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

Examination of Witnesses (Question Numbers 40-59)


3 MARCH 2010

  Q40  Mr Ainsworth: You touched on the question of debt in some of your remarks just now, so it may be that you feel you have already dealt with this, but can we explore it a little bit more? One of the areas that emerged when you were giving evidence last October to the London Assembly was a concern about the potential level of debt you were going to be landed with and where it was going to end up. From what you said earlier it sounds as though some of that has been resolved, although there has been no public announcement of that, has there?

  Baroness Ford: No, because I do not think the resolution is clear yet. We are hopeful that quite soon there will be a resolution. We are slightly detached from those negotiations because they are negotiations and discussions between the Mayor and central Government, but the feedback to us is that discussion is going well and they expect a positive outcome.

  Q41  Mr Ainsworth: A lot of people expected this to be resolved in January, and we are now into March. You must be quite worried about it because clearly it is enormously material to your ability to do what you want to get on and do?

  Baroness Ford: I am not worried about it, because it needs to be resolved for the project to be done properly and everyone has always understood that. The reason I am not worried -and you may think I am just Pollyanna here—is that everyone knows that until there is a solution to this you cannot get a proper planning and management of the Park. There has never been any dispute between the Mayor and Government that this needed resolving. The issues have been technical issues that have needed to be dealt with, and that has taken time.

  Q42  Mr Ainsworth: There are not any new issues that have emerged, are there? Or are there new issues that have made it harder to resolve?

  Baroness Ford: No.

  Q43  Mr Ainsworth: Why can they just not resolve it?

  Baroness Ford: You would need to ask them that. I cannot answer that question.

  Q44  Mr Ainsworth: It must be pretty frustrating for you.

  Baroness Ford: Not really. We are quite busy doing other things. Because the LDA have been so good and so helpful around the handover, we have operated as though we are the beneficial owners of the land and it is only if we need a legal decision that we would go back to Peter Rogers and Harvey McGrath and ask for that. We have worked very well without that resolution.

  Q45  Mr Ainsworth: Do you have any expectation of how much of this debt you may end up having to carry?

  Baroness Ford: Our expectation, based on the proposition and the prospectus that was set out to us when we came into the job, was that the £600 million Public Works Loan Board debt that was taken on by LDA would not be passing over to the company, so I do not expect to be responsible for paying any of that.

  Q46  Mr Ainsworth: Your expectation is that you will be landed with none of it.

  Baroness Ford: That is my expectation. My expectation also is that we will completely fulfil the promise to pay back the Lottery and that we will operate in a commercial way. Over a long period, we would not be doing our job properly if we were not generating good receipts back to the Government.

  Q47  Mr Ainsworth: When Newham Council, for example, say that the unresolved debt issue is "a key concern" over the legacy planning, you think that they are unduly concerned, do you?

  Baroness Ford: I would not say they are unduly concerned, but I am perfectly confident that we will get a resolution. It might have been January, it may be later, but we will get a resolution because the projects simply cannot operate properly without a resolution and all the shareholders understand that and are committed to solving it.

  Q48  Mr Ainsworth: Time is going by. You made comments again in the autumn about the way the debt situation was potentially affecting the type of development and the type of housing that was being planned there. Are you still concerned that the type of development that you want to see may be harder to achieve if the debt issue remains unresolved as time goes by?

  Baroness Ford: The key issue in terms of the debt is the type of housing in the Park. Our proposition is that we create best value for the people who live there and for the taxpayer by building a quality development that is attractive to the market and is attractive for social housing providers who want to come into the Park as well. We are quite clear that the bulk of that ought to be family-based housing and a good mixed community, so we really need the headroom (that is, to be rid of that debt) in order to execute that plan properly, but that is the basis on which we are planning the rework of the Masterplan at the moment, with the blessing of our three founders. It is everyone's expectation that this will be solved sooner rather than later.

  Q49  Mr Ainsworth: Everyone assumes it is going to be resolved. We look forward to hearing when it is and seeing material evidence of that, because obviously it is hugely important.

  Baroness Ford: I am optimistic it will be resolved pretty quickly.

  Q50  Mr Ainsworth: Coming back to the design of the buildings in the Olympic Park, the Olympic Village is going to be the first neighbourhood there, is it not? Do you have views about the sort of tenants you would like to see moving in? Do you have thoughts about a nomination policy, for example, for people wishing to move into the new development?

  Baroness Ford: I have been trying to give Andrew a quick tutorial on how nomination rights work in this country, but it has even taxed me a bit.

  Q51  Mr Ainsworth: It is quite complicated.

  Baroness Ford: It is quite complicated, but for the Park, as well, it is further complicated by the fact that the grant from the Homes and Communities Agency of £100 million into the village came from their pan-London allocation, so I am not entirely clear—and it is not our remit, so you might forgive me for not being entirely clear—about how that nomination allocation process is working. I do know that the Mayor's Office, the Homes and Communities Agency and the boroughs involved are working up a protocol in terms of the allocation of housing and the nomination rights for the social housing. It is for them to solve that.

  Q52  Mr Ainsworth: Is it for you to have an opinion and an influence on the way they resolve that?

  Mr Altman: Yes. In fairness, they have asked us to be involved in the discussions. Clearly, the Olympic Village, as you say, is the first neighbourhood in the Park. There will be 2,800 units of housing, half of which will be affordable. The ODA is the body that is both building and delivering those units, and it is the accounting officer for those units. It has been an issue very much of concern to our board, it has been a high priority for our board, in fact. At our second meeting, we had the Chair and Chief Executive of the ODA come specifically to brief us on the Village, because we recognise how important that is going to be for setting the overall tone.

  Q53  Mr Ainsworth: Exactly.

  Mr Altman: To the value of the Park. It is going to be the first impression, the first neighbourhood, so all of the policies related to how the Village unfolds—not only the nomination policy but also the sales and marketing strategy for the market-rate units, the 1,400 units; the timing of the sales and marketing; and how those units are disposed of, in block or to multiple developers. As a result of raising those concerns with the ODA and with our founder members, there is an agreement within Government to set up what is called a Programme Board—with the OPLC, the Legacy Company, myself—I will chair that board—with the ODA present and with all other stakeholders present—so that we can get at the heart of many of these issues and have an influence, as you say, on the policies and how those policies are set. Everything can come through that Programme Board, which OPLC will chair, which respects the accounting officer responsibility of the ODA but at the same time influences all of those critical decisions to legacy. We have just established that and we are working very hard on that.

  Q54  Mr Ainsworth: Baroness Ford, you rather undersold yourself in your earlier reply. It is not somebody else's responsibility. If you are chairing the Committee that is taking this forward, that is a very encouraging piece of hands-on engagement, I would have thought.

  Baroness Ford: It is. As Andy said, the key distinction is that David Higgins is and will remain the accounting officer for the village until the project is finished. Andrew does not have that accounting officer card to play there, but I think we have managed to get ourselves into a strong and influential position there, which is exactly what our board wanted.

  Q55  Mr Ainsworth: Again, it is crucial to get it right, because if it goes wrong it has a huge knock-on effect on what happens to the rest of the project.

  Baroness Ford: Yes.

  Q56 Mr Ainsworth: Can I ask quickly about the International Broadcast Centre, the Media Centre, you touched on this earlier. It sounds as though we are going to end up with a gutted Media Centre, with wires hanging out of walls and all the valuable bits taken away. How confident are you that the public money that has gone and is going into that is going to be fully recouped?

  Mr Altman: Just to address the first thought, on what we will be left with, as the Chair said, yes, the Olympic Broadcast Services does take out all of its equipment from the centre. There are two pieces here, by the way, just for clarification. There is the Media Centre and then there is the Broadcast Centre. The Media Centre, as you know, is essentially an office building of 250,000 square feet, which will be fitted out, essentially, and serviced. It has heating and cooling and basic systems in place, and the good condition will be left after the media service leaves, post-Games. The Broadcast Centre, which is closer to, let us say, half a million square feet, as you know, over two floors, the Broadcast Services will take out most of that equipment. Again, part of what will have to happen is that obligation from LOCOG to the ODA and then to us is that the building is left in a condition so that there are no wires hanging out, so that the walls are repaired, and the gantry, for example, is removed, should we desire it to be so, which will house the cooling systems outside of the building—so at least it is left in a decent state, that we do not have to repair. The next question is: okay, who can come in and who will use it? We are currently now doing a couple of things. One is we are assessing the building itself, understanding the cost and design issues related to how the building can be divided. There are a number of ways that the building is divisible. As you know, it might be in three or four different components. One of the things that potential tenants have said to us is that they need to understand the physical parameters of the building, so we are doing work on that so that we can precisely answer that question, so that someone knows what it does take to fit out the building, the retrofit cost and if they can divide it into modules. We are doing some basic work on that now to understand that. Second, we are going to be going out and doing a lot of soft-market testing. We are following up on many leads to get the sense of what the market is around the idea of the media cluster. There may be different ways that could be used, from anchor tenants to smaller tenants. We are going to be following that over the next year, to see exactly what the demand is and what the market is, and by then be able, we hope, to bring to a conclusion what the strategy will be for the occupancy of the Broadcast Centre. Again, I think the Media Centre is a more straightforward proposition as an office building. The Broadcast Centre has possibilities, but they really need to be tested, and that is what our goal will be over this next year.

  Q57  Mr Ainsworth: Thank you for that answer. Can I just repeat my question, which is how confident are you that the total public commitment to this is going to be recouped?

  Mr Altman: I think, to be honest, it is early to say, until we are really out and I can give you a fair assessment of the demand of that. I would not want to mislead the Committee one way or another. As the Legacy Company, we have to get our arms around this proposition. It is a very large building. To be honest, we all know that it is a challenge.

  Q58  Mr Ainsworth: Not at all confident, then.

  Mr Altman: I would not say that. I think it is early days, to be quite honest. To underestimate the challenge would be naive.

  Baroness Ford: It would not be credible.

  Mr Altman: It would not be credible. If I told you I was overly confident, I do not think you would believe that was credible.

  Q59  Mr Ainsworth: It is early days, but time is flying.

  Mr Altman: We are going to be pursuing it. It is a serious concern for us. In terms of one of the legacy buildings, it is a very large building to fill. We will go from there.

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