Examination of Witnesses (Question Numbers
40-59)
BARONESS FORD
AND MR
ANDREW ALTMAN
3 MARCH 2010
Baroness Ford: Thank you very
much, Chairman. It will be brief because we set out in the submission
that we made to you the detail of what we have been doing for
the last nine months. I have been in post for just over nine months
and Andrew for just over six months, and in that time we have
been getting the company together. Our board has now met three
times, we have a senior management team in place, and as well
as putting together what you might call the housekeeping and the
governance of the company we have been busy reviewing the master
plan, the first iteration of which was published last year, and
getting into a position where we will now have a public process
to agree the settled final use for the stadium. We are in relatively
good shape. We have had the benefit of 50 staff seconded to us
from the London Development Agency, who were the legacy client
for the Games before, so there has been good continuity from that
perspective, and in the next few weeks we hope to have the land
and debt questions settled and really get moving. We have our
corporate plan pretty much in shape, and the board signed off
the 10 key issues we need to crack in the next 12 months. It is
a brilliant project to be involved with, and a great joy to be
part of, and I think I speak for both of us when I say there is
nothing else I would like to get up in the morning to do. So far
it has been a really enjoyable project.
Q29 Chairman: The legacy of the Games
was a key part of the undertakings given to the IOC which won
London the bid. Now that you have had time to have a look at how
much work has been done to deliver a legacy, were you surprised
or satisfied by the work that has been done, or do you feel there
is still quite a lot to do?
Baroness Ford: Both really. There
has been a lot of work done. For the Committee's benefit, to be
clear, we are only responsible for the legacy as it relates to
the Olympic Park, so we do not have a wider role in any of the
other venues or anywhere else. A huge amount of work has been
done around the master planning and the concept of the Park in
legacy. Some work had been done in terms of drumming up initial
expressions of interest for things like the broadcast centre and
so on, but there is a lot more work to be done in terms of getting
good commercial outcomes settled for all of those venues, and
we see that as one of our primary jobs over the next two years.
There has been some good progress but there is still a lot of
work to be done in getting to a final good position with the stadium,
and with the broadcast centre which is a huge venue in the north
of the Park.
Q30 Chairman: One of the things we
have learnt in talking to previous organisers of Games is that
to deliver a legacy requires you to build that in right from the
very start particularly when it comes to designing and building
facilities. You have arrived when quite a lot of the work has
already been done. Are you satisfied that enough thought was given
to legacy?
Mr Altman: We found that very
few—actually none—of the other Olympic cities set
up a legacy company two and a half/three years before Games. We
have been going through facility by facility to understand for
each venue exactly what has been programmed and how it has been
designed. There was a lot of thought given to legacy in each of
those specific venues. We are now evaluating those to make sure,
as we look to take possession of those assets in the future as
the Legacy Company, that we have sufficient flexibility for other
uses that may be needed to accommodate other uses. We are doing
that assessment now. There has been a lot of thought around many
of these facilities with legacy in mind, it is not something that
was done as an afterthought, so we feel comfortable we will have
a lot of room to manoeuvre. A lot will come out in the next year
as we get into the specifics and go through the process of procuring
operators for each of the venues and working with them to ensure
that the buildings work and can be maximised, so there is still
work ahead.
Q31 Chairman: Do you feel that the
LDA, which came before you, did enough to talk to possible future
tenants of various facilities?
Baroness Ford: They probably did
as much as they could, and I do not mean to be in any way critical
of what they did, but some of the decisions were taken quite early
on. For instance, the design of the Aquatic Centre makes it undoubtedly
the stand-out building in the Park, it is iconic, to use the jargon,
but iconic buildings tend to be expensive buildings to maintain
in legacy. The decision was taken to have this stunning building
there but we knew, and I think everyone was clear from the start,
that would be an expensive proposition in legacy which I guess
is why the previous London Mayor, confirmed by the current Mayor,
has said that there will be an amount of money, £10 million
from 2012-13 onwards, to really help with the running costs of
some of those venues. It was always understood for the Aquatic
Centre in particular and maybe some of the other venues there
would need to be some on-going subsidy to make those viable. LDA
did a reasonably good job in terms of what they were trying to
do, but it is an interesting balance because we want to have the
right venues for the Games but obviously in such a way that they
are flexible enough to do what you want them to do in legacy.
We will all want to do some further work to some of the venues
in legacy, and the broadcast centre is a good example. When the
Olympic Broadcast Service moves out after the Games the broadcast
centre will be left with a basic, very good infrastructure in
terms of the wiring and so on, but it will not have much else.
There will be purpose-built studios but they will be empty, so
we will need to do more and further work to make sure those kinds
of venues will be fit-for-purpose in terms of market occupation.
Some has been done but more needs to be done.
Q32 Chairman: Coming to the structure
of financing of the Legacy Company itself, previously when speaking
to the London Assembly you suggested there had not been enough
thought given to the business plan of the OPLC and the funding
of it. Are you happier today?
Baroness Ford: Yes, I am happier.
The first business plan and the master plan, and this was correct
at that time, was done on the basis that there was a large debt
repayment to be paid to the Public Works Loan Board of some £600
million. So there was a quantum of money to be paid back to the
Lottery, and when the first business plan was put together for
the Park it was envisaged in terms of its development, because
that was the issue at the time, how it would pay off that debt.
We and the board have been guaranteed that we will not inherit
that £600 million debt and we will have the land unencumbered,
which has allowed us to think again about the master plan and
the kind of housing, for example, that will go into the Park,
and to move from a very highly dense apartment-based plan which
was there at the start to something that is much more about family
housing and proper mix of communities. We benefit, therefore,
from the fact that we will receive the land hopefully in the relatively
near future unencumbered, although we understand and fully accept
the original Memorandum of Understanding to pay money back to
the Lottery, and we will honour that obligation. We will have
the time to do that and the amount will be perfectly manageable,
so I am considerably happier than I was when I first spoke to
the London Assembly three or four months ago. That is good news.
Q33 Chairman: I want to be clear
about the resourcing available to you. Are you satisfied that
you have sufficient resources identified?
Mr Altman: We are working with
our founder members on the resourcing of the corporate operations.
There are different pieces of funding here. One is the corporate
operations. There is funding that will come from LDA and we have
seconded staff from LDA. We have a very good working arrangement
with LDA; they have been very supportive. We have about 50 staff
who have been seconded which has given us a base of operations.
We have a core team and we have been working with our founder
members to fully resource the company. Those conversations have
been going well and we are finalising those now with the submittal
of our corporate plan for the start of the next fiscal year. We
are also working now in terms of the longer term which is to put
forward what the capital plan will be and the ongoing operating
budget that will be needed for the Park post-2012, so that is
a piece of work we will be doing over the next year to fully cost
that and to give a proposal to the board and the founder members.
So there are immediate operational issues and then longer-term
issues.
Q34 Chairman: Within the overall
budget there is the £350 million allocation for transformation
but you have clearly identified quite a number of what look to
be quite important tasks that have to be carried out, namely adoption
of roads, diverting utilities, establishing buildings for visitors,
et cetera, which are not covered within that budget. Have you
identified how they are going to be paid for?
Baroness Ford: We are in the process
of doing that at the moment. The list that you see there was originally
developed by the London Development Agency, and their estimate
was in addition to the £350 million, the transformation budget,
in other words reinstating the Park after the Games. That £350
million sometimes has mistakenly been called the legacy budget.
We do not have any say over that budget; it is primarily there
to discharge planning obligations in respect of all of the venues,
the roads that are going to be put in and so on, so it is not
a question of the board thought it might like to use that differently,
we do not have the scope because it is really spoken for. Quite
a lot, however, as you rightly say, is outwith the scope of that,
so to get the Park properly up and running the LDA's initial estimate
was there would be another £450 million of capital required.
Now that is quite a lot and we are currently going through on
a line-by-line basis an analysis of that to see if that is correct
or too much or too little, and we will come to a view on that
ourselves. We have always understood the position to be that the
Department for Communities and Local Government (CLG) will take
main responsibility so we need to work with CLG to work through
the capital requirements for the company. Everyone's eyes were
opened in the sense that we knew the funding of our company going
forward would never come from the Olympic budget and that was
not what was envisaged, apart from this £350 million that
I mentioned. We are coming to the end of our corporate plan and
part of it will be to say over the five years after the Games
what capital will be required to finish the job, as it were.
Q35 Chairman: But if it requires
another £450 million, or maybe slightly less, that is a sizeable
amount of money which is outside the present Olympic budget.
Baroness Ford: Exactly.
Q36 Chairman: Where is it coming
from?
Baroness Ford: We anticipate it
will have to come from one of our shareholders. Given that the
Government Olympic Executive will not exist after 2013 or 2014
it will have to come from either CLG, central Government or from
the Mayor, or a mixture of the two.
Q37 Chairman: This is really quite
an important part of the overall Olympic project.
Baroness Ford: It is.
Q38 Chairman: It has always been
critical that the Games should not just stop at the end and there
should be a lasting legacy. Should this not have been incorporated
into the budget right from the start?
Baroness Ford: I do not know the
answer to that question because I was not involved in putting
the budget together at the start. Probably at that stage it was
not clear how much would be needed post the Games to reinstate
and then to create the kind of park that we want, but we have
to just play the hand we are dealt. As far as I am concerned what
is important for us is to verify that amount and be very clear
about the different ways in which we can do that, but we should
also not lose sight of the fact that we get tremendous assets,
genuine world class assets at the end of the Games, so if we are
doing our job properly we should be able to generate income as
well and not just be looking to the Government for grants to cover
all of these things. It is a large amount of money, by anybody's
standards.
Q39 Chairman: You are suggesting
essentially that in about two and a half years' time there will
be a call on the public purse of another half billion pounds,
or approaching that sum?
Baroness Ford: It could be.
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