Examination of Witnesses (Questions 40-59)
14 NOVEMBER 2007
DEPARTMENT FOR
CULTURE, MEDIA
AND SPORT
AND OLYMPIC
DELIVERY AUTHORITY
Q40 Mr Dunne: When the LDA purchased
the land or whoever was the entity that purchased the land from
the original owners, are there any clauses in those contracts
which give the original owners some right to proceeds on subsequent
sale?
Mr Higgins: Not that I am aware
of.
Q41 Mr Dunne: Mr Stephens, are you
aware of any?
Mr Stephens: No.
Q42 Mr Dunne: The Finance Department
has recently been brought back into Whitehall from the ODA. That
is referred to in here and the purpose of my question is to ask,
is there a clear delineation between the ODA and the Department
as to who is responsible for monitoring progress against budget?
Mr Stephens: Yes, the ODA is a
separately constituted, non-departmental public body that has
a corporate plan that reports against its budget to the Department,
to the Government Olympic Executive which is responsible for monitoring
its spend, acting as the client within government for the Olympics
as a whole.
Q43 Mr Dunne: Have I been confused
then at the notion that the Finance Department has been brought
back to Whitehall?
Mr Stephens: I think that is a
confusion. The Finance Director sits within the Olympic Delivery
Authority for the Delivery Authority. The Government Olympic Executive
has its own Finance Director responsible, as I say, for overall
monitoring and scrutiny of the Olympic budget.
Mr Higgins: I believe you are
referring to the secretariat services that advise the Board which
has recently been brought into the Department.
Q44 Mr Dunne: Mr Higgins, which nation
do you give credit to for the origins of the Modern Olympic Movement?
Mr Higgins: Well, clearly it was
established in France, but we know that there is a record of a
number of years, going back 250 years, of Olympic sports which
occurred in England, yes.
Q45 Mr Dunne: Mr Stephens, you perhaps
have not had an opportunity to brief Mr Higgins that it was not
France, but it was England that was the inspiration for the French.
Mr Stephens: Indeed, Much Wenlock,
and I had the benefit of meeting representatives of Much Wenlock
in recent months and clearly it is important that in the run-up
to the Games we claim full credit for that.
Q46 Mr Dunne: I am very pleased to
hear you say that, and indeed I am hoping, Mr Higgins, that you
will find space within the Olympic site to have a commemorative
block of stone from the Much Wenlock quarry which we can suitably
inscribe to make sure that people who arrive at the Olympics recognise
where it started. Can I have an answer to that—do you think
there will be space in the Olympic site?
Mr Higgins: We did discuss this
very issue, if I remember, in Brighton recently.
Q47 Mr Dunne: And I think you said
yes, but can you say yes, for the record?
Mr Higgins: Yes, though I am not
sure which part of the site.
Q48 Mr Touhig: Mr Stephens, when
you came before us last time, it was 5th March, several Members,
including myself, criticised the complex and confusing governance
structure in place for the delivery of the 2012 Games. Have you
acted on the recommendations of our 39th Report?
Mr Stephens: Yes, we have. The
structure, I believe, has worked effectively. We have taken action
to ensure that within the Government Olympic Executive, within
the DCMS, we have the capabilities and skills to manage a major,
complex project of this sort and that is in place now, I believe.
Q49 Mr Touhig: It does not give me
much confidence, I am afraid, on my part. On that occasion when
you came before us, we recognised, according to the Comptroller
and Auditor General's Report, that there are three stakeholders,
the Government, the Mayor and the British Olympic Association.
Below that, we have the Olympic Board with responsibility for
oversight, then we have the Olympic Delivery Authority which is
responsible for venues and infrastructure with a budget of £3
billion, then we have the London Olympics Committee and they are
then supported by the Olympic Programme Support Unit and the Olympic
Board Steering Group. With a structure like that and no one person
taking charge and in view of the huge increase in your budget
so far, how do you think we can be confident that such a structure
can deliver this on budget?
Mr Stephens: Well, as we discussed
last time, in the delivery of any Olympic Games, there are the
fundamental three partners that you have outlined there, the Government,
the host city and the Olympic Movement itself, and there is no
getting away from that fundamental tripartite structure at the
heart of any Olympic Games. For this Games, we have consciously
sought to learn the lessons of previous Games, and we have learnt
a lot of lessons from Sydney, in particular, and sought to put
in place from the beginning the structure that they eventually
ended up with and it also, if I may say so, reflects lessons learned
and brought out in previous PAC reports, so within this structure
there are really just two new focused delivery bodies, the Olympic
Delivery Authority responsible for the construction of the Games—
Q50 Mr Touhig: But nobody takes overall
charge?
Mr Stephens:— and the Organising
Committee responsible for the running of the Games. The Olympic
Board brings together all those interests to provide a clear oversight—
Q51 Mr Touhig: But I understand the
last time you came before us that it was not in a position to
direct any of these subordinate bodies to do anything.
Mr Stephens: There is a clear
line of accountability for each of these bodies and within government
the Olympics Minister is clearly responsible.
Q52 Mr Touhig: So that is where the
buck is going to stop, the Olympics Minister, just so we know?
Mr Stephens: Well, as I say, within
government clearly the Olympics Minister is responsible.
Q53 Mr Touhig: Well, you have already
made a £5 billion error in estimating the cost of the Games.
Surely that is going to get into the Guinness Book of Records
for the most catastrophic financial mismanagement in the history
of the world?
Mr Stephens: Well, if I may say
so, we went through pages 16 and 17 in going through the detail
of that. That, as I said earlier, gross increase in costs on the
big cost of £4 billion is £5.3 billion and, of that,
tax is £1.2 billion which, as the NAO Report brings out,
returns to the Exchequer, so it is not an additional cost to the
taxpayer, so that is an increase of £4.1 billion. Of that
£4.1 billion, more than half is set aside for contingency
and it is not yet spent.
Q54 Mr Touhig: I accept that and
I listened to your argument and the points you made earlier and
I do not want you to go over the figures again as our time is
limited.
Mr Stephens: If I may say so,
because I think it is important—
Q55 Mr Touhig: The Department has
managed to produce a budget for the Games which is now double
what your original estimate was, and you are asking us to be confident
that you are going to do this okay and you are going to manage
this well with your complex structure and with nobody taking any
real responsibility, although you have passed the buck back to
your Minister on the record today if anything does go wrong, and
you are asking us to be confident that you are going to manage
this?
Mr Stephens: Well, I return to
the NAO Report which says that the process leading up to the budget
announced in March 2007 was thorough, that it was based on detailed
analysis and expert input and that it provides a significant step
forward in providing a sound footing for the finances of the Games.
Q56 Mr Touhig: Well, we are going
to have ongoing reports and we will see that your revised budget
means, Mr Stephens, that the National Lottery Fund is going to
have to contribute £2.17 billion and that is an increase
of £675 million. Now, I cannot see either of you two in green
tights, but you might be a modern-day Robin Hood because you are
really robbing Peter to pay Paul, are you not?
Mr Stephens: Well, the original
funding package had a contribution from the Lottery of something
like 60% of the original funding package. It was always clear
that costs over and above that might be a call on the Lottery,
and that was never hidden. In fact, the arrangement that was put
in place has put the overall burden on government expenditure
and the proportion being borne by the Lottery has fallen from
more than 65% to under 25%.
Q57 Mr Touhig: It is £2.17 billion.
Now, the friends of the Newbridge Memo in my constituency are
seeking to rejuvenate and reuse the wonderful building built by
the pennies of miners for those who died in the First World War
and they need £4.9 million from the Heritage Lottery Fund.
Do you think they are going to get it in competition with the
Olympics?
Mr Stephens: Well, that of course
is a matter for the Heritage Lottery Fund. The Lottery distributors
act independently of government—
Q58 Mr Touhig: What are you going
to do though to ensure that the Lottery Fund is not actually causing
great grief to worthy projects like that right across the country
in order to fill a gap here because you really made a foul-up
of the estimate in the first place?
Mr Stephens: Over the period in
which that extra £675 million is proposed to be taken from
the Lottery, the various Lottery distributors will gain income
of more than £5.2 billion that will still be available for
those existing good causes, and it is not a matter for me, but
I very much hope that the miners—
Q59 Mr Touhig: I will let you know
how the Newbridge Memo has got on when you come again. Have you
had any talks with the National Lottery operator to see if they
are using other ways of maximising Lottery income now to make
up for the fact that you are taking £2.17 billion from them?
Mr Stephens: Well, there has been
extensive consultation with the distributors that has informed
the proposal as to how this extra money is taken from the Lottery.
In addition, of course over this period, since the Report was
published, a new Lottery licence has been awarded by the National
Lottery Commission and that was awarded on the basis of maximising
the returns to good causes, and we look forward to seeing what
opportunities it provides for increasing the overall income from
the Lottery in the next licence period.
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