Olympic Games and Paralympic Games 2012: Legacy - Culture, Media and Sport Committee Contents

Examination of Witnesses (Question Numbers 40-59)


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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