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

Examination of Witnesses (Questions 1-97)

LORD COE, PAUL DEIGHTON, JOHN ARMITT AND DAVID HIGGINS

14 DECEMBER 2010

Witnesses: Lord Coe, a Member of the House of Lords, Chairman, London Organising Committee of the Olympic and Paralympic Games, Paul Deighton, Chief Executive, London Organising Committee of the Olympic and Paralympic Games, John Armitt CBE, Chairman, Olympic Delivery Authority, and David Higgins, Chief Executive, Olympic Delivery Authority, gave evidence.

Question Numbers

Q1   Chair: Good morning. This is the first session of the new Committee with the organisers of the London 2012 Olympics. I would like to welcome this morning Lord Coe, the Chairman of LOCOG, Paul Deighton, the Chief Executive, John Armitt, the Chairman of the ODA, and David Higgins, the Chief Executive. If I might start, we have, in the past, talked some length about the legacy for East London. Sorry, Seb, do you want to—

Lord Coe: We were very happy to make brief opening remarks to set the scene but, Chairman, if you want to go straight in.

Chair: Since we're going to be slightly pressed for time, brief remarks first.

Lord Coe: Very brief. First of all, Chairman, thank you for the opportunity to post you on progress since we last met. I will keep my remarks brief. I think I would make three quick points. Firstly, we should not underestimate the scale of the delivery demands over the next year and a half. This is an extraordinarily complex project: the ability to deliver 26 simultaneous world championships, then 20 Paralympic world championships. Secondly, this is played out more so than ever on an international stage, so the reputational risk is probably at its highest. Thirdly, I sensed, over any number of Culture, Media and Sport Select Committees, that the most demanding stakeholder going forward was always likely, in the end, to be the 60 million people that make up this country and a large chunk of your constituencies and that is why involving, engaging and inspiring has been so important.

Very briefly, the Park: I know many of your colleagues have been around the Park recently. That is in great shape. As an organising committee we have confirmed all our venues. We continue to strengthen and develop those relationships. There are now 19 Government Departments helping us to deliver this project. We've made critical decisions about something we take very seriously: the Paralympic Games. Channel 4 and Sainsbury's have come to the table since we last met. We continue to punch through an extremely difficult economic climate. We have 34 business partners at the table. Among all the other things that we've achieved this year, including ticket sign up, bringing the mascots into the world, torch relays and volunteer programmes, I'm delighted to announce this morning that our medals will be manufactured domestically through the Royal Mint in Wales.

Paul Deighton: I was just going to give you a minute on what our priorities are for 2011. Two overriding priorities for 2011: one is Games readiness, as we scale up to get ready for the Games. Let me just tell you what that involves. It means making operational about 100 venues and all the things we have to get right in venues, for spectators, for athletes, for the media, across things from accreditation to security to transport, doping control, officiating catering and so on. So a lot of detailed work there.

It means scaling up enormously on the people front. We move from about 900 people in London Organising Committee of the Olympic and Paralympic Games (LOCOG) through to 6,000 at Games time. We scale up to 70,000 volunteers, whom we have to select down from the quarter of a million who have applied, and then we have to train them and deploy them. There are about 100,000 contractors whom we bring on board through big contracts in areas like catering, security and cleaning. So, a huge deployment and a mass mobilisation.

Then we have to make sure all our arrangements with our external delivery partners are in place and we are properly integrated. So, for example, on transport with Transport for London; on security with the Home Office and police; with the GLA on how we manage London; with the local boroughs on how we deliver services there; with the Olympic Delivery Authority (ODA) on how the Park ownership is transferred from the build stage; on to us for the operational stage at Games time.

Then this year our testing also begins. Testing is absolutely critical, given the scale of what we are doing, to make sure it's going to be all right on the night. So our testing begins in the summer of 2011. We have to be ready for that. We have to understand what we're testing and how we're testing it. We then have to make sure that individual test events get used also to test the wider system and the bigger clusters of activities that happen around Games time. So all that; Games readiness we call it, and it's a big year for us to get ready for that.

Then the second half of the thing we're doing—the second priority for 2011—is to continue to deepen and broaden our public engagement. So building on the sense of enthusiasm and excitement that we think already exists across the country and really driving home, through ticket sales—which will start in March for the Olympics, in the autumn for the Paralympics—through all the ongoing engagement programmes, like our education programme, Inspire programme, our culture programme; celebrations like "One Year To Go" and "500 Days To Go". Really getting people involved and engaged in the Games so they believe they can be part of it, giving them opportunities to be involved. So those are the two overwhelming things; a big year for us in 2011, very much building on the great work in the Park that John and David have been responsible for.

Q2   Chair: Okay, thank you. I think we are going to be looking at quite a number of issues that you have raised, but perhaps I might just begin. In the past you know this Committee has focused, among other things, on the legacy for the five London host boroughs. We've taken evidence from the Mayors from the host boroughs. It now appears that one of the host boroughs isn't going to host anything and that has caused some unhappiness. Could you say why that has come about and what you can do to compensate Tower Hamlets for the fact that they're not now going to have any Olympic events?

Lord Coe: Let me take the key question. You're referring to the marathon. It was a very tough decision, I'll be very open about that—probably one of the toughest decisions I've had to make, and it was made purely for operational reasons. I won't take the Committee through the full detail of that but to put that into perspective: on one of the marathon days we have 11 events in London, as broad as Wimbledon, Wembley, Greenwich Park. In order to allow the marathon to progress towards a Stadium start and finish, it would have meant closing Tower Bridge. That basically puts at massive reputational risk the operational ability to stage a Games in London. Exactly the same for the 16th day, which is the men's marathon combined with the Closing Ceremony.

The relationship we have with Tower Hamlets, as we have with all the host boroughs, is very, very good. Since having to make that decision we have been working particularly closely with Tower Hamlets across a whole range of legacy potentials, including skills and jobs. I spent half a day last week with an organisation called Skills Match, our LOCOG employment teams, Tower Hamlets themselves, making sure that we're giving every opportunity for Tower Hamlets' residents to be a part of the Games; paid members of LOCOG, everything from helping them access those jobs to construction of CVs. So, the relationships are very good and we're working on the basis that we have big opportunities in East London. 75% of the Olympic Games are being delivered in East London and 92% of the Paralympic Games. Therefore, it's very important to put that into context.

On the marathon itself, this is removing about two miles off an East London street; this is not the London Marathon. This is a field of probably between 70 and 80, in both the men's and women's. This isn't a celebration for six or seven hours at the side of the road. The looped course that we now have planned for the centre of London, finishing and starting on the Mall, will allow many more Londoners to see that event. So, a very tough decision—I don't walk away from that—but for very, very strong operational reasons.

Q3   Chair: So with the very good relations you now have with Tower Hamlets, does that mean that they've withdrawn their intention to seek judicial review?

Lord Coe: I think it is probably safe to say that is subsiding, but we continue to work very closely with them to leverage every ounce of legacy that we possibly can, whether it is through the torch relay or through some of the skills. Paul Deighton, Chief Executive, spent a lot of time at a very senior level in Tower Hamlets scoping out as much potential as we can from this. But I don't mask the fact that it was still a tough, difficult decision to make and I can understand the disappointment.

Q4   Mr Watson: On jobs and skills, to pick up your earlier comment, the deal back in Singapore was that the legacy would be transformational for the community around the Olympic Park. Can you tell me how many people who didn't have skills now have skills as a result of the work you've done?

Lord Coe: I think that is probably a question more appropriately aimed at the ODA, but I can chip in with my observations about LOCOG and what we are planning to do.

John Armitt: It has always been a central element of our objectives to give maximum opportunity to local people and to people who were unemployed. Statistically, roughly 10% of the people on the Park consistently have always come from unemployed positions. I think one of the ways in which we got off to a good start was by creating what is known as the "Digger School" where, with JCB, we were able to establish a training school that has had several hundred—in fact about 800—people go through it and come out after a few months with skills that set them up for life, quite frankly, in the construction industry. That school has now been permanently established in Newham, which wouldn't have happened at all without the impetus from the training facility on the Olympic Park and the Games themselves.

We've had several thousand of the construction workforce go through all sorts of different training courses. We made a commitment that we would provide 350 apprenticeship opportunities over the period of construction, and we are now in excess of 300 and well on target to meeting that 350 objective. 25% of the labour on the Park consistently has come from the host boroughs as well, again exceeding the objective that we originally set for what we expected would be a reasonable number of people coming from the local boroughs.

Q5   Mr Watson: Would you accept that most people who work in construction would say that you are deficient in training enough people in craft skills? Training people how to drive a dumper truck, important though that is—and there is a role for that—is not training someone to be an electrician or a plasterer.

John Armitt: You need them all and in fact, to be fair, there is a difference between operating a JCB backactor or an excavating piece of equipment and simply driving a dump truck. The dump trucks were just an element. The majority of the training that we gave was for driving excavators. I think the important thing is it is a well-paid job in the industry and a job that is always in demand.

Q6   Mr Watson: How many electricians have you trained?

John Armitt: On our apprenticeships, of the 300, 100 are electricians, which is a very good number to see and, equally, the plumbers are a fairly high number. So the higher-skilled end of the sector is where, in fact, the apprenticeships are being created and the opportunities given; so that is encouraging. But I don't disagree with you at all that, for the last 20 or 30 years, the industry has been deficient in providing training. It's a consequence of the nature of the industry over that period.

Q7   Mr Watson: Would you say that only training 300-plus apprentices is disappointing?

John Armitt: Well, it is three times what you would normally expect to see. 300 out of 10,000, which is the number of people we have, is 3% and if you look around most construction projects you will only find about 1%. We sat down with the contractors at an early stage and put a lot of effort into encouraging them to do that. Towards the latter end of the project we made it a condition of the contract that, in fact, there would be at least 3% employed as apprentices. I think that is potentially one of the legacy issues, learning issues, as to how public procurement particularly takes place in terms of encouraging training.

Q8   Mr Watson: Is it your view that more apprentices could have been trained had there been apprenticeships built into the contracts earlier?

John Armitt: As I say, I think you have to be realistic about the numbers. What I would say about the contractors is that they stepped up to the mark very well. As we reached the back end we thought we needed to reinforce it, as we reached the smaller companies being employed on some of the smaller contracts at the back end. So we contractualised it. I would not argue against contractualisation in the future as long as the target was set at a sensible level.

Q9   Mr Watson: When you look at the construction of the Media Centre, the Velodrome, the Aqua Pool, and the Stadium, do you think it's fair to say that you bought in at the top of the market and the job was done at bottom of the market prices?

John Armitt: No, we've bought in across the period. I think it's fair to say that right at the beginning we were buying at the top of the market, when in fact there was a reluctance by some contractors to get involved in the Olympics at all. That made that early stage all the more challenging. It is part of the reason why in fact we went for target-price contracts, because we didn't want to get too high prices foisted on us and felt that the target price with its incentives would give us a better deal at the end of the day. The back end of the market, as you say, has been a very different picture and that has been reflected, certainly, in the level of competition we saw in the Olympic Village.

Q10   Mr Watson: With the reductions to the Olympic budget—I think £47 million has been announced—can you tell me how those savings are going to be made?

John Armitt: The one that has received a lot of attention has been the "wrap" and that is disappointing for many people in terms of the aesthetics of the Stadium and something that we're still looking at, as to whether there are other ways in which that could be included. Another area was in what we call travel demand management, where we have cut the marketing budget for our travel demand management and the other various efficiencies across the piece. But it has come very much at the back end of the programme when, of course, largely the commitments have been made in contractual terms and the work was very well progressed.

Q11   Mr Watson: Thank you. Paul, can I ask you a final question, with the Chairman's leeway. You wrote to me the week before last and told me that you have, on average, 8,000 enquiries and suggestions from the public relating to the 2012 Games, including numerous suggestions about ceremonies. Can you give me a flavour of what those 8,000—

Paul Deighton: I actually get about two of them. Seb gets 7,998, as you can imagine. We're going to do a coffee table book, actually, but—

Lord Coe: There is a coffee table book in this and it is British creativity at its best. I suppose the most encouraging thing is what I said in my opening remarks, that everybody now feels a proprietorial interest and we feel a massive responsibility to get it right.

Q12   Mr Watson: Well, Mr Dennis Sanders of Great Barr, Sandwell—

Lord Coe: Right, here we go.

  Mr Watson: —who breeds doves of peace does not feel like a stakeholder because no one in LOCOG or the ODA will meet him to talk about his inventive idea. Could I offer his services to you? I'm sure—

Lord Coe: I think we have the exchange here.

Paul Deighton: I have the exchange. I've passed it on to my ceremonies team. This is Mr Dennis Sanders of 143 Newton Road?

  Mr Watson: That is correct.

Paul Deighton: That's the one, yes. No, no——

Lord Coe: A world-wide family favourite.

Paul Deighton: Yes. No, no, I've passed this on.

Q13   Mr Watson: Her Majesty uses him for her ceremonies, so he has a good pedigree.

Paul Deighton: Oh okay. In that case, I'll make a note of that.

Chair: He certainly can't complain about his Member of Parliament not raising his concerns.

Paul Deighton: Would you like me to address jobs and skills, going forward, or are you happy—

  Chair: I'm keen we move on. We have a lot of ground to cover.

Paul Deighton: Okay. I'd be happy to do it, though.

Q14   Jim Sheridan: Mr Armitt, I want to explore: you said that near the end of the contracts you made it a condition, in award of contracts, that they were awarded to companies that invested in skills. Why did we leave it to the end of the contract?

John Armitt: As I explained, we debated that at the beginning of the procurement process. It is always a moot point as to the degree to which you insist on things in contracts, or the degree to which you believe you're going to get a better result by sitting down, being open and having an open discussion about it. When the project started off that was felt to be an appropriate way to deal with it. I think the results speak to the fact that the contractors—

Q15   Jim Sheridan: The reason I'm asking you is that when the former Secretary of State for Culture, Media and Sport was asked in the House of Commons Chamber about investment in skills, she assured us that when contracts were being awarded those companies with a track record of investment in skills would be given priority. It seems that has not been the case then, if you waited until the end of the contract?

John Armitt: No. All she was saying was that she believed that contracts were being awarded to companies who showed a good track record in training. I wouldn't disagree with that and I don't think there is anything to show that that has ever been anything but the case. There has been a very good approach to training by all the contractors involved and, as I said, as we reached the end of the programme, with the debates which continued to go on around training, we said, "Well, let's do it the other way now. Let's write it in". I don't think there is any evidence to show that we have any more apprentices signed up towards the back end as a consequence of doing that, than we did at the front end with doing it on a voluntary basis with the major contractors involved.

One of the things you have to recognise in construction training and the nature of construction is that, out of those 350 that we will have had pass through, less than 100 would have the opportunity to complete an apprenticeship anyway during the course of the contract, because if we're talking about tier three or tier four apprenticeships, which are going to be three or four year apprenticeships, very few people would be on the project for that length of time and therefore be able to secure completion of their apprenticeship. So a lot of our effort has also gone into talking with the employers about making sure that they continue the opportunity and that as they move on to other projects—

Q16   Jim Sheridan: It is not just the major contractors. It's the subcontractors as well.

John Armitt: I agree. But the leadership needs to come, in the first place, from ourselves; then from the major contractors and then from the subcontractors. What you can't do is continue to make explicit, down through a private sector procurement chain, what people do.

Q17   Jim Sheridan: I think if you did that, come the end of the contract, you could make that a condition.

John Armitt: You could make it a condition on public procurement. You can't insist that people do it in the private sector.

  Jim Sheridan: You can't insist but you can make sure that—

John Armitt: You can encourage them, which is what we've always done.

Q18   Jim Sheridan: Yes, but you didn't do it from the start. You waited until the end of the contract.

John Armitt: No, we waited towards the back end. But, as I say, the figures, which are three times better than we would see in the industry normally, I think pay testament to the fact that the persuasion techniques that we used at the beginning worked pretty well.

Q19   Paul Farrelly: More generally on that point, in terms of the benefit of the Olympics to Britain, you periodically release the various contracts that have been won regionally and nationally. Could you provide us with an update of the balance of business that has been secured by companies based here, which will not just lead them to import from overseas, and the balance that has been given to overseas companies?

David Higgins: Certainly. Suppliers and businesses: 1,355, England; 29 from outside the UK—Scotland, Wales, Ireland are the balance. If you look at London, 726 out of 1,300; so around 50% of the total contracts are London-based and the vast majority are—

Q20   Paul Farrelly: I wonder if you could provide us with numbers of contracts and value in a note after the session, rather than dwelling on it in detail now.

David Higgins: Yes, I can come back with that.

Q21   Paul Farrelly: More generally, I think according to the latest briefing from the Government Olympic Executive, it was reckoned that you would probably come in within about £500 million of the total £9.3 billion budget. That is, there would be about £0.5 billion of contingency left unspent by the end. Is that the way you see things going?

David Higgins: We have a quarterly report. In our end of September quarterly report we had the anticipated final cost, which is the most important measure, at £7.23 billion, as opposed to our original budget in November 2007 of just under £7.1 billion. So it's about £100 million above the original budget of three years ago and that still includes the contingency of over £500 million in there. That's the ODA budget. The budget you refer to, and which the Government Olympic Executive refer to, is an overall budget. That's at £9.3 billion and they're saying of that there is about £0.5 billion that is unallocated, which sits at Treasury.

Q22   Paul Farrelly: You recognise those figures?

David Higgins: Indeed, yes. That's right. Correct.

Q23   Paul Farrelly: Okay. Just very briefly, the Government didn't spare the Olympics its share of budget costs in the Spending Review, but they seem to be cuts that you had already saved and you're going to be well within the contingency anyway. So that was more a headline sleight of hand, wasn't it? It didn't make any real difference.

David Higgins: From the ODA's point of view, given nearly every contract is let, we're over 75% spent. Therefore, going back and trying to undo contracts or redefine scope in the end would cost time and, therefore, money. So the best way that we can save money for the public on our budget of £7.2 billion is to do it more efficiently, safer and to time schedule. That way we will release money or not spend contingency, and the Government certainly recognise that. We looked at areas, which my chairman just referred to, where we could make savings, such as on travel demand management; a little bit on shooting, we looked at consolidating some of the temporary works there; and areas such as the Stadium "wrap". So we looked at some areas to achieve change in scope. But the main way we can save money is just to continue to be efficient.

  Paul Farrelly: Yes, I think we are going to come on to some of those areas as we go on.

David Higgins: Sure.

Q24   Chair: David, nobody could criticise you for not wanting to take on a challenge. You're off in February to take over at Network Rail. This is probably a question for John. Do you not think it's a bit strange for the chief executive to leave four months before the Games?

John Armitt: No. As David has just said, we are 75% complete. Last week we handed over the Broxbourne White Water Canoe Centre. That, in a sense, is a typical example of a project delivered very effectively by the engineering industry. It provides great sport and, indeed, provides in fact excellent legacy as well; so meeting all the criteria that we've sought. The Velodrome is hard on its heels and, equally, will be completed very early in the new year; the Stadium not far behind that. By the time we get to next summer essentially all the stadia will be complete and we'll be at the tail end of the Olympic Village. By this time next year I would expect to see everything completed and, during the course of the year, made available to LOCOG for their activities.

David has brought on a very good team with him all along. He has led that team incredibly well. The reason why we are where we are today is, to a very large degree, down to David's leadership. Therefore, I feel that we are in a position where the opportunity for David to go to Network Rail is in all our actual joint interest because I think he will do an excellent job at Network Rail, the ideal person to go there. It is not a big issue for us to get through the next few months with David's deputy, who has been at his side right the way from the beginning of the job, to take over. I'm very confident that we will be able to cope in the remaining period of construction.

Q25   Chair: Would some people not have expected, though, that when you appointed him the Chief Executive of the ODA the contract should state that the job would run until the Games took place?

John Armitt: I dare say when David took the job he assumed that he would probably be there until 2012, but the world moves on. The job, as I said, is very well—

Q26   Chair: But you never put into the contract that it was a—

John Armitt: You can't do that. At the end of the day, the employees usually have a right to move on when they expect to do so. I think the key thing about this is I don't think we believe that this is going to damage the work that we have to do going forward. As I say, I think, as UK Ltd, we are in the best position in seeing David go to Network Rail. Obviously I speak from some personal experience.

  Chair: Indeed. Well, we certainly—

David Higgins: I can comment. In the end the contract protects the Government and if the Government wanted me to stay at the Olympics it was quite within their rights to require that and, therefore, it turns out I'm not as critical as you think I am. There is the normal succession planning in place. So if John, if Ministers, if the Permanent Secretary, hadn't been comfortable in any area I wouldn't have gone. In fact, they asked me to follow through on a few things—to follow through on the Village sale process and some of the transport restructuring—before I left. So we have this four-months-plus handover process where I'm working on those issues there. So the Government is certainly protected and the contract ends only with full agreement that this move is happening.

  Chair: Okay.

Lord Coe: I have no intention of losing mine in the January transfer.

Q27   Jim Sheridan: Do you think there will be any bonuses or incentives, given the fact that money is tight?

John Armitt: No. The remuneration committee will meet next May to review the last 12 months and the circumstances and will judge everything in the way that it is expected to and has done to date.

Q28   Jim Sheridan: That sounds like "maybe".

John Armitt: I am trying to avoid saying something that can be misconstrued. David will be entitled to what he has earned to date. There are certainly no golden goodbyes, in the way that they are normally described, at all.

  Chair: Your talents will certainly be needed at Network Rail; so we wish you every success there.

David Higgins: Thank you for that.

Q29   Mr Sanders: The Media Centre is still set to cost £81 million more than originally envisaged. Is there any prospect of recouping the shortfalls in the cost of the Media Centre and, indeed, the Olympic Village, which are currently being met by contingency?

David Higgins: You're right. On the Media Centre the original public contribution was £220 million and that was on the basis of the private sector putting around £160 million in and also owning the entire asset. So the public sector made a grant, but then lost control and didn't get any profit share on the Media Centre until after the private developer had made a 20% profit. So, yes, we have put an additional £80 million into the project, but it means the public sector owns the entire asset, with no private sector control over it; no profit share, nothing at all. So it has a debt-free asset, which is currently out for tender. The thing about the Media Centre, and for that matter the Stadium, is that both those assets are owned by the Legacy Company. They own the freehold, and there is nothing in our budget that we need to get back from those assets to balance our books. So the Media Centre is out for tender now. The ODA is not involved in any way in that tender process. It's completely controlled by the OPLC company.

On the Village, of course, that is a separate story because the ODA does own the freehold and our budget does assume we're getting back receipts of around £324 million from the Village. I'm pleased to say at the end of this week we expect to be able to publicise a short list of investors in the Village. I'm sure you'll remember early last year we stopped the process of bringing in private equity and banks into the Village because of the market conditions. We've now gone out and had the who's who of British property investors and developers, plus international investors, express strong interest in the Village, which is excellent. You have recently had Westfield sell 50% of their shopping centre to two very conservative overseas pension funds for around £900 million. So the market has changed and there is a huge vote of confidence in East London, in both the Westfield sale and now the short-listing of the Village. So we would be hopeful of recovering public investment as set out in our forecast for the Village.

Q30   Mr Sanders: Have you considered, though, asking those who are going to use the Media Centre to make a contribution towards it?

David Higgins: The IOC—they do of course. You have ratepayers, the journalists, the press and the media who pay substantial premiums, which goes through to the IOC and to LOCOG and, therefore, this is the asset that they get to occupy because of those premiums they have paid.

Q31   Mr Sanders: Have you agreed what they are going to pay? Is that something you could look at again and perhaps increase above what you were looking at?

David Higgins: That is an agreement between the IOC, the international broadcasters and the media, and that then comes through to LOCOG.

Q32   Mr Sanders: So you have no control over that at all? So your costs can go up and up and up but you can't change the income stream?

David Higgins: Our costs on the Media Centre have come down. Our original budget—

Q33   Mr Sanders: But it is still £81 million over the original. It may have come down £7 million in the previous quarter—

David Higgins: No. The original budget was some £350 million on the Media Centre when we got approval for that. That has come down from £350 million now to £300 million. But the arrangement between the media and the press is a direct arrangement with the IOC and LOCOG. It is nothing to do with the ODA. We just build the facility for them.

Q34   Paul Farrelly: I wanted to follow through on a couple of those questions, to get an overall view, and we'll get to the Stadium later. Looking at the last National Audit Office report, in February 2010, it said, as at December 2009—that is a whole year ago—the ODA had completed 49.4% of its capital programme against a target of 50.3%. What are the figures one year on, just to get a—

David Higgins: 75%.

  Paul Farrelly: 75% against—

John Armitt: We're looking at 75.6% or something. It's very similar to programme.

Q35   Paul Farrelly: When is handover day, could you remind us?

David Higgins: It changes. I mean there is progressive handover. So the first handover happened last week. Well, the earliest one happened at Weymouth, of course, but Broxbourne happened last week to the Valley Park Authority; then progressively the Velodrome will be early in the new year, the Stadium later. The final official handover will be within the first week in January 2012, where the ODA hand over Park venues and Village to LOCOG.

Q36   Paul Farrelly: In terms of the Media Centre, the cost is presumably less now overall—not to the public purse but overall—because you've scaled the facility back and put a lot of temporary stuff in there?

David Higgins: That's right.

Q37   Paul Farrelly: We've talked about the legacy for Tower Hamlets having disappeared. What is the legacy for Hackney now?

David Higgins: The legacy for Hackney is two things: first you have the media and broadcast and you also have the 7,000 seat multi-purpose sports hall as well, which is also in Hackney.

Q38   Paul Farrelly: What is the likely legacy outcome as it stands with the Media Centre?

David Higgins: It's out for tender at the moment, which is run by the Legacy Company. So it's not for me to comment on that interest. We have had no direct involvement in that at all.

Q39   Paul Farrelly: Nonetheless, can you give us a flavour of the sorts of interest that has been shown from which—

David Higgins: I have literally had no involvement at all. The ODA has no access to any of the tenders. It is an entirely secure process. So we have the technical documents, of course, which are transferred across to the Legacy Company, but we have no involvement whatsoever on the scrutiny of the various tenderers.

Q40   Paul Farrelly: Likewise, the Olympic Village has been scaled back and has been subject to some changes in terms of the way architects were going to be appointed to handle this and the numbers of units. What is the legacy thinking behind the Olympic Village at the moment? These sports peoples' apartments, who will be attracted to them?

David Higgins: The Olympic Village is 2,800 existing apartments, plus residual land for a further 2,000-plus apartments there as well—so nearly 5,000 homes in the Olympic Village—plus a full-scale academy for 2,000, polyclinic and all the landscaping and playing facilities, all in one facility. What has been interesting is that when we looked at this a year and a half ago, there was no capacity for the private sector to take a position now. I would have expected three or four in the short list for the Village.

We're going to have substantially more than that because, frankly, the idea of short-listing down the expressions of interest we've had from a wide range of domestic and international investors for investing in the Village has caught us by surprise, and the seriousness of those offers; it is very interesting to see what will happen. So I am quite confident that we should get very significant, long-term, institutional investors that want to take a long-term ownership position in the Village. It complements, of course, Stratford City, which now has two big pension funds, one from Holland and one from Canada, buying into that.

Q41   Paul Farrelly: I haven't been around any of the apartments. So you'll forgive me, I am doing this from a distance. The question was: what sort of people will be attracted to living in these sports persons' apartments after the Games are over?

John Armitt: They are a lot more than sports persons' apartments. These apartments have been designed with legacy in mind, and you have 2,000—

  Paul Farrelly: But there has been a lot of chopping and changing.

John Armitt: Well, there are 2,814 apartments and, of those apartments, 900 were specifically designed for larger families: three and four-bedroom apartments. Another 1,000 or so are two-bed and the balance one-bed; so a slightly different split than you would normally see on a London scheme. A higher proportion of affordable, which, as David said, has been arranged with a housing association who have now taken 50% into ownership. So they are now in fact clients for it. These have been designed to the highest level of any apartment blocks in London at the moment, what is called BREEAM Level 4, which is a very high standard indeed.

So what you have here is a very high quality Village; 10 different architects giving a very considerable balance of relief to the buildings. Pretty well every apartment, I am pretty sure, has a balcony. Every apartment pretty well has a car-parking allocated space. You have a central garden area in the middle of each quadrant block. You have a polyclinic and you have an 1,800-place academy being built as part of the Village. So a strong community, with excellent transport arrangements and I would be optimistic about its long-term future; particularly, as David said, with the level of interest that we're seeing from the private sector in acquiring the other 50% of the apartments.

Q42   Paul Farrelly: I feel that Seb is itching to come in and say they're going to be attractive to Members of the House of Lords.

Lord Coe: Oh, we're already booked in there. I would, of course, make the point that in this extraordinary landscape you have world-class sporting facilities as well, which complete that holistic approach to the broader definition we have always taken on this: of sustainability; venues that London has never had before; and potential for community use that London has never had before.

Q43   Paul Farrelly: Just on that, we went to look at the arrangements in Barcelona and they were very lucky because they got all theirs away before the crash happened. It made it a little bit more difficult afterwards. But what we were struck by there was a very strong purpose in holding the Games and a very strong emphasis that these would be family apartments and they were let to sports people for the two weeks of the Games, effectively. When it comes to after the Games are over, are you confident that when people look, in hindsight, at the way the Village has been constructed and the way it has been targeted, it will shine in the robust assessment as Barcelona has?

John Armitt: I see no reason why not because these were never designed as being accommodation that was specifically for sports people. These were designed as apartments for Londoners for the next 100 years and they were simply going to be, if you like, lent to LOCOG for the Games to house the athletes. We consciously have not installed the kitchens at this stage. So that becomes an extra bedroom for the Games. So it means after the Games we can go in and retrofit brand new kitchens, so the people acquiring the properties have brand new facilities. Some of the finishings we have, in fact, left out for the period of the Games. So, again, we can go in and give them a once-over; put in some of the more detailed finishings to make sure that what people are seeing is exactly what they would have expected to see if the Games had never taken place.

Lord Coe: If I might just make a very brief point, of course, that Village will be the home for 4,200 Paralympians and their coaches, supporters, helpers. So it will be built to probably the highest standards of accessibility of any residential development in this country for the last 10 years, I'd say, John.

John Armitt: Ever.

Lord Coe: Ever? Okay, I'll go with "ever".

Q44   Paul Farrelly: Seb, how far are you towards your target of 75%? They're on target with the ODA. How are you in terms of your targets and your fundraising?

Lord Coe: Our targets are in very good shape. The single biggest financial dependency, of course, is our ability to sell tickets. We now have 34 business partners at the table. Their marketing spend is very important to help us stage the Games, but equally important now is the activation of a lot of their activity across the Olympic spectrum. We have some of our partners activating their sports participation; GE, a top partner, is leaving an antenatal unit in Homerton. Pretty much everything that we went to Singapore for—in terms of the solid legacies at a market-led level, through LOCOG bringing these partners to the table—is solid. I say that in what, as everybody knows, is probably the most difficult economic climate to deliver a Games since the 1970s.

Q45   Paul Farrelly: And on sponsorship?

Lord Coe: I'll leave Paul to deal with that.

Paul Deighton: Yes. When we originally set out on domestic sponsorship, back in 2005, we set ourselves the target of between £600 million and £700 million. We are currently—shall I carry on?

Paul Farrelly: Yes.

Paul Deighton: We're currently at £673 million. So we're tending towards the very top end of the range and, of course, after we set the target there was the credit crunch and then the rest of the markets collapsed. I would expect that we will reach the top end of the range, £700 million, by the end of March 2011. Notwithstanding the extraordinarily difficult climate that exists to do this kind of thing—because a marketing budget is ultimately relatively discretionary—we're very confident about getting to the very top end of the range of our original projection: £700 million, with £673 million already committed.

Paul Farrelly: I have inadvertently strayed into your sponsorship when talking about your budget, and my colleague David Cairns will want to come in, in a moment, spontaneously on that.

Paul Deighton: I'm sorry.

Q46   Paul Farrelly: But I have one last question. The company building the Shard, which is going to be London's biggest building, I suspect is not going to tell its banks that it's only going to produce accounts when the Shard is completed; so, over 18 months. BP or companies that have major projects around the world do not tell their banks and their investors that they are going to report after 18 months rather than 12 months. Why are you so special?

Paul Deighton: I think principally because we are a one-project business. We are not a broad operating company. We have one project. So what we do—just so everybody understands—is that when we close this financial year at the end of March 2011, rather than closing the next financial year in March 2012, we're extending it to September; so we have one 18-month period. The reason for that is were we to close in March 2012 we would then be, during the next three months, closing our financial accounts during the period where all our efforts should be focused on cash management, driving down costs and procurement. In other words, every financial resource we have in the business needs to be focused on operational financial management, not on ex-post financial account closing. So we've taken that through our own accountants; through our board and, with the Government, everybody agrees that that is a much better way of managing the risk around this project.

Q47   Paul Farrelly: Some people may see it other ways, but I'll leave it—

Paul Deighton: We took a balanced assessment and everybody we made the arguments to accepted that this was the better way to go.

  Paul Farrelly: Okay.

Q48   David Cairns: On sponsorship, I know you basically have the sponsorship deals that were negotiated above your head by the IOC and then the local ones that you're negotiating. We've heard the targets are going well. But looking at the seven local partnerships that you have here—and they include Lloyds TSB, British Airways and BP who, between them, haven't had the best two years—have you banked their cheques? How does it work? Have they given you money? Are they promising you money?

Paul Deighton: The way it works is that when we agree the deal—and those are all agreed—we sign a contract and in that contract they are committed to make a series of payments. They're different payment terms, but typically there will be an upfront payment of between 10% and 20% of the total and then the rest are evened out right through to the delivery of the Games. So, therefore, we do have a credit risk should any of those companies default for the remaining payments. While you say some of those companies have been in relatively difficult operating environments or other issues, I don't think there is any question over their ability to meet their payments to us over the next couple of years.

Q49   David Cairns: This figure of seven, is that something that is set out by the IOC or is that as many as you could get? If you could get a couple more would you add them into it? How does that work?

Paul Deighton: If you think about it from the sponsors' point of view, of course, the most important thing for them is the amount of exposure they can get from having a sponsorship arrangement. The sponsors generally, particularly at the top end, are quite interested in the field being as narrow as possible because then more of the sunshine is on them. So the range gets negotiated when you do those individual deals and, as we have gone through them, I think we could probably do a couple more, if we could find a couple more. We probably won't at the tier one level, so all the discussions we are having to fill in the remaining £25 million I talked about are at the tier three level and many of those are related to some of the procurement deals we are doing. We construct a supply agreement and then we also have a marketing agreement alongside that. We use the competition to get our procurement business to help generate interest in being a sponsor as well.

Q50   David Cairns: So the tier one money and, by extension, the tier two money, given that you did mention it, that is safe. There is nobody saying, "We're not sure about this. Maybe can we have a look at this? Things have become a bit difficult"?

Paul Deighton: Contractually, they are obliged to pay us. Nobody, as it happens, has even remotely suggested that they would like to reconsider or renegotiate. But, as a matter of contract, they couldn't anyway. Everybody among our partners is saying, "What a brilliant decision we made five years ago when this looked a long time ago. We're getting here. It's going to be the greatest thing in this country in our adult lifetimes and what a great prize we've got and how do we spend the next two years getting the most out of it?" That is how they're all focused at the moment.

Q51   David Cairns: In the Paralympics you have Sainsbury's. Is it an equivalent structure? Are you going to try and get more? Are Sainsbury's the equivalent of tier one sponsorship? How does that work?

Paul Deighton: Yes. You're right, it's a new arrangement. We are delighted to have been able to get a company of that power and marketing range, and spread around the country, involved to take the Paralympics forward. So we think it has been a great thing, in parallel with having Channel 4 as the television providers to the Paralympics. It gives it its own independent identity and gives it a real ability to make an impact, which I think is important.

Just so you understand, all our other domestic sponsors are both Olympic and Paralympic. So, for example, while Sainsbury's are doing a lot, in particular I point to BT, which sponsors the Paralympic World Cup. I know Tim Reddish is here. He might talk about that later. They've been very great supporters. A company like Deloitte does an enormous amount with things like bursaries to support the Paralympics. All our domestic sponsors also support the Paralympics.

Q52   David Cairns: In terms of the IOC negotiated contracts—I appreciate you do not have any say; or do you? Are they just handed down to you by the IOC and you say, "Right, fine; you look after that. We'll deal with our own". What say do you have on the IOC stuff?

Paul Deighton: Firstly, a number of the IOC contracts, the majority of the IOC contracts, are multi-Games contracts. So they're in existence before we were even awarded the Games. So we inherit those deals. A number of them get negotiated during our Olympiad but, again, they simply do the deal and say, "Okay, now these are part of the family". The way it works technically is, essentially, the IOC holds all the categories for sponsorship because sponsorship is allocated by industry category. When we want to sell a category domestically, they essentially allocate it to us. Think of it as, "It's all theirs, but they give us some to sell domestically to support our own budget."

Q53   David Cairns: I'm not a foodie fascist, as is obvious, frankly. But are you then entirely comfortable with the notion that the only branded food available will be McDonald's?

Paul Deighton: To get it exactly right, the only branded restaurant at the Games will be McDonald's. There will be a very wide choice of food available at the Games. I have to say, just to put an important comment forward, when we discussed sustainability standards and things companies can do in terms of training their people, in terms of their own supply chains, McDonald's is the most proactive and creative about pushing those standards forward of any the suppliers we work with. They are really helpful in some of the sustainability things we're trying to do.

Q54   David Cairns: Was that a food category, and you went off and negotiated with McDonald's or did IOC say, "It shall be McDonald's".

Paul Deighton: They're a very longstanding IOC partner.

Q55   David Cairns: In terms of restaurants and other food, if I'm wandering about the Olympic Village fancying something to eat, there will be branding there from other food providers or is it—

Paul Deighton: No, the other branding will be generic. So there will be plenty of choice of other foods—so you may have a Mediterranean section or an Oriental section—but McDonald's will be the branded restaurant. I must say, for any of you who visited the Olympic Park, again, you will find the longest queues typically are at the McDonald's. So public demand tells you, in part, where you need to provide the supply.

Q56   David Cairns: I'm not anti-McDonald's and I'm sure they have a fantastic PR department that works wonders and all the rest of it. But, Seb, given everything you have stood for in your entire life to date, is there not a small part of you that thinks, "This is just a little bit icky"?

Lord Coe: No, not at all. I wouldn't quite say that this has been my life's work. But McDonald's, as Paul has quite rightly said, are a terrific partner. They train staff and teams probably better than any company out there. They've hit, and we've exceeded, most of the sustainability standards. As Paul has quite rightly said, this is a branding and a marketing arrangement. This is not the only food that will be accessible to people going into the Park and wanting to eat and be sustained throughout the course of the day. So, no, I am entirely comfortable with that and do enjoy the occasional McDonald's.

Q57   David Cairns: Do you have any say on the pricing or does anybody? Are they going to gouge people? Can they double their prices from what you would pay a couple of miles along the road because they have a captive audience in the Olympic Village? How does that work?

Paul Deighton: In the Olympic Park? No, no, they'll—

  David Cairns: In the Olympic Park, sorry.

Paul Deighton: Yes. I say that because they obviously, of course, do have a restaurant in the Village for the athletes, and again it's where the queues are longest. So, in Seb's defence, he's not the only one. But, no, we do work with them on pricing to make sure the offering in the Park really works for the spectator experience. Again, for those of you who have been to Games in the past, spectator catering has generally not been great, because to feed that many people for such a short period of time and to make a good job of it is a very difficult challenge.

Lord Coe: And it does give us the opportunity to showcase British food as well.

  Paul Deighton: Yes.

Lord Coe: This is a fantastic potential legacy.

Q58   David Cairns: But we have all been charged, you know, £20 for two strawberries at Wimbledon or somewhere like that. Are we going to be seeing lots of stories about how people have been gouged in the Olympic Park by being charged an absolute fortune for a Coke or something?

Paul Deighton: It is absolutely one of the principles of the catering contracts we are currently in the middle of negotiating, to make sure that offering in the Park works for the kinds of spectators we're going to have coming in there who all want a good day out. That is really what we're trying to do.

Q59   David Cairns: Last question: you have said that McDonald's is branding but there'll be other choice. It doesn't apply to credit cards, though, does it? You can't buy tickets online or do anything online unless you have a Visa card. That seems a bit restrictive.

Paul Deighton: Well, no, you can pay by cheque or by postal order or at a ticket office with cash. So that seems fine, doesn't it?

  David Cairns: Well, no, because—

Lord Coe: Visa has been a longstanding Olympic partner. This is no different from previous Games. Visa has been with us for 25 years, and their activation in Team GB domestically has been a huge asset in the last—

Q60   David Cairns: The competition authorities are looking at this, aren't they? Do you have an update on where we are on that?

Paul Deighton: It's really up to them. As I say, if you can pay by cheque or by postal order or by cash, that seems to me to be pretty competitive. But they'll obviously be the judge of that.

Q61   Jim Sheridan: Can you buy McDonald's with Visa?

Paul Deighton: Absolutely.

Q62   Ms Bagshawe: It is heartening hearing what you're going to provide for people once they get into the Park. Obviously the ability to buy tickets in a fair and transparent way is going to be a major issue for the Games, as it is delivered. We already have good legislation on the statute books outlawing unauthorised ticket sales. Can you fill us in a little bit about how you're going to police that legislation; how you're going to make it effective?

Lord Coe: I'll let Paul flesh out a little bit of the detail, but the overriding principle, of course, is that this House passed legislation to protect a large part of the commercial programme that we deliver through the organising committee. We have to raise £2 billion to organise these Games. We're not recipients of public money. So these are important areas for us. Inside that framework, of course, was very clear protection against ticket touting. I would make the broader point: the unauthorised resale of an Olympic ticket is a crime and that is the point of departure that we start from. We have a Metropolitan police unit dedicated to tracking and tracing the path of tickets that will potentially get from organisations into the wrong hands. Of course, we have the right, within that framework, to close down particularly online sites that will be dealing fraudulently or putting tickets into the wrong market space.

Paul Deighton: I think the only other thing I would add is that the general approach of trying to get the tickets in the right hands in the first place really helps, because if the ticket initially goes to someone who is really desperate to be there it is not going to resurface on the secondary market. So all the work we do in marketing, sport by sport—trying to find out who wants to go to the preliminary rounds of taekwondo and would give their right arm to be there and getting the ticket directly to them so they don't need to think about the secondary market—really helps to cut off the supply.

Q63   Ms Bagshawe: This leads neatly into my next question, which is: in the Beijing Olympics, of course, when all the venues were supposedly sold out, when we watched on television, we did see large swathes of empty seats where they were given to corporate people or so forth, and that looks terrible. There are empty seats there and spectators are not showing up. Are you confident that you have measures in place to make sure that tickets are delivered to fans, as you say, who are really going to go and attend?

Lord Coe: It's probably the most important thing and I take this very seriously. The three criteria for us are very simple. Of course, it's about pricing because that's a large chunk of change that goes towards our budget. But it is about full venues and, within those full venues, having people that look like they want to be there; and accessibility and, somewhere in that, that is where we will come out. I am absolutely committed. The ticket signup that we organised a few months ago showed within literally the first few days—we haven't maintained a running commentary on that for very good reasons—there wasn't an Olympic sport out there that didn't have an interest of at least 100,000 people. The other very good piece of that story was that over half of that million or so in the first week or two also wanted involvement with the Paralympics. So I think we're in the right space. But, no, we have a lot of work to do.

Paul Deighton: In Beijing they weren't corporate seats that were empty. Quite often somehow the tickets were distributed right around the country, I think, often through political channels. So somebody 2,000 miles away received a ticket and there was no way they were ever going to the Games. They kept the ticket as a souvenir. So that was the problem in many cases there. One of the things we have done is to cut down session links. In Beijing, in some sports if you bought a ticket you had a five or six-hour session, maybe with two or three matches. In their case they often only wanted to see the Chinese competitor, so the other two games would be empty. A good example was beach volleyball. Many people might think five or six hours of beach volleyball is their dream. But sitting there watching game after game after game, led to a lot of empty seats. So what we have done in each sport is to design a length of session that we think most people are going to be comfortable sitting right through.

Another thing we're doing, copying on from our friends at Wimbledon—I've mentioned this before—is that in the Olympic Park when people leave we will zap their ticket and then resell it back at a ticket office where we'll have a queue on hand ready to fill those seats. We'll also talk to our sponsors and say, "Just realise, reputationally, you're part of this family. You really need to help us make sure that your guests, the hospitality you're providing to your guests, really do take up these seats because there are millions of people out there who would give anything to have that seat. So you do have a responsibility to work hard to make sure your guest is sitting in that seat". So we're very, very conscious of this.

Q64   Ms Bagshawe: I think the cultural change is very important and I would have brought up the Wimbledon strategy had you not already just mentioned it, which is encouraging to hear.

Paul Deighton: Thank you.

Q65   Ms Bagshawe: It is good to hear Lord Coe saying that there is also great interest in the Paralympic sales. This is very important and I just wonder what your thoughts are. I certainly think having secured Channel 4 as an interesting strategic partnership is wonderful for boosting the profile of the Paralympic Games. When do you plan to announce your ticketing strategy for the Paralympics?

Paul Deighton: Our approach to that is, if you followed our signup campaign, where we now have about two million people signed up, it allows you to tick a box for both the Olympic Games sports you're interested in, and the Paralympic Games sports you're interested in. So we already have a database showing who's interested in a Paralympic ticket. We're going to wait until after we've seen the application process for the Olympic Games, which starts in March, because that will give us a real indication of what the public's interest is broadly in the Games: the sports they like; their reaction to different price points. After we have received that data we will then set the pricing for the Paralympics—which will, therefore, say, be in the summer of 2011—and then we begin the ticket sales process for the Paralympics in September/October 2011. So they can have their own moment in the sun; so it's an independent and strong marketing campaign that doesn't get confused with the marketing campaign for the Olympic Games.

  Ms Bagshawe: That sounds sensible.

Q66   Dr Coffey: Games Makers—volunteers—are a big part of the Olympics experience. Are you pleased with the level of response to your volunteering programme and, in particular, about specialist applications? I understand about three months ago you had recorded about 8,000 specialists and that was half what you needed.

Lord Coe: The overall picture is very encouraging: about 240,000, a quarter of a million. I suppose the nice segue out of that is that 40% of the people that have applied have not been volunteers before. One of the great legacies that Sydney was able to point to, as a Games, was that a lot of people that applied to become volunteers for the first time went into patterns of volunteering post-Games. The Games Makers are exactly what they say—they are the difference between a good and a great Games.

I have seen the Games through eight different prisms. I would take a lot of persuading that the volunteers in every one of those prisms aren't the people that make a huge, huge difference. They do. We must make sure we have the right people, the specialists and the generalists—we launched that over the summer. We're pretty confident that we're going to get the right balance of up to 70,000 Games Makers volunteers. Of course, the Mayor has his London Ambassador programme as well that will be an ambassadorial way-finding role within London. But, yes, we're confident we're in the right space.

Q67   Dr Coffey: So you have enough specialist volunteers already or do you still need to recruit some more?

Lord Coe: No, the applications closed. We launched our specialists in July, to make sure people understood the specialist nature of those jobs. This was very important. We gave plenty of time. I don't want people to think that this is a giveaway, this is a prize. It is very important that people understand that these are eight-hour shifts. We are encouraging people to commit to the Olympic and the Paralympic Games and those specialist posts are key. I mean they really are key to the operational success of the Games.

The generalists, working at arrivals and departures and Village Welcome and all those sorts of things, are vital, too. But we really wanted people to understand the nature of the specialists, "Don't apply to be on duty at the Olympic Stadium because you like track and field. Chances are you're going to be standing probably 20 feet below the track working in our operations centre below, maybe not seeing any of the track and field at all." It was really important that people understood that this is an essential ingredient for the successful delivery of the Games.

Q68   Paul Farrelly: Where are you putting them all up or are they making their own arrangements for accommodation?

Lord Coe: They will be making their own accommodation arrangements, and typically that is exactly what happens. If you go back to previous Games—Vancouver, Sydney, Games that we've watched very closely—people do that. They stay with friends; they make their own arrangements.

Q69   Philip Davies: Can I ask you about security for the Olympics, because the original budget was £600 million. It now appears that that is going to be cut by £125 million. Are you not concerned that that is going to have a substantial impact on the security of the Games?

Paul Deighton: I'll take that one. I think what the Home Office announced yesterday was that they expect to spend £475 million, although the budget remains at £600 million. So if the level of risk rises and, therefore, they need to spend more money to manage that risk then that budget remains in place. I think the way I look at the number they are expecting to spend it has taken the path that has happened to everything else we've done on the project. When you begin you price in a considerable amount of risk and uncertainty, because you really need to figure out the detail of what you are going to do.

What the Home Office and the police have been doing for the last five years is getting in to the nitty-gritty of what policing the Games will involve. So the number that I think they're revealing now is the one that is the product of all that work and it's a much more granular budget. I think this is much like the ODA—a very good example of when you move from general planning into the actual delivery, then if you get it right you can work out the efficiencies and that is what allows you to deliver with a smaller number.

Q70   Philip Davies: How is it going to work? Will the police, for example, police to what they believe is necessary, the different venues around the country and then be reimbursed for it—whatever that might be—or will they have to work to a budget and they'll police it as best they can within that budget; or maybe will the local taxpayer have to pick up the tab for any shortfall? How is it going to work with the police?

Paul Deighton: Clearly, the details of the Home Office and police budget are more a matter for them than they are for us. I think our interest, in running the Games, is that we work extremely closely—and have done right from the beginning—with the Home Office and the police to make sure that we are operationally integrated where that is necessary. Their absolute focus—it's the paramount objective—is to ensure that these are safe and secure Games. The absolute driver for all this activity is that objective; as you would expect. It's a very high-profile event. They're very focused on what the level of risk is and, as a consequence, will put in place the police support, the counter-espionage support; all the work that goes on will be in response to their perception of the level of threat and what is needed to make it a safe and secure games and that's the driver.

Q71   Philip Davies: Given that everything else appears to be going so well, it seems to me that this is potentially one of the biggest threats to the success of the Games and I don't think anyone is under any illusion that this is potentially a target for terrorists. I just wonder how much of an agitator you are with the Government over these issues. So, for example, the e-Borders programme, which has been an absolute shambles, that was supposedly in place to make sure that airlines knew who they were picking up; that people who were a potential risk weren't even allowed to get on the plane in the first place, it wouldn't wait until they were mid-air. The contract with the e-Borders supply has been cancelled and we're now without a contract with anybody. I just wondered how much of an agitator you were with the Government to say, "For goodness sake, this is absolutely crucial to us. Will you get on and make sure that there is an effective e-Borders programme in place for the time of the Games?"

Paul Deighton: We work very closely with the Home Office and the UK borders authority, specifically on the things that are really important to us. We generally don't agitate broadly. We agitate very specifically on what we need; so, for example, the situation with respect to visas for the accredited people to come to the Games and how that will be handled. We work very closely on that and are working with them to make sure that, operationally, those processes with respect to visas and how they will develop over the next two years can be effectively operated at Games time so our guests feel welcome but, from a security point of view, the country is adequately protected.

Q72   Philip Davies: Have you had any assurances from the Home Office that there will be an effective e-Borders programme in place by the time of the Games?

Paul Deighton: The assurances we've had from the borders authority relate to the entry procedures for the Olympic family and, in that respect, they have given us assurances that they will make this work for us operationally, yes.

Q73   Philip Davies: Can I ask one separate question, which is about the sporting legacy, which was obviously one of the main parts of the bid. When, Seb, you did your pitch, that was one of the key factors behind our success in hosting the Games. One of the things that the Sports Minister has been very keen on for a long time, from when he was in opposition, has been how we use the coverage of the Games to maximise sporting participation and avoid the Wimbledon syndrome where everybody is on the courts for two weeks during Wimbledon and then two weeks afterwards nobody is interested.

One of the things that he has been very persistent about, which I think is a very sensible idea, is how we can get the broadcasters, while a particular sport is on—say, perhaps while the judo is on—to have a little screen on the bottom to say, "If you want to get involved in judo in your local area please ring this number or go on this website to find out where your local judo team meet", or whatever. That seems to me a very good way of building on somebody's instant enthusiasm. I just wonder if any progress had been made with the BBC in order to try and make that a reality.

Lord Coe: Obviously we're working closely with the BBC and Channel 4 in any number of initiatives to help drive this. The question about Channel 4 is a good departure point because, you're quite right, it's not simply about 16 days of great coverage, which the BBC and Channel 4 will give us. Channel 4, for instance, will have—I think I am right in saying—10 one-hour-long documentaries introducing people to the skill sets that are required for our top Paralympians; there will be documentaries about the build-up. The BBC, I know, are planning exactly that.

If you look at the build-up this year to the BBC review of the year some of the focus they have given to the Olympic sports, that is in good shape. But you are absolutely right and my visit to your constituency was probably as good an example of that as anything in meeting those young divers who—to a girl and boy—said their role model through all this was Tom Daley and the coverage that diving was now getting on mainstream television. So we see it as a very important part of the legacy and Hugh Robertson is quite right to focus on that.

Q74   Philip Davies: But is this going to happen? I mean, it's a great idea but can we be convinced that this is going to happen; that we're going to have a little strip along the bottom of the screen saying, "If you want to get involved in judo or swimming or basketball", or whatever it might be—

Lord Coe: What I can tell you is we are discussing things of a similar nature, along those lines. Your question is probably best aimed when the BBC come in here. I think they have a hearing quite shortly.

  Chair: Tomorrow morning.

Lord Coe: Tomorrow morning; well, there you go. But you're right, it has to be the right thrust to use—the well-stocked shop window—to encourage people into sustainable participation, not just the two weeks that we're excited and then the shoes and the rackets go back into the cupboard.

Q75   Mr Watson: Paul, could I take you back to what I thought was the important line of questioning from Philip Davies? If I can say so, I think I heard you give my colleague a politician's answer. Did I hear you say that the security budget has not changed but there is just an intention to spend less?

Paul Deighton: No, the budget is the same but they expect to only spend £460 million. That is factually what the situation is. So if they need more, the budget is still there. I was trying to be a bit clearer about it.

Q76   Mr Watson: Is it your view that the security risk to the Games has diminished since the original budget was set?

Paul Deighton: No, not at all. But I think what has increased is their real understanding of what is involved in policing at Games time because of all the work that has been done. So they've been able to come up with a detailed plan and when you have a detailed plan—as we have found in all the delivery we're doing—you're much more confident about postulating as to a more specific number.

Q77   Mr Watson: I read in The Guardian this morning—I'm afraid I couldn't get the actual cable as it hasn't been published—one of the WikiLeaks revelations was that the Americans had said they were concerned about a Mumbai-style attack on the 2012 Games. Are you aware of the Americans' concern about that?

Paul Deighton: No, I'm not.

Q78   Mr Watson: Would the fact that the Americans are saying that prompt you into revisiting the security assumptions and budget?

Paul Deighton: The people who are charged with making those decisions are the ones who get this information, and they're very engaged in precisely making that assessment of, "What's the risk? What do we need to spend to mitigate it?" That is really the process that we, as Games organisers, rely on the security authorities to get right.

Q79   Mr Watson: You would be party to all those considerations, though, or is that done in isolation to you?

Paul Deighton: No, we would not be party to all those considerations. We would be party to some of those considerations. In particular, just as the ODA has worked with them on the protection of the Olympic Park during the construction period, we worked with them on the operational issues around protection of the venues as people would arrive at them at Games time.

Q80   Mr Watson: So if you are not party to those internal discussions you can't say with any confidence that the security arrangements are appropriate.

Paul Deighton: No, I am not party to every single piece of intelligence information upon which many of these judgments are formed. I don't really think you expect me to be.

Mr Watson: Actually, I would.

Paul Deighton: Well, not every single piece of it.

Q81   Mr Watson: I would expect you to be security cleared to know that the biggest reputational threat to these Games is a terrorist attack and I would expect you to be able to say to me, at a parliamentary Committee, you are completely confident that all risks have been covered.

Paul Deighton: I am completely confident that all risks have been covered because of the nature of the relationship we have with the Home Office and my confidence in their ability to do their job, which is absolutely what we rely on; not for me to second-guess them.

  Mr Watson: Okay, thank you.

Q82   Damian Collins: A change of subject to the Stadium building itself. First I just want to ask if you're satisfied with the progress that's been made towards identifying a long-term plan for the future use of the Stadium after the Games.

Lord Coe: Well, beyond the clear legacy potential that has been built into the Stadium—and maybe John and David want to add something to that—our overriding concern when we were putting the bid together was to leave venues, whether it is the broadcast centre, whether it is the Village or whether they are the specifically dedicated sports venues, with a sensible chance of a life beyond the Games.

So they have been done in a way that maximises the legacy potential through design and, beyond that, the clear understanding that you do not want to be left with white elephants—there has been too long a history of that in sports events of late—and the real importance of making sure that you have the right people in place early enough in the process to start identifying that legacy potential. That isn't something an Olympic Delivery Authority, with its tight timelines of construction, or an organising committee that has the responsibility for putting the show on should be worrying about.

The one very good story in this project is that the Olympic Park Legacy Company that was put together now over a year ago—it was a combination between the Mayor and the Government—is a long way into that process. Baroness Ford chairs it and its sole responsibility is to figure out what will happen, in a commercial and legal sense, beyond the Games. We are probably the first host city that has had any structure that has remotely appropriated this in Games history.

Q83   Damian Collins: There are two bidding consortia that are in dialogue with regard to taking over use of the Stadium after the Games. There were reports that the consortium led by Tottenham Hotspur might be looking at demolishing the Stadium. We are not getting into that. Is it possible? Could that be allowed to happen? Are there any restrictions of what could be done to the Stadium after someone took on its use?

Lord Coe: For a very good reason, given that this is a properly conducted process, I am loath to get into this discussion. We are not party, in exactly the same way the ODA are not party, to that process. So anything that I follow in that process is gleaned in exactly the same way that you would glean it.

Q84   Damian Collins: But there are no covenants or restrictions on the Stadium at all? So it is perfectly possible that someone could knock it down afterwards.

Lord Coe: I think the Olympic Park Legacy Company is conducting particularly the process on the Stadium along the recognisable lines that commitments have been made about the basis of future use. But I think it's perfectly reasonable for them. The one thing I'm very pleased about, without being intimately involved in this process in any way, is that we have clearly crossed the first hurdle, which is that—if you're telling me that's the case—there are two serious bidders. There have been more than that out there who clearly see a life beyond the Games for that Stadium and that's how it should be.

Q85   Damian Collins: I agree, we don't want white elephants. But it would be an enormous shame if the legacy for the Olympic Stadium ended with it being cleared as a site—something new built there—when it is the iconic centre of the Games as they'll take part in London.

Lord Coe: Yes, within the spirit of this Committee I would agree with you. But that's not my responsibility.

Q86   Damian Collins: You are of the same view on the athletics legacy and whether the Stadium could be a centre for a future World Championships bid?

Lord Coe: Well, I won't be disingenuous here either. I'm Vice-President of the International Federation for Track and Field (IAAF) and it would be fairly odd of me to come here and say anything other than track and field deserves a proper legacy in this country. In terms of performance over the last 35 or 40 years, it has probably been our most successful national sport.

Q87   Damian Collins: One final question on the Stadium; the "wrap", which has come up a couple of times. There has been speculation and you yourself have been quoted in the media; I think you said, "Watch this space", with regards to whether there would be a commercial—

Lord Coe: Yes, we have had some interest shown by organisations that might want to take that up.

Q88   Damian Collins: Should we carry on watching this space?

Lord Coe: Yes.

Q89   Damian Collins: Is that in answer to commercial restrictions on what could be done?

Lord Coe: Yes, you are quite right and Paul laid out the landscape for our commercial partners. But within that framework, yes, there is scope; but clearly it couldn't be at variance with anything that we have in place in terms of our top or domestic partner programmes.

Q90   Damian Collins: Concern has been raised that if the "wrap" isn't there it may affect the aerodynamics of the Stadium and wind movement through it. Is that a concern at all?

Lord Coe: In fact it doesn't. The technical reports that both our organisations have been in receipt of show that this doesn't have an impact either on spectators or on the performance of competitors, particularly in the field events that you have talked about.

Q91   Damian Collins: It's a "nice to have"?

Lord Coe: It is a "nice to have" and I think we would probably recognise that, given the strictures on public funding and the difficulties that communities the length and breadth of the country are faced with, this was a small price to pay.

Q92   Damian Collins: Okay. I just wanted to bring one other topic forward before handing over to the Chair, on transport around the Games. We have discussed this in previous Committee sessions and I have a particular constituency interest representing a Kent seat, and obviously access to London from the south-east will be very important. Are you any nearer to a date where you will be able to publish detailed transport plans that cover rail movements in and out of London during the period of the Games?

John Armitt: The transport plan we've been working on now for two or three years, and we're now moving to the phase where the delivery of transport moves across to those organisations who will deliver it on the day; so in your own case, for example, Southeastern Trains and Transport for London (TfL) and others. In the case of Southeastern Trains, I know that they have been looking at the detailed timetable which will be in operation during the Games. That will be published typically around a year before the time, as train timetables always are, which will show the timetable both for normal operation commuter use and so on during the Games and the services that specifically would be stopping at Stratford and Ebbsfleet to enable spectators to take benefit of the Javelin Service from Ebbsfleet to indeed literally stopping right in the heart of the Games at Stratford.

Q93   Damian Collins: You mentioned the Javelin Service and for my constituents in Folkestone that's the service they currently use to get in and out of London, but it's still not certain what restrictions there will be. I think that is an issue not just for residents but for visitors who will come to the UK from Dover or the Channel Tunnel and are looking to make an onward journey to London not on the Eurostar; how they are going to be able to complete those journeys.

John Armitt: As I say, the last time I looked literally at the timetable, it was being discussed. There were some restrictions, compared with the normal daily service, around the middle of the day—rush hour services were being maintained—and the reason being that obviously there is more of a focus on the Games themselves during the period 10 am to 3 pm; so the services there geared to the Games as opposed to the normal commuter service. But the overall service for commuters was only being very slightly changed.

The Javelin is clearly the perfect way for accessing the Games themselves and I think, for the people in Kent, the Javelin Service does make the Games particularly accessible and will be a brilliant part of the overall offering. But it is only a part of the overall offering. We have been investing, as the ODA, heavily in infrastructure around the Stratford area, in Stratford station itself and other stations. We have been supporting TfL in their investments in the Docklands Light Railway and other services; the North London Line typically, which is going to be commissioned fairly soon, a much upgraded service. Overall, a lot of effort has been going into increasing the capacity so that, in legacy terms, Londoners are going to be one of the first people to benefit. In fact if you use the DLR you already are because we have longer trains on the DLR today. But I think transport will be one of the great legacy benefits of holding these Games because of the increased capacity which Londoners will see.

Q94   Damian Collins: Has that been planned not just considering the resident and commuter population of London but the anticipated visitor numbers who will be using the same networks and services during the Games themselves?

John Armitt: Yes. What you will see is the plan takes account, as you say, of the increased pressure because of the Games themselves and the background use of commuters. One of the areas we've specifically kicked off recently was communication with the business sector and we've produced a guide for companies to work their way through the potential impact during the Games, because the reality is that life will not be normal in London during the Games. Life will be unusual and we think that's something that needs to be emphasised. There are enormous benefits to everyone in London of hosting the Games and being part of that celebration but, at the same time, moving around will be different to as it normally is. For businesses, therefore, we want them to understand the opportunities that they have with their staff for recognising that, introducing a bit more flexi-time working, potentially changing their hours of operation. But talking about them now helps them to think about it and develop the best options.

Q95   Damian Collins: Finally, does any of your budget go towards policing the road traffic movements? Because obviously there will be heavy congestion on the roads in and out of London during the Games, as you say. As you have said before, we can't expect business as usual when the Olympics are on. Is the cost of managing that extra policing work being borne by the police authorities or by you?

John Armitt: The particular element that we provide financing for is the financing of the local authorities who monitor the Olympic Route Network. So the Olympic Route Network, which is devoted to the athletes and the officials to ensure that they can move around properly, is obviously denied to the general public. There will be wardens who are monitoring that to make sure that it is being monitored properly and we will provide the extra funding to local authorities to enable them to do that.

Q96   Paul Farrelly: Very briefly, John, before we move on, I want to go back to this naked Stadium with all its bones poking through. As I remember when the design of the Stadium was unveiled, the "wrap" was going to be, to use a technical term, the one thing that jazzed up what was going to be a very simple, functional bold design. We couldn't afford the Peking bird's nest but we've got this fantastic "wrap" around our breadbasket. What would you say to people who would charge that, for very little saving, you are compromising the design and the way the centrepiece of the Games is going to look?

John Armitt: One thing you might point them to do is go and speak to Lord Rogers, one of the bastions of British architecture. Lord Rogers prefers it as it is because he would argue that modern buildings show how they work, show the guts and that's what the current structure does. To be fair, it's interesting that many people who come to visit Olympic Park look at the Stadium and say, "Well, isn't the Stadium great", without being aware one way or the other about the potential impact of a "wrap".

Naturally, the architect who designed it, Rod Sheard, designed it bearing in mind that he saw the "wrap" as being an integral part of his design, and Rod would put the opposite point of view in terms of the overall image that can be created. For most people associated with it, that would still be the preferred outcome and, as Seb said earlier, the discussions continue with various parties to see if we can find somebody who is willing to fund it. If that were to be the case, then that would probably satisfy the majority opinion.

Q97   Paul Farrelly: Richard Rogers has always loved his exoskeletons over many years. They are to some people's taste and some people prefer the Foster design. Have any architects had their noses put out of joint, been miffed and walked off the job?

John Armitt: Oh no. In fact, read the architectural reviews or the magazines and, of course, the debate will rage there between the different factions. That's the nature of architectural fashion. But certainly the teams who are responsible for it, Rod and his team, are as devoted to delivering a splendid Stadium as they have ever been.

Philip Davies: We don't have time to raise the Cultural Olympiad but I just wanted to commend you for choosing the Black Dyke brass band as one of the people to play as part of the Cultural Olympiad because they're based in Bradford, which is good for me. But they also are, without doubt, in my view, the finest brass band in the entire world. So can I commend you for incorporating them as part of the Cultural Olympiad?

Chair: Thank you. I'm glad we managed to get that on the record.

Philip Davies: The Black Dyke brass band; a kick in the teeth for the politically correct brigade.

Chair: I thank the four of you very much.

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Prepared 9 February 2011