Examination of Witnesses (Questinos 60-79)
DEPARTMENT FOR
CULTURE, MEDIA
AND SPORT
30 JUNE 2008
Q60 Mr Burstow: So we await the next
report.
Mr Higgins: The next one will
be going in July.
Q61 Mr Burstow: One of things I specifically
wanted to follow up on was insolvency. In terms of your planning
and preparation to ensure you do deliver on cost and on time,
what sort of estimates have you made of potential insolvency amongst
the businesses that you are dealing with?
Mr Higgins: We have certainly
put considerable effort into that, and clearly, it has gone significantly
higher up on the risk register than it would have been six months
ago. We looked particularly at the cumulative effect, how many
projects we have with individual contractors and suppliers. We
monitor it very closely. It is fair to say that, while I am pleased
with progress in the last 18 months of completing £1 billion
worth of work, risks on the project are high. This is a difficult
environment to be in. Inflationary pressures on fuel and energy
mean that everything that comes to this project has been impacted,
so it is a tough environment, and the credit crunch does not help
at all. So it would be fair to say that it is a difficult environment
in which to be developing a project like this.
Q62 Mr Burstow: Can I just go back
to page 12-13, the organisation chart the Chairman was taking
you through earlier on. I presume that this chart is not original,
that there are similar schematics within the ODA and elsewhere.
Is there a similar chart within the Department that is on your
board so you can refer to that?
Mr Stephens: Yes.
Q63 Mr Burstow: One thing I was not
quite clear on from the answers you gave earlier on, where you
described this being very much a partnership between the various
key stakeholders in all this, was just how you go about resolving
a situation where there is a failure to agree. What is the mechanism
for doing that?
Mr Stephens: That is what the
Olympic Board is fundamentally there for.
Q64 Mr Burstow: The Board itself
cannot actually, in the end ... If the members of the Board were
at loggerheads for one reason or another, who would ultimately
decide? Is there an ultimate referee? Is there a casting vote?
Is there some way in which a disagreement can ultimately be resolved?
Mr Stephens: There are arrangements
set out for the Olympic Board to reach decisions in its Founding
Joint Memoranda, which set out how it reaches decisions in the
context of disagreements and which members have vetoes over which
particular areas of decision. A key way of managing the risk here
is that the Olympic Board early on agreed and assigned clear accountabilities
for the various elements of the programme. So, for example, on
the most expensive element, the build programme, the construction
programme, that is clearly the responsibility of the ODA. The
ODA, with the other stakeholders, has published a clear account
of scope and budget, what it is delivering for what money. Now,
if any of the stakeholders want to suggest that there should be
a change in scope, if they want to add to the scope, they need
to come along with extra money.
Q65 Mr Burstow: If it is within the
existing budget and it goes wrong, it is Mr Higgins and the ODA's
responsibility?
Mr Stephens: They are responsible
for delivering the construction programme.
Q66 Mr Burstow: Which is a longer
way of saying "yes"?
Mr Stephens: Yes.
Q67 Mr Burstow: It would be helpful
to us perhaps if we could have a note on those key aspects within
the governance arrangements about how impasses are broken.
Mr Stephens: Yes. [5]
Q68 Mr Burstow: On another matter, which
is again about accountability and responsibility, the Report notes
that you are responsible for co-ordinating legacy activities.
It is less clear in the Report—perhaps you could make it
clear today—who is actually accountable for delivery on
legacy once all of the bodies that are currently delivering the
Olympics have gone.
Mr Stephens: Overall, for the
delivery of legacy as an overall programme, the Government is
accountable and that is one of the things that the Government
Olympic Executive is monitoring.
Q69 Mr Burstow: So is that the Secretary
of State for Culture, Media and Sport or is it the Minister for
the Olympics, or is it the Prime Minister?
Mr Stephens: No. It sits within
the Government Olympic Executive, which is part of the Department
for Culture, Media and Sport. Within that, our recent Legacy Action
Plan, which was published last month, set out five key promises
and allocated responsibility for delivery on those key promises.
One of those, for example, was the physical regeneration of East
London, where a key responsibility sits with the Mayor and the
LDA. Other elements of the legacy promises, for example, are about
increasing sports and physical activity participation.
Q70 Mr Burstow: Specifically on that,
where in the legacy planning do things like the development of
coaching come? I have looked at the five promises which are set
out in the Report. Where would that be incorporated?
Mr Stephens: That is one of the
delivery plans under promise one, and in particular, under the
headline ambition for increasing school sport and the maintenance
of participation in sport as people leave school.
Q71 Mr Burstow: Thank you for that.
I just want to go back to security and the security plan. This
Committee when you were before us previously in March last year
was told then that a security plan was being drawn up. Can you
just clear this up, because, certainly in this Report, the implication
is that it was not at that time being drawn up but it is now being
drawn up. Is it the case that it was not being drawn up when you
told us last year it was?
Mr Stephens: No. That was what
we were aiming to do then. We were at that point trying to accelerate
progress ahead of what—
Q72 Mr Burstow: An aim is not the
same as actually. Was it actually being drawn up or was it an
aim that it should be drawn up?
Mr Stephens: Work was under way
with the objective of having it in place. We were trying to accelerate
progress ahead of what might be the normal Olympic schedule for
the security plan. We did not make the progress we wanted to last
year, but what we did do was identify the problems and issues
that needed to be addressed, issues around governance and co-ordination
across multiple departments and agencies, and we believe we have
taken action to put that right so that we are now aiming to deliver
the costed plan by the end of this year.
Q73 Mr Burstow: That point brings
me on to my next question: the intention is to deliver the overall
plan by September of this year, and yet the security plan will
follow after. Presumably, it is not the whole plan that will be
delivered in September.
Mr Stephens: The intention is
to have a draft which is considered by the key agencies and stakeholders
involved early in the autumn so that the final costed operational
plan can be considered and approved by the end of the year.
Q74 Mr Burstow: But presumably, in
terms of your scheduling, you must assume there will have to be
a further iteration of the overall plan once you actually have
the final sign-off on your security plan.
Mr Stephens: Indeed, there will
need to be constant reiteration once the planning work has been
undertaken.
Q75 Mr Burstow: Presumably, the plan
that comes out in September is more of a draft, given how significant
security is.
Mr Stephens: Yes.
Q76 Mr Burstow: So it is not a final
plan.
Mr Stephens: No. I am sorry. I
should just be clear about when the plan is coming out. This is
at this stage an internal management document. It is not the intention
at this stage to publish. I thought I should clarify that.
Q77 Mr Burstow: A final thing just
on the ODA project contingency. Can you tell us what the monitoring
and high-level reporting are in respect of this when people exercise
the delegated authorities that are in place within that?
Mr Higgins: It reports through
to our Board every month: detailed reporting. It reports through
to the Government Olympic Executive office as well, and any application
for that contingency comes through a Change Control Board, which
meets monthly, which has representatives of the Department sitting
on it.
Q78 Mr Burstow: How many have been
submitted so far?
Mr Higgins: A variety. I would
not know the exact number.
Q79 Mr Burstow: Could you let us
have a note?
Mr Higgins: Yes. [6]
5 Ev 11 Back
6
Ev 11 Back
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