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Wembley Stadium
3.30 p.m.
The Minister of State, Department for Culture, Media and Sport (Baroness Blackstone): My Lords, with the leave of the House, I shall now repeat a Statement given today in another place by my right honourable friend the Secretary of State for Culture, Media and Sport. The Statement is as follows:
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"With permission, Mr Speaker, I would like to make a Statement on the progress of the National Stadium project. This fulfils my commitment to the House on 7th May to update honourable Members before Whitsun.
"I would like to address four main points concerning the project. First, the extent and nature of the government responsibility for this FA project. Secondly, the allegations that arise from the James and Tropus reports into the early stages of the tendering process. Thirdly, to update the House on progress made since I last informed the House on 7th May. And, fourthly, I would like to comment on the lessons learnt and the changes put in hand as a consequence.
"First, then, the role of government. Quite clearly, the project is primarily a matter for the FA. It wants a national stadium. It wants it at Wembley and it is prepared to pay for it. But it is a clear principle that big infrastructure projects require government engagement, whether financial or in facilitation. Patrick Carter's report has made that clear.
"Government support is plainly a factor in the market's assessment of a project such as this. The first Wembley proposal was over-ambitious. It was poorly managed; the tendering process was flawed; secure bank lending was not achieved; costs escalated; and the Government's role was ambiguous. It was those weaknesses which led to delays; to the request from the FA for extra public funds, and to the Government's decision to ask Patrick Carter to carry out a full review of the project's feasibility.
"Now, the Government can decide to support the FA or, of course, can walk away. If we walk away, it will almost certainly stop the project in its tracks. What we cannot, should not and will not do is to take over the direction of the project itself. That remains clearly with the FA.
"However, when public funds are committed to a project, government do have a responsibility to ensure that proper standards are met to safeguard public investment and to secure the improvements to the management and governance of the project necessary for success. And that is what we are doing.
"We are insisting on 'best practice' public-sector standards. We need this to protect the taxpayer and the lottery player. But that should also reassure the market that this is a worthy project to invest in.
"Once these measures are in place, it is appropriate for us to meet some of the non-stadium infrastructure costs, and we have identified
- £20 million for that purpose. And of course we need to stay engaged with the project, to protect the public interest in the £120 million lottery grant made by Sport England.
"To turn to my second point, honourable and right honourable Members may have read much in recent days about the Tropus and James reports into the stadium project. These reports investigated alleged irregularities in the tendering and procurement processes and weaknesses in the corporate governance of the project in the period 1999 to the summer of 2000. These allegations make disturbing reading.
"That is why in December I set clear conditions that this project had to be cleansed before any further commitment from the Government. But I believe it is important that they are now considered in the context of progress since my Statement to the House of 19th December.
"These four conditions were: a full value-for-money assessment of the construction agreement to be undertaken by an independent assessor; that WNSL supply a copy of the James report to the National Audit Office; that significant changes be made to corporate governance; and that legally binding agreements for the financing of the stadium be concluded. I do not believe that there have been any new disclosures which add to the concerns previously identified.
"It is important to note that the David James report did not find any evidence of criminal impropriety. It did not recommend retendering the contract for rebuilding Wembley. So the most important question to be answered was whether the flaws identified had irrevocably damaged the project on grounds of cost, propriety or deliverability. The expert judgment suggests they have not.
"In December, I asked both the FA and WNSL to publish the James-BLP report. However, for legal reasons WNSL felt unable to publish it. A publishable version has finally seen the light of day. Much of this is history, but history from which we must learn. Changes have been made, particularly since December. I wish now to look to the future.
"In many ways, there has been as much improvement in the past five months as in the previous five years. Three conditions—assessment of value for money; the consideration of the relevant papers by the NAO; and the strengthening of project management and corporate governance—have broadly been met.
"I will not repeat what I said on those matters just two weeks ago, except to say that the Sweett report, the independent value-for-money assessment, is now in the Library of the House of Commons for any who wish to read the detail.
"It confirms that it is unlikely that retendering of the construction contracts would result in significant savings. However, I do wish to bring Members up to date on the question of financing.
"On 7th May, I informed the House that the lead bank had agreed in outline to proceed. The FA has since said that it expects to sign a 'heads of agreement' and exclusive mandate with WestLB, the lead bank, in the next seven days which will agree the overall financial structure of the project. It has said that it will then expect to complete all the financial contracts some time within the next 10 weeks.
"The bank is satisfied that it has access to all the information it requires, including the James and Tropus reports. The prospects are good, progress is promising, but the outcome is not yet certain. Accordingly, I will not give final approval on the Government's contribution to non-stadium infrastructure until a final report has been produced by Patrick Carter, after proper banking arrangements have been concluded and assessed.
"I am clear—as indeed is the Football Association—that the current negotiations represent the last chance for Wembley. Should a Wembley deal not prove possible, I would expect—as I indicated in December and ever since—that the FA would enter into discussions with Birmingham over its proposals.
"The FA has repeated its assurances that if Wembley fails to proceed, then it would look for other options; options which would include Birmingham.
"Birmingham's bid was and is credible. It has been examined by Patrick Carter and by the FA in good faith. However, the Carter report supports the view that Wembley would deliver higher revenues, hence the FA's declared preference. And the Birmingham bid is still only embryonic: planning permission for what is a green belt site has not been given; the detailed design has not be completed; final costings for the stadium have yet to be done; the business plan has not yet been thoroughly tested or backed by market research; and there remains a significant funding gap to be bridged. So moving the project to Birmingham is not a straightforward process with a guarantee of success. But if Wembley fails, Birmingham deserves the chance to make its case.
"I now want to clear one matter up. Some have mistakenly assumed that there is a secret agreement between the FA and Sport England to reopen the old Wembley stadium if the new project fails. This is nothing more than a misunderstanding of the staging agreement between Sport England and the FA. It is the security obtained by Sport England for the £120 million lottery grant. It could, in theory, allow Sport England to require the FA to stage events at Wembley for 20 years in the event of the project failing.
"In reality, the stadium would be very expensive to reopen, and would be increasingly substandard as a venue. The Carter report indicates that it would cost around £40 million for a quick fix to open the doors—a solution which would require a second, major refurbishment only five years later, costing tens of millions of pounds more.
"The FA made clear in its statement yesterday that reopening the stadium is only one of the options that might be available in the event of a failure to proceed with the new stadium. And given the cost, it is an unlikely option for the FA to choose. However, it is for Sport England and the FA to decide how, in the event of the project failing, the grant is repaid.
"I come now to my last point. Hindsight shows what a high-risk project this was. Lottery money is not about risk avoidance, though. It should be about risk management; and I accept that more work needs to be done with distributors on risk assessment.
"One possible solution is to involve the Office of Government Commerce in all high-risk lottery projects, to ensure full scrutiny of proposals before their approval. This has now been done on Wembley, and the OGC's report, in the light of changes made and proposed, supports the stadium plans. I intend to include this issue in the forthcoming consultation on the future of lottery distribution which I hope to bring before the House before the Summer Recess. It is important for the future of the lottery to get this issue right.
"One year ago, this project was flawed, tainted and unsustainable. Since then, the efforts of the FA and other stakeholders, working with Patrick Carter and his team, have yielded results in governance, transparency and the potential to attract financial support to a much more credible project.
"The money sought from government is still on the table. It forms part of the financial package and it will remain there while the present negotiations with the bank continue to progress to conclusion.
"There is some distance still to travel; and if my four conditions are met in full, the House can be assured that government support is being given to a project that will have demonstrated that it deserves it—a project that will benefit sport in England at all levels for generations".
3.44 p.m.
Baroness Anelay of St Johns: My Lords, I thank the Minister for repeating the Statement. We seem to be stuck in the nightmare of the film "Groundhog Day"—another day, and we simply cannot escape from the same thing happening again and again, without resolution. For the sake of our sportsmen and sportswomen, we must break free and settle the matter.
The Minister stated that she is awaiting a final report from Patrick Carter, and that the FA has told the Government that it expects to complete the financial contracts some time within the next 10 weeks. I noted carefully what the Minister said. There was no mention of a deadline this time. Why is that? After all, by my reckoning, 10 weeks will take us to 1st August—after, as we all hope, the House has risen for the
Summer Recess. Will the Minister give an undertaking that she will return to the House before the Summer Recess to give an account of progress on the specific matter of Wembley? The Minister referred to progress on lottery resolution. Will she please also give an undertaking to report on progress on Wembley?The financial details of this deal have become a byword for fiasco. That pleases no one in this country. The Minister referred to the Tropus report, which revealed irregularities in the procurement processes. When did that report first reach the Department for Culture, Media and Sport? When was it first read, if at all, by Ministers?
What is the Government's response to the Football Association's statement to the Select Committee of another place this week that the Government should have been aware of the Tropus report last summer because they were in touch all the time with David James and he knew of its remit and likely contents? It was also stated that there was a pervasive awareness of allegations of impropriety in procurement matters.
The Minister stated that she did not believe that there had been any new disclosures to add to the concerns previously identified. What about the revelation this week of the "staging agreement" between the FA and Sport England? This means that if the current bid to build a new stadium at Wembley breaks down, the old stadium must be taken out of mothballs and used for football international matches and FA Cup matches for the next 20 years, so that the £120 million of lottery money can be repaid. It is a simple guarantee to Sport England.
That was certainly a new disclosure to me, and to most of the country apart from the favoured few. Is the Minister aware that the Secretary of State admitted to the Select Committee of another place earlier today that she was one of the favoured few and did have prior knowledge of the staging agreement?
The Minister tries to make light of the agreement; but does it not fatally damage the hopes of Birmingham or Coventry that they could ever genuinely be considered as a venue for the national stadium?
After all, the staging agreement is a contractual term. It is not for the FA to choose whether it keeps to it or not. Sport England is a contractor to the agreement too. So, if the Government are so confident that there is a way out of this impasse, why is that the case? Have the Government sought, and received, from Sport England a guarantee that they would not enforce the staging agreement if the negotiations for a stadium at Wembley were, God forbid, to fail? Does the Minister realise that, without that, her warm words about Birmingham and Coventry mean nothing?
Finally, is the Minister aware that in the Select Committee of another place earlier today the Secretary of State admitted that she knew that there were weaknesses in Sport England's oversight of all these processes? What meetings have the Government held with Sport England since the Statement made in this
place in December last year to call Sport England to account for its handling—or mishandling—of the lottery agreement, of public money?It is vital that this matter is resolved swiftly and effectively. Our sportsmen and sportswomen, and the whole country, deserve that.
3.48 p.m.
Viscount Falkland: My Lords, we on these Benches thank the noble Baroness for repeating the Statement, which she read so expertly. In so doing, she concealed the alarm that it has caused me and, I imagine, other Members of this House.
When I arrived this morning, I was told by my Whips' Office that it was of a mind to refuse the Statement and thought that the Conservative Benches would refuse it too. It was almost like being told, if one were eagerly awaiting a sequel to "Four Weddings and a Funeral", that it had suddenly been withdrawn—I do not want to associate the word "funeral" with this particular project, but the noble Baroness will take my point.
The project is in a terrible mess. Most of the media and the press share that view. To use another motion picture analogy, there is a certain amount of speaking with forked tongue in the Statement. As we all know, and as any member of the public knows now, if we are entering into a project such as a national stadium, there needs to be full and whole-hearted commitment by government to support it. There never has been that commitment. The Government, however, have involved themselves for the very reasons given in the Statement. This type of project, whether it be a national stadium or a national football stadium—which is what it is—needs government support in some shape or form in order for it to succeed.
The problem is that when the project got into difficulty, the Government sought to tell us that it was nothing whatever to do with them. The Government say that it is a matter of commercial agreements between various parties. We were told that some weeks ago by means of the David Frost show on national television. When it comes down to it, however, the Government are very much involved. After all, they have committed a great amount of public money—lottery funding to the tune of £120 million, to be precise—to the project. As for the future of that, I would not blame anyone for being nervous about reports that lottery funding of the millennium fiasco is unlikely to be recovered. We hope that the same will not apply in relation to this project.
Some of the remarks in the Statement are extraordinary. The Government say, for example, that we have learned lessons. However, this is not the stage at which we should be learning lessons. We should be teaching lessons, not learning them. The Statement also says that the Football Association wants a national stadium. It does not want a national stadium; it wants a football stadium. The sooner we stop talking in these terms, the better it will be. It is a football stadium for which a type of enlarged Lego project—to
add a running track and so on—has been discussed ad nauseam, with the enormous costs and problems attached to that.The Statement makes the extraordinary claim that the prospects are good, progress is promising, but the outcome is not yet certain. From my modest career in commerce, that is certainly no basis on which to encourage investors to invest. That is a point on which I have questioned the Minister when we have previously discussed these matters. If she is of a mind to answer my question, or those of other noble Lords who may speak later, I hope that she will not tell us that certain aspects are "commercially sensitive", because that just will not do. We have not been told anything concrete about the project's potential for revenue earning although such potential is vital for funding.
It has been bandied about that the facility will be used for 20 days of the year. Anyone with a cigarette packet and a pencil can work out the fact that it will be very hard for a stadium costing such sums but used for only 20, 40 or even 60 days of the year to produce a cashflow projection that will inspire any confidence in those minded to invest. We have had no serious and encouraging remarks from the Government about that. All they say is that, "This is a contract between two, three or four commercial bodies and they must get on with it. We are there only to protect the public funds, the lottery funds, involved in this".
This is very unsatisfactory. It is procrastination which has been forced on the Government. The Government have prolonged the deadline for the conversations to continue. The Minister has now told us quite clearly that there is probably no truth in the fact that, if this fails, the Football Association will want to continue with Wembley in the future. However, I am quite sure that there are sensible people in the Football Association, although one begins to doubt it.
Wembley is like the London Zoo in many ways. I have enjoyed many happy days at Wembley, for boxing matches and football. I was at the 1966 World Cup. I have a great affection for Wembley. I also have a great affection for the London Zoo, where I used to watch polar bears. However, it is all out of date. There is no way in which Wembley can be either a national stadium or a national football stadium.
I do not come from Birmingham, but I have a great feeling of support for Birmingham. I also see the right reverend Prelate the Bishop of Birmingham on the edge of his seat, ready to tell us what he thinks. I do not know whether Birmingham's plan is well shaped and well formed and ready to go or what difficulties might exist, but Wembley is an obvious alternative. It is only fair to the Birmingham people that they should be told now the likelihood of success. They should not be strung out for months upon months with the promise that there is a deadline and that Birmingham will have a fair crack of the whip if the deadline is not met.
What a sad Statement. In fact, it is a classic. I shall stick it up on the wall somewhere in my house, together with some other extraordinary things that have happened in the House and with which I have been involved, although I am not sure where. No one will understand it. I look forward to the Minister's reply.
3.55 p.m.
Baroness Blackstone: My Lords, I am grateful to both the Opposition Front-Bench spokesmen for their comments and questions. I am delighted that the noble Viscount, Lord Falkland, has had so many enjoyable trips to Wembley as well as the London Zoo. I hope that he has more enjoyable trips to Wembley in the future if this project comes off. It will be a rather different experience from going to the London Zoo.
The noble Baroness, Lady Anelay, asked why there was no mention of a deadline. Perhaps I should remind her that the 30th April deadline was not a government deadline but a deadline provided by the FA. It has failed to meet that deadline because it has not been able to complete its commercial—I underline commercial—negotiations with those who are financing the project. I do not believe that it would be right for the Government to impose a further deadline at this stage. The FA has made it clear, as I have made it clear in the Statement, that it hopes that it will be able to complete its negotiations within 10 weeks.
The noble Baroness then asked whether I would give an undertaking to return to the House before the Summer Recess. Clearly I cannot give any such undertaking. However, I shall certainly pass on what she has said to my right honourable friend the Secretary of State.
The noble Baroness then asked about the Tropus report, and whether any new disclosures have been made in relation to the staging report. I shall start with Tropus. Tropus produced a dossier containing a series of allegations about the procurement and corporate governance procedures in WNSL. These issues were aired with Patrick Carter and his independent review team in discussions about the viability of alternative options for the national stadium. WNSL responded very quickly to those allegations and appointed David James to carry out a full independent review of the main concerns.
The James report is a very thorough investigation of the main Tropus allegations. On receipt of the report, we responded decisively by setting out the four conditions which I made clear in the Statement. As David Hudson of Tropus said on Tuesday, the James report showed that the position was worse than we had thought. We have now reviewed the Tropus dossier. We are satisfied that there are no issues that have not been covered by the comprehensive changes that WNSL and the FA have agreed to make to their procurement and corporate governance procedures.
I turn now to the questions that the noble Baroness, Lady Anelay, asked about the staging agreement. It might be helpful and clarify matters if I read out a letter sent by the FA chief executive, Adam Crozier, to
the project director in Birmingham. Before doing so, however, I shall read to the noble Baroness what was said in a statement made by Adam Crozier earlier this week. It states:
- "All parties have recognised that in the event that the Birmingham proposals were to be considered and proved viable it would be necessary to conclude an event staging agreement in relation to the new Stadium once current legal commitments relating to the National Stadium project at Wembley had been concluded in a way that satisfied all parties".
- "as far as The FA is concerned, Birmingham would remain an option for the national stadium should the new Wembley not proceed. As has always been the case, this would of course be subject to discussions by all the stakeholders on how best to abort the current project and any agreements relating to it".
The noble Baroness also suggested that this was some secret agreement. I hope that I may put her right on that. There is nothing secret about it. Indeed, the Culture, Media and Sport Select Committee was told about the staging agreement some two years ago in 2000.
4 p.m.
Lord Faulkner of Worcester: My Lords, will my noble friend confirm that the Liberal Democrat spokesman in the other place broadly welcomed the Statement by the Secretary of State and said that it was only sensible to delay a little longer to see whether the Football Association could sign the heads of agreement with its financial backers? That is in complete contrast to the rather rambling statement made by the noble Viscount a few minutes ago. Does my noble friend also agree that the approach that the Secretary of State and, indeed, the DCMS team have adopted is in marked contrast to what happened prior to December last year? The use of the words "flawed", "tainted" and "unsustainable" which I noted down from the Statement I think describe everything that went wrong. I refer also to the words "high risk" and "high risk project". The ministerial team, as well as everyone else who was involved in the project up until the general election, are no longer in post and certainly the fiasco over Wembley had a large part to play in that.
However, since the Secretary of State took a grip on the matter in December and demanded answers to the four questions, it seems to me that all reasonable people would—like the Liberal Democrat spokesman in the House of Commons—want to give the Football Association the opportunity to see whether these matters can be brought to a satisfactory conclusion and that their choice, and the choice of most people in this country, that Wembley should be the site of the national stadium, should be implemented.
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