Examination of Witnesses (Question Numbers
40-59)
BARONESS FORD
AND MR
ANDREW ALTMAN
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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