the Mayor said as long ago as last April, the LDA, which has to borrow money as we have dealt with it in answering your questions, has to take an extremely prudent and cautious view about what assumptions it can make because it is borrowing money and it is a public body. The Mayor told the press conference last April that that figure was around £800 million, precisely the figure which appears in today's The Times allegedly as news. The LDA has always made it quite clear that it has a planning assumption in order to meet its financial strategy, and that it needs to get £800 million back. That is a very prudent and cautious figure. The land value increase built into that is 6%. In the last ten years the lowest increase in any year in land values in that area has been 6%; and the average increase has been 20%. It also has extremely prudent assumptions in terms of the density and quantum of development. It assumes 50% affordable housing in line with the London Plan - 70% of which is social rented housing; and it assumes no payment of social housing grant whatsoever. These are all very, very cautious and prudent assumptions. To suggest that in some way actually we are only going to get £800 million and definitely no more is just a distortion really of the situation. In fact the LDA has commissioned a range of estimates and assumptions here, and they range broadly between £800 million and £3 billion. The biggest driver in this range is, of course, the increase in land value. The £3 billion number comes from an assumption that you will achieve the 19% that we have seen in the last 20 years in London - a period obviously when there have been good and bad years for the property market. We believe it is obvious there is a very strong likelihood that a figure way in excess of £800 million will be achieved. It is precisely for that reason I know the Government was so keen to renegotiate its Memorandum of Understanding with the Mayor, because the original Memorandum provided that all the land receipts went to the LDA. Precisely because of the likelihood that a significantly higher sum would be achieved, we entered into negotiations which set out, going up to the figure of £1.8, how any receipts would be split. Finally, because it is irritating to see such an inaccurate story appearing, all our valuations and all the estimates we have done precede, for example, the decision of the Government to provide the funding for the Crossrail development which will go into Stratford Station, and which plainly must have a major impact on increasing both land value and development potential of these sites. I do not think there is cause to express the concern that was expressed in that article about the likelihood of us seeing much greater returns from the land proceeds, and the possibility of fully repaying both the amounts that have come from the Lottery and, indeed, securing additional funding that the LDA can invest in the regeneration of the area.

Q292 Chairman: You say you adopted a very prudent approach to this, but when the ministerial statement was issued in June I did go through how the £1.8 billion, which it was hoped to raise, would be allocated between the LDA and the Lottery, and it then speculated about how they would then divide any additional sums which were raised beyond the £1.8 billion. Do you think it is realistic still to expect that it could exceed £1.8 billion?

Mr Coleman: Indeed I do. As I say, one of the main drivers here is land value. If and obviously it is a very big "if", but it is by no means implausible given what is happening in east London; it is by no means implausible given the long-run gap between housing supply and housing demand in London, but if land values in this part of London increased in the next 20 years in exactly the same way as they increased in the last 20 years, we would generate not £1.8 billion but £3 billion through these land sales. As I say, even were land values not to increase in that way, there are a whole range of other factors, such as the quantum nature of development, such as the quantum of affordable housing, which if it was varied from the assumptions we are now making would again mean that land receipts would be very much higher than the numbers that have been quoted.

Q293 Chairman: You will have seen The Times article and you have talked about the potential reaching a 19% increase in values per annum. Savills described the idea of raising 16% per annum as complete madness; and Spicerhaart went on to say to get to the top of the market 16% is ludicrous?

Mr Coleman: All I can say is I am familiar with getting a range of views from different estate agents about values. We are not talking about next year when everybody agrees that property prices and house prices may go off - although I have to say, if you look at what prices did in Hackney, Newham and places last year, you will see that these figures are more than realistic. We are talking about looking at an historic trend which has been met over the last 20 years. If people say, "That's not going to happen again", I cannot quite see on what basis they say that, given that there is a huge mismatch between the supply and demand of housing in London, and given the level of investment and improvements that are happening in this area through Crossrail, other things the boroughs are doing and so on. As I say, you do not actually require necessarily, in order to meet for example the £1.8 billion, 19% or 20%. You can vary other assumptions in order to produce greater values. It really is not the case at all that £1.8 billion is an unrealistic figure. I would anticipate that in all likelihood this figure will be met and exceeded.

Q294 Mr Farrelly: I am not surprised about The Times article. There is a vote today in the Commons and the additional raid on the Lottery is unpopular in many of the constituencies around the country. Can I just focus on your £800 million figure. Are you saying now that under the Memorandum of Understanding you will be required to be repaid £800 million before a penny is given back to the Lottery?

Mr Coleman: No, Manny will correct me if I get this wrong, but the number we have to get before anything is paid back to the Lottery is £650 million. The reason why those numbers differ is that we need the £800 million to come in to meet the whole of the strategy which I referred to earlier, which does not just involve repayment of the land; it involves contributions from the LDA as well.

Q295 Mr Farrelly: That is from your own internal point of view. The £650 million is that capped in the Memorandum of Understanding?

Mr Lewis: The way it works is that the first £650 million realised in value will be returned to the LDA. Beyond that level there is a "profit share".

Q296 Mr Farrelly: I understand that. So £650 million is fixed at future prices. That is £650 million in the future and not £650 million now?

Mr Lewis: Yes, it is a fixed sum.

Q297 Mr Farrelly: Under the Memorandum of Understanding who is going to be responsible for realising the assets and the land sales? Who is going to handle the process?

Mr Coleman: The land is owned by the LDA for the most part. To that extent the LDA will have the responsibility. It is conceivable that it may decide to make arrangements to set up a new vehicle to do this, as Manny has talked about. Fundamentally the answer is the LDA.

Q298 Mr Farrelly: I ask the question, Chairman, because beyond £650 million three-quarters of the additional receipts are going to go back to the National Lottery. If you are handling the sale there is not as great an incentive to go beyond £650 million as someone who is handling the sale on behalf of the National Lottery, or an independent party?

Mr Coleman: We did actually try and draw this agreement up so the split is intended clearly partly to ensure that there is an incentive on the Agency and that it does derive benefit from increasing the level of receipts. That is why we did it in this way. I think if there was any question that this was not being done in that way and the Lottery was being disadvantaged through an inappropriate approach to the disposals, which I very much hope would not come about, but if that did, there would be other means open to the Government at the time to deal with that situation, the most obvious one being - assuming that we still have something like the arrangements we have today - the development agencies depend fundamentally on grant funding, so there is a pretty strong lever to use there.

Q299 Paul Farrelly: What thought has been given, in your ranges of estimates, in terms of tying in the process with the individual boroughs' regeneration strategies? For instance, your efforts to maximise the sale proceeds of the media centre may not quite tie in with what the local borough might envisage as a use of the site and might, therefore, assent to in its planning procedures.

Mr Coleman: This is a very important point that you make. Clearly, the boroughs, as the local planning authorities and as the representatives of local communities, do have very strong interests and desires that we ensure that the development strategies which take place here are appropriate in line with their plans and are producing new, genuinely sustainable communities. That is something which the Mayor, certainly, is very strongly committed to. There is no question of us actually adopting an approach that says: "We are going out to maximise value come hell or high water". If we were doing that we would not have built into our assumptions 50% affordable housing and 70% for social rent. If we had not built that in the proceeds would be way up in the air, but clearly we would not be doing anything for local people and their communities. Similarly, in the planning framework that we have agreed with the boroughs here, there are proposals for major developments of new social infrastructure - schools, health facilities, community facilities and emergency service facilities - to go alongside these residential developments, and that will require payment of additional contributions from developers. That, again, is built in here. There is also a concern about the type of housing that is built here in the boroughs, and there is a commitment, for example, in the planning framework that there will be a broad range of different types of housing and that 44% of the housing will be family housing, which is to meet the sorts of needs that the boroughs have. So we are very sensitive to these points, and that is one of the reasons why over the last six to nine months new machinery has been created to very much extend and deepen the involvement of the boroughs as real partners in this development process. We have some formal structures; a steering group, at both senior official level and at ministerial level, bringing together the Minister for the Olympics, the Minister for Housing and Planning with the Mayor and the leaders of all the boroughs, to make sure that they have oversight of the work that is going on in this area. I want to try and reassure you that we are very much looking here to do a programme that is regenerating, that is bringing benefit to existing communities, that is meeting local needs and is supported by the boroughs. It is not a programme that is in any way driven simply by the desire to maximum proceeds.

Q300 Paul Farrelly: Given all those balancing considerations, you are confident, are you, that the Lottery will be repaid in full?

Mr Coleman: I am actually personally confident that the Lottery will be repaid in full, but as I have said we are forecasting here land sales going out to 2030 and there is a lot of uncertainty about the future. Who knows what external events may occur during that period that will change the way we look at things. If you look, as I say, at the ability not just to get the money in through looking at the increase in land value but, also, by adjusting other things that are open to us to adjust, I believe that there is every prospect that the Lottery will be repaid in full.

Q301 Mr Evans: So The Times has got it completely wrong, and it should have said: "Revealed: £2 billion Olympic bonanza"?

Mr Coleman: No. I think what The Times should have done is, as I say, not to have reported this on its front page, since it is not news, since everything was said by the Mayor nearly a year ago. It has always been the case that there is a broad range being looked at here, between £800 million - a very, very cautious and prudent figure - up to £3 billion, which is the figure you would get if the next 20 years was like the last 20 years, and anyone who claims to be able, as I say, to tell you now what the price of a hectare of land in Stratford is going to be worth in 2023 is either a fool or a genius.

Q302 Mr Evans: Part of the problem, you say, is there is a lot of uncertainty. One of the certain things about this whole procedure is that none of us will be here around this Committee table in 2030 to say whether you are right or whether you are wrong. You can understand the cautiousness of the whole thing, because when we first started this procedure, as you know, the Olympics was going to cost two-and-a-bit billion pounds and we are now approach £10 billion. Therefore, you can understand that everybody wants to get as accurate as they possibly can the costs that are going to fall on certain bodies. Janet has already said (and she represents a seat in Lancashire, and so do I) that although they call it "The London Games" the fact is that the whole of the UK is contributing towards this, in one way, shape or form or another, and there will be good causes in the North West of England who will be foregoing money in order that these Games can take place. Can you understand the concern?

Mr Coleman: I very much take your point and I do understand the concern that there is, particularly in an area which is as intrinsically uncertain as looking out over 20 years at a series of land sales. So I do understand that.

Q303 Mr Evans: Do you think that the Memorandum of Understanding which Tessa Jowell signed should have said that it should not be £1.8 billion (upon which, clearly, the land sale increases are about 16%, and now everybody is saying 6%) and that it should actually have said there are a range of values that could be met because, clearly, £1.8 billion seems to now be fanciful.

Mr Coleman: First of all, just to reiterate, I do not accept for a moment the £1.8 billion is fanciful. What you have to bear in mind is that, as I understand it and as I read it, the Memorandum of Understanding did not say, in any way, as The Times totally inaccurately reports today, that there has been an agreement that the proceeds will be £1.8 billion. It does not say anything of the kind. What it does is to provide for what will happen as money comes in up to a total of £1.8 billion. We could have gone beyond that - arguably we should have done - and that would not have amounted to saying that we were going to get in £3 billion; it would have amounted to making an agreement to what we were going to do with the proceeds under a range of future scenarios, accepting that this is a period that will go out for quite a long period of time. Obviously, when we sell the land is by no means certain. I imagine - as you said, it probably will not be us - that the people who have responsibility for this (for example, if 2013 - unlikely, I think - is a bad year for the property market in East London) will take a view on going later rather than earlier. People will be sensible about balancing all the objectives we have, I think, in terms of making sure we get the money back, precisely because I think everyone is committed to making sure the Lottery is repaid.

Q304 Mr Evans: When will the Lottery get their money back in full?

Mr Coleman: It will obviously depend on the timing of the land sales. That is something which, as I say, will be a matter for judgment dependent on the conditions in the property market at the time. If you want me to speculate, I would have thought that it is likely that in the immediate aftermath of the Games that may well be a good time, and there may well be strong arguments for trying to sell land at an early stage, but that might not be the case. There is uncertainty here, I do accept, but I do think, overall, there is a strong and robust position to expect significant repayments. Frankly, we are looking not just for the Lottery to get money back; we really are looking, here, for the LDA to get further money beyond the 675, without any doubt, because that money will go to help the further regeneration of the areas between the Olympic Park and the river, where there are ambitions to build very large numbers of new homes and create new jobs.

Q305 Mr Evans: You talk about property values but you talk, also, about social housing, which will, clearly, not draw as high a price from the land. Could that be a variable as well - that if the £800 million is not looking as rosy as you think and you want to get a bit more money, the content of the social housing could be reduced?

Mr Coleman: That is indeed a variable that could be looked at. Indeed, it is a matter for discussion with the boroughs, I think, in particular, because they will have views about the types of housing they want there. If, for example, there was a view and a consensus that we should be looking at increased proportions of, say, equity-share housing as opposed to social rent housing, or indeed a greater proportion of market housing, and that was agreed, then that would, you are right, significantly increase the money and help to get it back. We felt it right, for the purposes, as I say, of our core estimates, we would take the most prudent thing, the thing that puts the number down, and that is why we have assumed 50/70% social rent - if you like, the sort of full-bloodied, London Plan and overall London policy - as the best basis for making calculations.

Q306 Mr Evans: Will the London Council Taxpayer, if it is towards the top end of the estimate, get any money back?

Mr Coleman: That is very much something for the future.

Q307 Mr Evans: That is why I am asking it.

Mr Coleman: It is right to say that existing plans do not make provision for that. Clearly, if it were very much towards the top end of the range, I imagine that is something that would come on to the agenda, but I would say, again, that we are looking here at an extremely ambitious regeneration project. We are looking not just at the Olympic Park; there is a very big area, as you will know, going south down to Lea mouth and beyond where, crucial to the future of London, we have a planning framework in place with the boroughs that is looking at 40,000 new homes and 50,000 new jobs. We will need continued investment in that. We will do that over time. Just as the Olympics has vastly accelerated our ability to regenerate the area of the Olympic Park, additional money coming in, in this means, would, similarly, accelerate our ability to complete regeneration and create new opportunities in the rest of this area.

Q308 Mr Evans: A final question, which is, if the Games end up costing more than the £9.3 billion, do you think the money from the land sales will go to fill any black hole that exists because of the increase in the price of the Games?

Mr Coleman: I really do not want to be drawn there, and I am going to say that the Mayor's position on this is absolutely firm that he will do anything to prevent this costing more than £9.3. When you had John Armitt here he said something like: "Obviously, no one can give you a guarantee, signed in blood, that this will not happen", but the Mayor's absolute determination is that the Games will not cost more than the prudent budget that has now been agreed.

Q309 Philip Davies: In a previous answer to Paul Farrelly you said that there were three potential tenants for the Olympic Stadium after the Games. I think I read in the paper that Leyton Orient were one. Are you in a position to confirm that and, perhaps, explain who the other two might be?

Mr Lewis: Leyton Orient have put their interest in the public domain because they have consulted their fans on the option of the Olympic Stadium. The other interested tenants, because of the commercial sensitivities, we cannot release or confirm who they are, at this stage.

Q310 Mr Evans: When is that going to be finally resolved? Have you any idea when we can expect an announcement?

Mr Lewis: We think it is very important that this is delivered in an integrated way, so you know what sort of vision you want for the Park through the framework, you know what development brief you want, in terms of realising a value, and that you also know what the Park management arrangements are. Those three conditions will all combine round about Spring 2009 and we think that is the right time to then be able to say: "And these are the tenant arrangements that we think fit into that delivery vehicle for the Park".

Q311 Adam Price: You still, clearly, believe that the upper range of expectation, in terms of land values, is at least a possibility. I would like to ask you, therefore, what is your understanding as to what will happen to any surplus raised?

Mr Coleman: Above the 1.8? Well, as I understand it, at present, we would be reverting to the situation in the old MoU that all that money would go to the LDA - it is the LDA's land. However, the LDA works in close co-operation with government on regeneration projects and, as I have said before to colleagues of yours today, ultimately the LDA depends on government grant-funding to carry out its activities. So, obviously, in the event that proceeds did, in the future, possibly go significantly higher, there would be a discussion to be had between government and the LDA about how the extra money was being used. There would be a trade-off here because, obviously, one choice open to the Government would be to say to the LDA: "You have got all this extra money in here, we have agreed with you that you are going to spend this much on the further regeneration in the Thames Gateway and in East London, but that means that you do not need so much grant from us." So, in that sense, this is, inevitably, an ongoing discussion between the agency and government about how these proceeds are used.

Mr Lewis: The MoU says that expressly - that in the event of realising beyond £1.8 billion there will be discussions between the Mayor and government about the best use of those resources.

Adam Price: Members of Parliament in Wales, Scotland and the North of England will probably have something to say about it as well! Thank you.

Chairman: We need to move on. Can I thank you both for your evidence.

Memoranda submitted by The Host Boroughs and Greenwich Leisure Limited

Examination of Witnesses

Witnesses: Sir Robin Wales, Elected Mayor of Newham and Chair of Five Host Borough Group, Mayor Jules Pipe, Elected Mayor of London Borough of Hackney, Councillor Denise Jones, Leader of London Borough of Tower Hamlets, Councillor Clyde Loakes, Leader of London Borough of Waltham Forest, and Mr Peter Bundey, Deputy Managing Director, Greenwich Leisure Limited, gave evidence.

 

Chairman: We now move on to the Five Host Boroughs. Can I welcome, representing them, Sir Robin Wales, who is the Mayor Elect of the Borough of Newham, Mayor Jules Pipe, from Hackney, Councillor Jones, the Leader of Tower Hamlets and Councillor Clyde Loakes, the Leader of Waltham Forest. Representing Greenwich Leisure, Peter Bundey, the Deputy Managing Director. I am going to ask Philip Davies to start.

Q312 Philip Davies: How do local people view the prospect of hosting the Olympic Games? Is it universally popular in your boroughs?

Sir Robin Wales: Yes. I am sorry it is a short answer, but yes.

Q313 Philip Davies: We are all for short answers - that is marvellous! What impact, if any, do you think the Games will have, during the Games, on your local services and the local infrastructure? Will you be able to cope?

Sir Robin Wales: As we said in the submissions, there are clearly issues around the Games. Firstly, there is a lot of pressure on us. The more we look at the Games, the larger it becomes and the more opportunities it generates, and as you look at previous Games I think it is a journey of understanding. It is much bigger than any of us realised. Obviously, there will be pressure. We worked with the ODA to put together a joint local authority team that can give local authority services in the Park, and we have done very well with the ODA and done some work with that, but clearly we are going to have to talk to LOCOG in identifying that. One of the things I would want to particularly stress with this whole thing is the need to have debates early and actually opening up the issues of concern, so that those things are widely debated in public, which we think will, in the end, come to some sort of resolution. I will say that, at the moment, in the governance structure we have got in order to enable us to get decisions, we have about one of the best governance structures on regeneration and one that involves the boroughs fundamentally, and we think it is a very good structure. It was a bit of a struggle to get there but we have got something that we are able to engage with. So there will be issues. Are they resolved yet? No. Would we expect them to be resolved yet? No. Do we need to have that debate? Yes.

Q314 Philip Davies: Have you quantified at all what additional costs, if any, there will be to your Council Taxpayers to make any changes and do work in preparation for the Games?

Sir Robin Wales: It is too early for that yet. We have started to do some of that in terms of the building work in the Park, and some of the support we have got - so we have got building control and we have a unified borough approach. So we have started doing the building work but for the Games it is too early for that. So that is something that we will be working through. The answer is we do not know, at the moment. We have to engage in discussion.

Q315 Philip Davies: Do you still think, after all that has been totted up, that support for the Games will be as unanimous as it seems to be at the moment, in your boroughs?

Sir Robin Wales: I think the thing we never talk about is just what it is doing for inspiration, with people. I have to say, for me, it is not about the physical legacy - the physical legacy is great, smashing - but if we are talking about getting people involved, if we are talking about taking what is, in our boroughs, the poorest community, the largest mass of deprivation in this country, possibly in Europe, and actually trying to inspire people, that is what, I think, the Olympics and the Paralympics provides us with. If we do this right - and we are working hard to get participation; we have got excitement in the schools and we have got kids getting involved - I think we will end up with what we have seen in the Commonwealth Games elsewhere; we can inspire people to do quite different things. The answer is it is up to us. Will we do it? I do not know. I think we will but it is a challenge for us. The answer is, yes; I think when the Games roll into town our people will absolutely be up for it, and they are now. Although, I would put in a bid for free tickets from them!

Councillor Loakes: Can I add to that? Certainly from a Waltham Forest perspective, in December, 66 of my residents got into employment (20% of those were long-term unemployed), and that is already starting, therefore, to make a difference to those households in areas of deprivation that Robin has already alluded to. So we are already beginning to see the value-added benefits of hosting the Games in 2012 in the here and now. I would add, on inspiration, record numbers of youngsters in Waltham Forest and across the five boroughs are now participating in regular sport - not ad hoc events but regular sport. The boroughs have been at the forefront of encouraging that. That is having a snowball effect across through to older groups of our residents and trying to get them engaged in active participation in sport because, ultimately, the Games are a sport. It is about the biggest gig in the world coming to East London, and we will ensure that we maximise every possible opportunity - milk it dry - when it comes to all the benefits that we can get from this.

Mr Pipe: On the point of the additional costs to the boroughs, since our submission the ODA has put forward £32 million for the public realm issues in the periphery of the Park, actually within the boroughs. So the principle has been set that they acknowledge the costs, and now the debate has got to move on between the five boroughs, the ODA, LOCOG and everyone about, say, the regulatory issues that will arise not just during the Games but, also, in the lead-up and the construction.

Q316 Philip Davies: In a nutshell, what you are saying is you want all the benefits of having the Games but none of the costs?

Sir Robin Wales: No, I do not think we are saying that. If we are going to not develop on Greenfield sites - we are going to have to develop on brown-field sites - there is a cost to that. We develop across the country; we invest money in projects across the country. I would not dream of opposing some of the developments going on. What we are saying is that given the level of deprivation we have got - I will give you an interesting fact: we know that the people moving into Newham are poorer than the people moving out. So, effectively, what we do is take in poorer people, we work with them, we have over 100 languages at school, we work with these people, we get them in a position where they are more aspirational and they move out, and so we import more poverty. We have, in my borough, 18,000 people who have never, ever worked - never, ever worked - in their lives. The non-employment level in Tower Hamlets is the lowest in the country, Hackney is the second-lowest and we are the third-lowest, in Newham. So what I think we are saying is that the investment that is coming to East London - it is high time that investment went in. It is going into the poorest area in this country. So what we are looking to do is maximise that benefit in two ways. One is the development issue. It is interesting, one could make an argument that the Olympics is only the third-largest regeneration scheme in Newham, because we have Stratford City and we have the Docks, but we are also trying to inspire people to get them to move into work. So what we have tried to do is take a substantial investment of public money and try to transform our population, their expectancy and their aspirations. At every stop on the District Line between Westminster and Newham, there is one year less life expectancy. We have to do something about this. This is a proper investment in an area. It is a massive task, it is a big investment and we need to try to use it so that in the future the East End of London will not be the poor place it is.

Q317 Philip Davies: Finally, after the Games, in your submission you said that you had a fear that the desire to generate as much revenue as possible to repay the Treasury and the Lottery might lead to unacceptable pressures on the development of the area in an unsustainable way. I am sure you have just heard the Mayor's Office and the LDA assure us all that it would all be done in a sustainable way and your fears are unfounded. Will you be reassured by what they said, or do you still maintain those same fears?

Sir Robin Wales: I think it is fair to say that the establishment of the steering group that we have set up, which Neale Coleman described to you, is a major step forward involving the boroughs in the legacy. Yes, we have concerns. We must have concerns at this point, because if we do not have them we cannot address them. In Canning Town we are currently in the middle of a £3.4 billion project to knock down and replace a load of housing that was built after the War. We cannot allow that to happen again, where we build a load of housing and then knock it down in 50 years. We need to develop communities. Our job in the boroughs is to fight to develop those communities so that they are sustainable in the long term. I think there is a recognition from all the parties (the ODA, the LDA, particularly the Mayor of London); they are very keen to make sure that there is a legacy and that the communities are there. So in the Park Committee recently, the boroughs suggested having an international competition to see what we might do with some of the areas afterwards to generate some employment opportunities, and the Mayor seized on that with some enthusiasm. It is a challenge to make sure we work with that, but I will say that if there is pressure put on to pay money back before we develop those communities, that would be a mistake. I would urge the Select Committee to be taking a view that said: "Make this work so we eradicate poverty in the East End, as far as we can", because in the long term that will pay more money back in taxes and we will actually pay back the money that is being invested. However, if we focus on just the repayments that would be a mistake. There are obviously going to be debates and we could be here till 2030 debating that, and that is fine, but we would argue we need to get sustainable communities because it is cheaper in the long run.

Councillor Jones: I think it would be fair to say that we won the Games because we have the opportunity to regenerate this area, which we did not have the opportunity to do before. So although we see the tremendous opportunity and we are really excited about it, we are equally excited about the regeneration of East London. As Robin says, we must not skimp on it, we must do it properly.

Q318 Chairman: It is, obviously, encouraging to hear your enthusiasm for the benefits which, clearly, will come from the Games, but they will also put additional burdens on your services. Will you be looking to have some reflection of that in the amount of money you receive from government in revenue support?

Sir Robin Wales: We always look for money from the Government. Clearly, it is part of the debate. Yes, if there are extra costs we are going to want to try and have discussions - sensible discussions. As Jules has said, we had a very sensible discussion with the ODA, and as we move forward people will engage in that debate and will look at the costs. I am confident that we will find ways forward. However, we have not got solutions at the moment. One of the things, I think, that is frustrating in this debate is that we are trying (Athens did their legacy after the Olympics) to work this through early, and if we do not have answers it is because we are actually trying to raise the question so we can find answers. At the moment, it seems to me that some of those answers are coming forward in a timely manner. Rightly, we will be raising questions about the costs during the Games, but we have raised questions about the costs building up to the Games, and some of that has been answered. Not fully, as Jules said, but they have established the principle and we move on and discuss it. We would never, however, any of us, turn down more money from the Government, and we would encourage the Government to give us more.

Q319 Mr Hall: The host boroughs have been very supportive or praiseworthy of the London Development Agency and the land assembly project, and over to the Olympic Delivery Authority. Why are you so impressed?

Sir Robin Wales: It was very interesting, actually. All the publicity was: "We won't build the Games on time and it will overrun on costs". Funnily enough, the "We won't build it on time" has begun to disappear because they were within one week of the target of clearing the site. That was challenging. We had a housing co-op in Newham that had to be decanted, we had traveller sites, other people had traveller sites, we had people on allotments and we have had lots of businesses and very important businesses - a very, very challenging effort. After, frankly, some errors at the beginning, it settled down into quite a well-run operation. There were mistakes made, and I could recount some, but actually the bottom line is, by and large, people were got off the site on time with a reasonable understanding of what we are trying to do. We were very supportive of that process and worked hard at it. I have to give full credit to our partners in working on that. The "We won't build the Games on time" story seems to have disappeared. I am sure it will come back, but we are on target.

Q320 Mr Hall: One of the most important things with the Olympics - and this is a very important part of the bid - was the active involvement of communities in the whole project. You are a very powerful voice for your communities. Is the Olympic Delivery Authority listening to what you are saying, in terms of community engagement?

Sir Robin Wales: Yes. I come back again: the establishment of the steering group for the Park is a very important step. We have government ministers, we have the Mayor, we have all the boroughs, and we have LOCOG and the ODA all sitting round the table agreeing how we go forward. There has been some significant movement now together. We have had visioning (?) days, we have got a vision for the Park, we have got ideas of what we would like to have in the Park, and we are now saying we will have an international competition, but there are a number of development platforms after the Games which can be developed. So we are saying let us have an international competition. Let us not us, as politicians, say what we think should go in it, let us ask people in the private sector what ideas they might have to make that work. That is all coming from partnership working. I would have to say that, as a governance model, it is working extremely well. If I can praise ourselves, if you take things like putting together all the services that need to be provided, we, as five boroughs, have worked together very closely to do a lot of this work. As an example of local government working together and working well with regional and national government, I think it is a very positive story. I do not expect it to be reported because I realise it is positive, but it is a very positive story. I expect to see exactly the same thing as LOCOG begins to work. What we need are discussions around volunteering, and the stuff that LOCOG will do, and I expect to see the same sort of approach. I would say, after a few hiccups, we are moving along.

Mr Pipe: Just to add to that, that partnership working and, also, community engagement is going to increase more and more as the focus turns more to the cultural Olympiad, the build-up of volunteering and, also - as it is already doing so - to discussions for legacy. If there was any bad impression initially it was because it was a "by necessity" approach to a big civil engineering project that had four or five years to be done in, and that was that. As we move away from that kind of focus and on to one more about cultural Olympiad, volunteering and legacy, that kind of engagement is going to increase.

Councillor Jones: If you take the aquatic centre as an example of something that, actually, we would have liked to have been involved in designing at the beginning, to make sure that it is going to happen, we are very concerned that local people will benefit from the right kind of fees and so on afterwards. We have been working together, making sure that Tower Hamlets is making a contribution and Newham is making a contribution - capital contribution - to making sure that is built.

Councillor Loakes: Just to echo comments that have already been made, it is a very complex and challenging relationship. Not every local authority or group of local authorities will be able to claim that they have put together such a significant and massive regeneration event during their time in office. Certainly, from a Waltham Forest perspective, we have had our challenges with the ODA and LOCOG but we have used the various vehicles that have been set up, through the five borough group and the steering group, to iron out those challenges and come to an understanding on the best way forward to benefit the residents of Waltham Forest but, also, to continue to deliver this fantastic event in 2012. It is not to say there are not challenges, but the engagement is actually getting better all the time because the organisation committee, as well as the ODA, recognise that they are not going to deliver a successful Games unless they carry local people with them. Therefore, there is a premium on that level of engagement with elected representatives as well as those communities directly.

Q321 Mr Hall: Mr Bundey, you have a slightly different view about community engagement, do you not, because you say that all cities traditionally start to try and invent the community engagement afresh rather than building on existing structures. Is that true of the London Olympics? Are we in danger of falling into that trap?

Mr Bundey: That has already been mentioned this morning, and I think that is very true; there is a danger of that trap and that is something we need to keep our eyes open to. Legacy does not fall out of the Games; it is not something that just happens at the end of the Games, it has to be planned into the Games. One of the encouragements I have had today, listening to the first session, was the amount of scrutiny that you are putting into the legacy. We are a co-operative, social enterprise, with charitable objectives, working to promote sport and inclusion through sport to benefit communities. The reality is that you cannot just drop something into the middle of an existing community network, existing sport network, and existing sport infrastructure, and then expect it to work. That is why there is engagement with the boroughs - and we are working with all the five host boroughs as partners and 13 other boroughs in London. You cannot just drop it in without dealing those communities in. It cannot be done to the community, it has to be done by the community. As you know, a lot of British sport, UK sport, is propped up by volunteers, individuals and small groups, and those people need to feel involved. When the bid came we raised 35,000 signatories on top of the signatories that had already been raised nationally, so it showed the level of interest and goodwill that was around within London in our facilities. The reality is we have to harness that. There is a Paralympian and an Olympian joining me here today because they are working out in the communities to inspire local kids, to inspire people. The issue is about how do you capture that and how do you take the spirit of the Olympics and the Paralympics and get it out to the communities. The one thing that I would raise and the one thing I think there is a danger on is protection of the brand. The IOC puts a big cloak around the Rings, the Paralympic symbols and how that brand is captured into a commercial sponsorship opportunity for the Games. That is, clearly, very, very important - the commercials have to work to make the Games stack up - but the community also needs something to hang on to; we need to be imaginative in how we get round some of those prescriptive measures to make sure that we can put some logos out, we can put some brands out and we can actually associate with the Games and get some of the feel from the Games. The danger is if you cannot mention the Olympics and you cannot mention the Paralympics, then how do you inspire people? So we need to be very conscious about how we engage with that.

Q322 Mr Hall: Do you think the International Olympic Committee is too protective of the Five Rings and the other logos?

Mr Bundey: My personal view is yes. My personal view is that if you look at the past Games, then the legacy and community engagement is not particularly good. The one thing that is encouraging about London - and I have to say I echo the boroughs - is that there is some good work going on with the ODA and the LDA on community engagement; there are certainly stakeholder groups involved in the design of facilities (I sit on the aquatic centre design group) that are starting to raise those difficult questions now so that we can actually breach some of these issues of legacy. The nearer to the Games it gets the less chance we have got.

Sir Robin Wales: Can I just say something on the brand? I am also on the LOCOG Board so I see it from both sides. There is a real problem with the brand. It needs to raise a lot of money, and if it does not you will be asking why not. I think what is being attempted, though, is a non-commercial brand that we can use. Certainly, as boroughs, we want it as quickly as possible and we want to use that brand, and I echo Peter's comments that we want to get that as quickly as we can. Equally, LOCOG has to raise the money, it has to protect the brand and it has to be careful with that, but a non-commercial brand would be helpful. What I am not sure about, which I think is interesting, is that although LOCOG is doing some good work, I think, on signing up partners, those partners are going to want to invest a lot of money in a whole variety of projects up and down the country, and I think one of the things we have underestimated, perhaps, or not looked sufficiently at, is the benefit the rest of the country is going to get from partners who want to get the whole country involved; they do not just want to be involved in London, they want the whole country. That will provide funding in all sorts of places that we, perhaps, have not had. So I think that is quite an interesting spin we will see in terms of spin-off from the Games. I am not sure what the incentive will be, but I think that is quite interesting. I will say, in defending LOCOG, I think they are aware of the importance of involving the community, they understand the need to get the brand out but they also have to get this money. So it is a balance, we understand that, and of course we will, as boroughs, push to get it as quickly as we can.

Q323 Chairman: When we were in British Colombia looking at Vancouver's preparations, we were told that the provincial authorities actually had to obtain permission to use the Rings on some of their literature. Have you sought similar permission?

Sir Robin Wales: It is a non-commercial brand that is being developed quite early on, and we are very keen to get that and then use it. That is being negotiated at the moment. The host boroughs will be first up to use that, and sooner rather than later. However, as I say, yes, we would take the brand tomorrow but it is that balance with sponsorship and people paying for it. We have to understand that. It is right and proper that is done, but there is a genuine recognition from LOCOG (I cannot speak with two hearts here) of the importance of this, and they are quite keen to free that up as best they can, and the non-commercial brand will be, I think, very significant.

Q324 Rosemary McKenna: First of all, can I raise an issue that was briefly mentioned by Jules, and it is about volunteering. Having experienced the huge benefits of volunteering, because I attended the Commonwealth Games in Victoria and saw how much work was done by the volunteers, I have two questions. First of all, the training that is being given them - is that ongoing and how is it going on the local community getting involved? Can you deal with that one first?

Councillor Loakes: Our Waltham Forest adult education services are running a number of volunteer programmes to start to prepare people for the opportunities from volunteering. Of course, what we are trying to do is, also, ensure that the opportunities to volunteer before the Games they kind of get first dibs on, so that there is some continuous benefit between now and 2012. We have been very successful in getting a lot of our adults through those volunteer programmes.

Q325 Rosemary McKenna: I think it is really, really important that you get as many people as you can involved.

Sir Robin Wales: There are two things here. One is, obviously, we will want to bring people from all over the country to be part of the Games, and that is important, because then different parts of the country get involved. We all recognise that you can volunteer, perhaps, to be in the Park but there are loads of other volunteer opportunities around it, and it is about us trying to engage with our communities. If we can get them volunteering and doing things now - we do a volunteering scheme and we have been looking to see: "Can we then get people moving from there into employment?" Very interestingly, we have managed to get some into employment but we also have evidence that people who are not working think that is their contribution and do not want to stop doing the volunteering and go into work. We will be doing research on that, so we are working now because we see it as a way of pushing people towards employment as they get connected. Clearly, all of us have plans to have extensive volunteering programmes; the more the merrier and the more people can get involved in that and the more they are part of it, the better. I think that is extremely important.

Q326 Rosemary McKenna: That is part of the legacy as well.

Sir Robin Wales: Yes, absolutely.

Q327 Rosemary McKenna: People will continue; once they have done some kind of volunteering, they tend to continue to do more. Thank you. Can I ask you about how you feel your views are being reflected? You are not on the Olympic Board, and you do not have any direct representation on the Olympic Board. Do you feel that they are listening to your views or are you struggling?

Sir Robin Wales: I am on LOCOG and LOCOG absolutely listens to every word we say with great interest. I think people are listening. There were some initiatives - and I think Jules explained why that is - but people are trying very hard to listen. Do they give us what we want? No. Do we expect that? No. There is an engagement, and I think quite an adult engagement. I think there is a willingness to listen. Sometimes, clearly, costs and things like that will drive things in a particular way, so we will not necessarily agree with some of the things that are done. I think Park thing (?) recently was very positive, with people having real vision about what they wanted to do and the sort of place we want to build. The challenge will be to deliver that. I think people are trying to listen and trying to work with us, but it is a challenge. It will not be exactly as we want. So, yes, I think they are coming in good faith, to be honest.

Councillor Jones: Also, Neale Coleman mentioned earlier that there is a regeneration board that has been set up that we will sit on together.

Q328 Rosemary McKenna: You already mentioned that; you said you thought there was a very good structure within that, and you are confident that that structure will be sufficiently strong for you to be really, really involved in the regeneration aspects of it. That is one of the biggest things, I think, that persuaded the Government that it was a good thing to do the Olympics and to bid for them.

Councillor Loakes: We do actually have very good access to those on the Olympic Board when and if required. So, for example, certainly from Waltham Forest's and Hackney's perspective, the northern sports hub that comprises Hackney Marshes, the Manor and the velodrome in Newham, there are some bridges that are integral to actually making that a successful sports hub, and ourselves and Hackney have been at the forefront of lobbying quite hard with David Higgins and Alison Nimmo to make sure that they understand the full implications of ensuring that those bridges are maintained and do go in and do exist in a legacy context. Otherwise, that northern sports hub, which, for all intents and purposes, is a community sports facility, will not work or function as well as it possibly could.

Councillor Jones: I would endorse that because the bridges also running from Tower Hamlets across the two rivers are needed after the Games as well as during the Games. That is very important.

Q329 Rosemary McKenna: So you see a real legacy for the five host boroughs in the future?

Councillor Jones: Yes.

Sir Robin Wales: Far be it for me to suggest what the Committee should do, but it would be really helpful if we can try to get an understanding in the public about, actually, the development of the communities. London is expanding, and a lot of the expansion is going to come in this area. You need housing; you need places for them to come. We need to make it work and we need to make it sustainable. We need to get the people who are not in employment into employment; we need to get people connected and doing things. We need to develop a Park that will be a north-east London Park, that we do not have anywhere. If we can recognise that that, and developing that sustainably, will be a long-term benefit to the UK and not just to the local populations perhaps we can just focus on that and say: "That is what we have got to get out of these Games first". If we get that and we make sure that is a priority, then at the end of the time the money that will come out, or whatever, in 2030 will be a bonus. However, if we can say publicly: "That is what we have to do; we have to transform this area and get people into work and change people's lives there", because it is a huge area of deprivation, then I think we will engage in more effective debate because then we will actually be making sure there is a permanent legacy. We need to focus on that and the more you do that the more helpful it will be for us.

Mr Pipe: As well as changing the realities for people who live there - for example, employment - I think what is key as well is that we have to change the reputation of East London. If anyone says: "North London", "West London" or "South London", everyone has an image - usually positive - of those places, but as soon as someone says: "East London" it is automatically linked with Dickensian poverty in many people's minds.

Q330 Rosemary McKenna: That is exactly what they are trying to do in Glasgow with the East End in the Commonwealth Games.

Councillor Loakes: It is not just about saying to the ODA: "You have to do this for us". We have to make the most of some of these opportunities ourselves. I know that all of us are investing in various different ways in different services to ensure that we maximise the opportunities from the Games. So, for example, we are putting up money towards our cultural Olympiad offer, from October this year, to make sure that that is successful. We can hang around and wait for DCMS or ODA, or whoever, to give us money, until the cows come home, but it actually starts this October. For a lot of residents that will be one of the major points of engagement; for a lot of residents that will be one of the first key milestones of the 2012 Games, when that torch is handed over in Beijing, and in October, when we launch the cultural Olympiad. So we cannot hang around and wait forever; we have got to do a lot ourselves and not just keep thinking that the ODA needs to answer this question and deliver on this question.

Q331 Paul Farrelly: Just on that point, I gave you very good notice of my question on kids and sports and participation, which has been talked about. I am boring people now because I mention it every time, but the most noticeable way is to say: "These are the five London boroughs and, Mr Bundey, pro-activist (?) we are going to deliver a playable sports surface in every school on our patch. We are going to tap you, the Government, and you, the sponsors, who are awash with money, to deliver that, and it is good for us and it is good for you".

Sir Robin Wales: We can then say that sponsors should spend their money in the East End of London rather than the rest of the country. I like that. I will go for it.

Q332 Paul Farrelly: It is a no-brainer for the leaders' group.

Sir Robin Wales: Yes. Each of us has different requirements in different boroughs. Each of us can give you a story. For example, in my borough, we introduced free swims way back, to try and get to kids, and we are currently drawing up a programme and saying: "What do we want to invest in, in terms of a sports infrastructure, between now and 2012?" We are significantly cutting our budget elsewhere so that we can fund that. I think the sports infrastructure will be critical. We have got a programme where, again, we have cut budgets so that we can invest heavily in activity, both for adults and for young people, because the adults' investment is often left behind in this, but, actually, it is a big factor in reducing ill-health and mental ill-health in adults - or older people. We have set up the Newham Sports Academy. I think 70% of all medals come from people from independent schools, from private schools, so we have set up a sports academy in Newham (with Tessa Sanderson) funding it, saying: "We want to help the kids, the Ds and Es that never get a chance because they have not got the support, the good ones, to get access to medals, so that they can then come back and say to other kids: 'Look, I can do that, why don't you take part in sport?'" That is what we are doing in Newham. Each of my colleagues can tell you exactly the same story, but with different emphasis, because each of us has different requirements. Jules sits with the biggest number of football pitches in the world in one place; he has got something very special - so we have each got different things and I think we all recognise the importance of that. Investing in that is absolutely critical, and the more we can get support for that from the sponsors or from the Government the better.

Councillor Loakes: It is about using the government programmes. So, for example, Building Schools for the Future, in Waltham Forest we are using that to totally revamp the sports offer that there is in our secondary schools currently. So the Leytonstone School, the new community sports facility there, during the day serves the school population but in the evening serves the local community population. That is a brand new facility. At Mayville Primary School, we have put in a synthetic, all-purpose sports pitch, and that is the first in Waltham Forest for a primary school. So it is there at the forefront of our mind, and when other government programmes are coming on board we are ensuring that we link the Olympics and Paralympics with what we want to do in those schools to ensure that we maximise the opportunities. Like Newham, in Waltham Forest we have been doing the free swims, and our target around participation in sport - two hours a week - in one year has gone from 63% to 87%. I am not happy with that, I want it 100% in an Olympic host borough, and we will be pushing hard on that and will probably make that one of our local area agreement targets that we are currently in negotiation with. So there is a lot that we can do. We have a "Tour de Waltham Forest" now, a celebration of cycling and bikes and all that is fit and healthy, because that is something that we know adults are particularly keen to participate in. That is a new festival that we added to our programme last year. So we are just building all the time on what we already do and making sure that it gets linked to the positive aspects of the Olympics and Paralympic Games.

Councillor Jones: Without going into detail, in Tower Hamlets we are also working with the Primary Care Trust, so we are sharing budgets, looking at preventative health, so that sports activities and healthy initiatives are being set up for people of all ages.

Mr Bundey: To round up, that is exactly spot on. No borough is the same, and across the UK, not just in London, every borough will be doing what the five boroughs are doing, which is looking at their sporting provision, looking at their sporting infrastructure, and building on that, so that, hopefully, coming out of the Olympics, the demand from young people and adults to get into sports facilities is such that we are going to have to look at a major expansion programme to cope with the capacity.

Mr Pipe: I would like to say that in Hackney, and we have mentioned the pitches and the £3.5 million that is going in there - £2 million from the LDA and £1.5 million from Hackney itself - in investment in the facilities. One highlight would be that we have opened a 50-metre lido which has attracted 100,000 people to use it in one year. There are probably few pools that could say that they have actually attracted that level of participation. Also, just one anecdote, there is a Paralympian who is going to Beijing who says that he probably would not be able to do it if it was not for that pool there because it would have been too far to travel to train.

Mr Bundey: He is actually sitting behind you now.

Chairman: We need to quickly move on to legacy.

Q333 Philip Davies: In Manchester, they knew before they designed their stadium that Manchester City were going to be the people taking over afterwards. Do you think that decisions have got to be taken now about the design of the Olympic Stadium, and things like that, even though no legacy tenant has been agreed?

Sir Robin Wales: Clearly, in Manchester, they had some idea beforehand and were moving forward. We would probably have supported (I would as a West Ham season ticket holder) them going into the centre, but, actually, what has happened is quite an imaginative and innovative legacy development from the Mayor, who has been able to identify some land which is more appropriate for West Ham. So from a point of view of the borough, I could probably say now that a significant legacy benefit is likely to be in use for West Ham in a better part of the borough, freeing up some of my borough and making it work. I think the work they are now doing for the tenants of the stadia and how we run the aquatic centre afterwards, people are working it through, they are trying to be imaginative and they are trying to come up with some ideas. I think it is a good example. There was a bit of a problem at the beginning but I think it is settling down and people are trying to resolve it. So I would probably say that I am quite hopeful that we will end up with a solution to these problems. In the meantime, I can genuinely say that I think we have had something, in terms of West Ham, in the borough which is, effectively, legacy; it would not have happened but for the Games, and that for us is quite a significant gain in our borough.

Mr Pipe: There is a similar tension around the IBC. It arises from the same thing that we have already touched on before: initially there is the drive to get it right for the Games and get on because they have got to let contracts. At the moment there are still two consortia involved who are vying to build the IBC, and hopefully that will be sorted by February and they will know which consortia is going forward. It is absolutely vital then that that consortia and the ODA talk to the array of broadcasters and recording industry people and others that we have put together that we want to see as the end-users, because they are saying to us they are not going to be interested in taking on that venue afterwards if they have not had some input into the spec, and it is something that they will be interested in. Whilst, yes, okay, we will end up with a shed that someone is going to want to pay a lot of money for afterwards, it does not do that trick that I spoke about before about changing the reputation of the area. Soho cannot give the power supplies to the creative and film and broadcasting industry, Hoxton is bursting at the seams with digital and creative media industries; they want somewhere new where the location is right, it is accessible and all the power supplies are there, and all the support that they need. This location, the IBC, the MPC and the surrounding areas is absolutely ideal for that, but we will lose the opportunity for that to happen if the ODA do not do as they have committed they will do. They have committed to do this, but they must do this. Come February/March, when we know who the contractor and the consortium is, they must start talking to those people that we and Hackney borough have actually put in front of them.

Q334 Philip Davies: Obviously, we are all interested spectators as to what is happening, but do you have a preferred model of ownership and operation of the Olympic Park - what you would like to see?

Sir Robin Wales: I think the governance of the Park is an integral part of the discussion - how we do it. We would probably echo what Neale Coleman was saying earlier: we want to be part of the governance; we recognise you need to have business there, and it will be as it develops. What we have got is governance body which enables us to engage effectively so we can develop a model for the Park afterwards. So the answer is I do not think we have a model at the moment; we recognise the different interests that need to be there and then, depending on the development, how that develops is really the governance structure you will want, but we have a body that can effectively take that forward. So the answer is no, we have not got an end game but we have got a process in place that will give us the end game, and give us it with some confidence. I think it is fair to say this from my colleagues: we have a lot more confidence now in the development and partnership that has been working and the improvements in relationships. That is down to what Jules is saying; that initially it was: "We must get this done, we must get it done on time". I think, as that has gone on and we have worked together with developers in partnership I would certainly, personally, argue that I am feeling very comfortable about where we might end up with this. I do think the governance structure (I said it earlier) in this is probably better than anything else that is operating in regeneration elsewhere in London, including the rest of my borough. So I think this is a very good model because it is involving local councils in an effective way.

Mr Bundey: From our point of view, having seen it from the ground, we would be comfortable with the LDA or the five boroughs in their approach as public guardians of the service. I think, generally, the issue around facilities is about flexibility for long-term legacy; to be flexible to meet demands and to make sure that we have got the ability to programme and get some community use into that. The reality of our structure is that the philosophy of the operator needs to match the philosophy of the guardian, so that it is a public asset from the five boroughs or from the LDA: a public asset, public benefit from the operator and the ongoing use of it. There has been discussion in the aquatic centre, for example, about softening off into leisure water, into flexibility with movable floors and booms, which helps all of the programming side, and it is quite right there is debate coming forward now. There is a healthy debate - it has already been mentioned early on - and that healthy debate is being had with the ODA, and they are listening through the stakeholder groups.

Q335 Adam Price: You said in your submission that there is not enough money allocated in the budget for legacy for transformation of the Olympic Park and venues. You also said it is too soon to put a figure on it. So how do you know it is not enough?

Sir Robin Wales: I think it is more we said there is a concern about it. We are concerned. As we have said, we must get the legacy right. We must get a place that is sustainable and that we do not knock down in 40 years. We must get a place where the communities work so that then there is less cost overall to the taxpayer. We must get a place where people are aspirational and get into work. Those are all challenges, in how you do that and how you develop that. If we said that has got to be a guiding principle, there will be a sum of money involved in that. Neale Coleman was making the point that we do not know how much money is going to come from this. One of the things with the international competition that we are going out to for some of the development platforms is that we could get something very interesting that will supply a lot of money to the public purse. I do not know. Hopefully, it is "to go" (?) to the rest of the world. It is "eyeball" economics. People are going to look at this area in the next four years in a way that they would not have done otherwise. This can transform the reputation but it could bring people in who would never have thought of the area. What do they bring? How do we then use that? If you look at the O₂, what a transformation, where somebody said: "I could do something with this". We do not know what is coming. What we have got to be saying is we must make sure that the first priority is to get this right. Then, if we do it properly, the money will be what it will be. If you take some principles and say the development of legacy and the sustainability in developing long term, for whole life, costs, then actually that is a better approach. We should then try, as far as we can, to maximise the benefit to the public purse always, but I think that is the priority. What we would be saying is we have concerns (and Neale Coleman said it as well): how dense do you want your housing? How much social housing do you want in it? Do you scrap all the social housing, build it dense and you get a big sum of money? But it will not be sustainable. So that is the debate we have to have, and we, as boroughs, are naturally concerned about it and raising it. I say again, and I said earlier, it would be very helpful if this Committee says that is actually a priority that should not be missed in arguing about sums of money.

Q336 Adam Price: Do you currently expect, as local authorities, to have to make a contribution yourselves to the conversion costs, for instance, of any of the venues and facilities?

Sir Robin Wales: We have already said ourselves, and Tower Hamlets have already said, we will make some of that contribution. If you take the aquatics, it has been agreed by the ODA to put in the movable floors that will enable the conversion, but then the question becomes: what are we then going to put in? I will give you an example: we would like leisure water; we want it for our communities and we are prepared to put some money in for leisure water for our communities. There is a proposal to build a block next to the aquatics. If you are doing that you will probably take 106 money as well, so where does that then leave the overall benefit? That is part of the debate you have to have. Just down the road, in Silvertown Quays, we have a development which is going to have the largest aquarium in Europe, Biota. Now, 106 money has gone into that because we recognise the benefit of developing that. Until somebody had the idea of putting an aquarium down there we would not have had that idea. So I genuinely think the legacy debate is happening early, people have come together in a structure that works, that enables us to have a debate. Is it solving our problems? Not yet, but we have a way of working it through. We need to decide what we want as a country and as communities. If we say develop these communities so that they will be net contributors to public purses (and a lot of housing benefit is paid in my borough) they can actually can develop something different. Now we have a vision that actually will give us something better at the end of the day.

Q337 Adam Price: Do you foresee any risk that you could be saddled with very substantial, long-term revenue costs? Is that part of the analysis that you have made?

Sir Robin Wales: No, we would not take them!

Q338 Adam Price: How big is the risk?

Mr Pipe: As Robin said, we will not take them, really. I think it would be reasonable to expect the boroughs to make a significant contribution if they were expecting additionality. I think, really, there was almost a kind of a bargain struck (however much it might have been unsaid) when we embarked on this; that, effectively, this was meant to transform a run-down area of the finest city in Europe, and that should not be the way it is. In that bargain there was a certain amount of legacy. If we go beyond what was in the original brief, and do something that is specifically, really, just for local people, I think it would be reasonable to have the boroughs make a contribution.

Sir Robin Wales: Could I give you an example? We happen to have in Newham an opera house. You will not be aware of this because it is one of the few opera houses in London. It is currently being used as a night club. We have looked at it and said: "Wouldn't it be good if we could convert that back into some sort of theatre or some sort of offer?" We will have to pay for that ourselves. It is right next to the Olympic Park. So if we do do that (and we are not sure that the money will stack up) we will do it ourselves; we will pay for it and we will raise money where we can, but we would not expect the Olympics to be paying for that. However, the fact of the Olympics and the Paralympics has made it possible for us to think about it. As I say, if the sums do not add up we will not do it, we will chuck it away and it will not be done. Another example is on the docks. It is interesting. We have looked at the docks because, of course, we talk about "the Park" because Excel has one of the largest number of sport events of any arena. On those docks, we are looking at putting in a lot of things. There are lots of floating opportunities: you can put all sorts of bridges floating in it, you could put greenhouses - there is lots of stuff that happens across Europe. So we are saying: "We want to develop the docks, link it in with the Olympics and do something interesting." We will have to pay for that. We expect to pay for that. We are piggy-backing on the back of the Olympics. The West Ham potential move will then open up the whole inside for us so that we can have a much better residential area there. Obviously, any costs from that we would expect to meet. It is using this and saying: "What could we do with this opportunity that is coming?" We will pay for those additionality things. We would expect to do that - that is our job.

Mr Pipe: There is that awful word "synergy".

Chairman: I think we will have to call a halt there, but thank you all very much indeed.