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 doingthe
second priority for 2011is 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 saleswhich will
start in March for the Olympics, in the autumn for the Paralympicsthrough
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 thatprobably
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
decisionI don't walk away from thatbut 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
hundredin fact about 800people 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 isand there is a role for thatis 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 budgetI think £47 million
has been announcedcan 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 UKScotland, 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 thingsto
follow through on the Village sale process and some of the transport
restructuringbefore 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 IOCthey 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 2009that is a whole year agothe
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
overallnot to the public purse but overallbecause
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 wellso
nearly 5,000 homes in the Olympic Villageplus 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 forin terms of
the solid legacies at a market-led level, through LOCOG bringing
these partners to the tableis 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 currentlyshall 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 thingbecause a marketing budget is ultimately relatively
discretionarywe'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 dojust so everybody understandsis 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
hereand they include Lloyds TSB, British Airways and BP
who, between them, haven't had the best two yearshave 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 dealand those
are all agreedwe 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 contractsI 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 foodsso you may have a Mediterranean
section or an Oriental sectionbut 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 sporttrying 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 marketreally 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 dayswe
haven't maintained a running commentary on that for very good
reasonsthere 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 WimbledonI've mentioned this beforeis 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 Paralympicswhich will,
therefore, say, be in the summer of 2011and 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
Makersvolunteersare 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 saythey 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 generalistswe 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 GamesVancouver,
Sydney, Games that we've watched very closelypeople 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 ODAa 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 itwhatever that
might beor 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 closelyand
have done right from the beginningwith the Home Office
and the police to make sure that we are operationally integrated
where that is necessary. Their absolute focusit's the paramount
objectiveis 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 onsay, perhaps
while the judo is onto 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 haveI
think I am right in saying10 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 whoto
a girl and boysaid 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 usethe well-stocked shop windowto
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 planas we
have found in all the delivery we're doingyou're much more
confident about postulating as to a more specific number.
Q77 Mr Watson: I
read in The Guardian this morningI'm afraid I couldn't
get the actual cable as it hasn't been publishedone 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 Stadiumand maybe John and David want to add something
to thatour 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 elephantsthere
has been too long a history of that in sports events of lateand
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
agoit was a combination between the Mayor and the Governmentis
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
thatif you're telling me that's the casethere 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 sitesomething new built therewhen 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 dayrush
hour services were being maintainedand 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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