Select Committee on Culture, Media and Sport Minutes of Evidence


Examination of Witnesses (Questions 480 - 499)

WEDNESDAY 21 MARCH 2001

THE RT HON CHRIS SMITH MP AND KATE HOEY MP

  480. What about the Olympic Stadium in Sydney?  (Mr Smith) I think Sydney was about £230/£240 million roughly.  (Kate Hoey) The cost of Wembley started off being more because the land had to be bought, which was what £120 million of sports Lottery money went into buying, so you have to add that on to the costs of the Sydney and the Cardiff stadia.

  481. So you are saying they do not compare?  (Kate Hoey) You have to be sure what you are comparing with when you start off looking at stadia.

  482. And the Stade de France was about the same as the Olympic Stadium?  (Kate Hoey) Yes, it was, but there was Government support for that.

  483. The one thing that is difficult to get a grasp of, just to get some figures, is that the estimated cost for Wembley Stadium has been reported as being about £475 million to £600 million. Is that a fair assumption?  (Kate Hoey) Again you have to look at the facts, and I am sure Wembley National Stadium would tell you, that what they are building is more than a stadium.

  484. I accept that but can you do the comparison because I cannot get my mind around what the difference is because you are telling me that they did not take into account certain things and you are now telling me that it is more than a stadium. Can you be more specific?  (Kate Hoey) If we were building just a stadium like the Stade de France at Wembley, including the costs of the land, it would work out more than the Stade de France, obviously, but it would be less than what it is under the present proposals, because under the present proposals it has incorporated more than a stadium. It has the hotel, it has the offices, which of course, in terms of the business plan, are what Wembley felt was needed in order to stack the plan up in order to be able to go to the City and raise the money.

  485. When we were in Manchester I, like the others, was extremely impressed by the work happening up there regarding the Games and a very interesting document came our way which I referred to yesterday which was about the Sydney experience. Are you aware of this?  (Kate Hoey) No.

  486. It is a very telling document and it goes through some of the comparisons between Sydney and what they are trying to achieve in Manchester. What do you feel are the lessons that can be learned from Sydney that will make Manchester a better event?  (Kate Hoey) Can I just say on Sydney first of all that you have a country that is besotted with sport generally and is absolutely determined that everybody gets a great sporting experience. We are talking the Olympics again?

  487. This was simply put to us about Manchester 2002 and the Sydney experience, and it very capably went through all the details of the type of Games that Sydney was and the lessons to be learned from Sydney to make Manchester a better event, and I just wondered what you felt were the main issues that we could benefit from Sydney to make Manchester better?  (Kate Hoey) Manchester went out both to the Olympics and the Paralympics because there is a disability interest as well for the Commonwealth Games, and they have come back with some very concrete ideas on how they can make things better in Manchester. One of the things that they picked up very strongly was the hugely important role of the volunteers and the way that people were drawn into supporting the Olympics by getting involved in a voluntary capacity. Not only can we use those people as helpful and useful but the experience can be used not just as an educational experience for them but also in terms of leadership and qualifications. I think the whole voluntary effort of the Olympics was something that I hope we are going to build on at the Commonwealth Games and I know that there is a lot of work going into that, but there was also the way in which Sydney brought the flame right across the country. One of the quite interesting ideas now that Manchester has is the baton running across the country so that the whole country can feel involved, that they are doing something to be part of the Games and part of an experience that everybody will not be able to attend in person but will watch on television and can still somehow feel that they are part of it.  (Mr Smith) Could I just add a couple of points? The first is that of course there are some very substantial differences between the Olympics and the Commonwealth Games. There are fewer sports involved in the Commonwealth Games, there are fewer countries, and the Paralympic competitions are folded in as part and parcel of the Commonwealth Games rather than being a completely separate event. We have to remember that there are substantial differences but there are also some similarities. I think one of the lessons which has been learned is, for example, the importance of not under-investing in the opening and closing events. It was because of learning from the Sydney preparations on this that the original expectation which Manchester had had, which was that something like one million or one and a half million pounds would be required for the opening and closing events, was changed. They came to Government, we discussed their needs with them and that is why we have earmarked now £10.5 million, in order to ensure that those events can be of major importance, particularly with the link to the Queen's Jubilee. Also, one of the lessons which became obvious, not just during the Sydney Games but in the preparations for the Sydney Games, was the need to have a single point of control over what was happening to prepare for the Games. Manchester had started out with two separate bodies and I think it was about a year ago that we, together with Ian McCartney and with Manchester, decided that it would be much better to focus everything into one body, Manchester 2002, which is now what has happened with Charles Allen, of course, in the lead. That also very much chimes with the experience in Sydney.

  Mr Fraser: Do you think that it would be a very good exercise to have a document like this entitled The Dome Experience? I asked that to the Minister yesterday and he said there was no comparison between one and the other and then we found later on, if you would like to read—

  Chairman: I am allowing a certain amount of latitude here, Mr Fraser.

Mr Fraser

  488. I am sure you are. I am coming back to this issue because there is a comparison perhaps between running a championships in Manchester and the Dome in terms of sponsorship. Are there lessons to be learned from the Dome that can be applied to Manchester?  (Mr Smith) There are always lessons to be learned from the Dome, Mr Fraser, and indeed many of those are spelt out in the excellent reports which your Select Committee has made on the subject. In relation to whether a document entitled The Dome Experience would be helpful, I think that already exists in the shape of the National Audit Office's report which is very detailed and has some pertinent observations to make—

  489. And quite damning observations, some of them.  (Mr Smith) —and indicates that, along the line, by virtually everyone involved in the project under governments of different hues mistakes were made, and that is something which some of us at least have readily admitted on many occasions.

  490. When is Sport England going to get its £20 million back?  (Mr Smith) The agreement is that the first tranche of that money will come at the financial close of the funding deal and then, subsequently, over the course of the next four years, it will come in, as has always been envisaged from the outset in the agreement that Sport England had made with the Football Association.

Chairman

  491. Before you go on, Mr Fraser, we have had a letter which the Committee have just seen, dated yesterday, from Mr Casey, the Chief Executive of Sport England, with regard to this very matter. He says in that letter: "We now envisage that the first payment will be made" (which Mr Fraser has been talking about) "—as indicated by the Secretary of State—as soon as the project's funding arrangements have been put in place. Our working assumption is that the other four payments will then be made as per the original schedule. However, we are grateful to you for highlighting WNSL's differing interpretation of its agreement with the Secretary of State, which would result in the second, third, fourth and fifth payments being made on anniversaries of the first." The schedule, or payment profile, as they call it in this letter, is set out as being the first payment in December 2000—which obviously has not happened. The second payment is December 2001 and then three other payments in the Decembers of the subsequent years, ending in December 2004. That is what is in the agreement, but according to Mr Casey, WNSL take the view that the four subsequent payments will not be made in those Decembers but on the four subsequent anniversaries of the date on which the first payment is made. So it will be very useful if you, with your authority, Secretary of State, could let us know what you believe is going to happen.  (Mr Smith) Chairman, from your description of Mr Casey's letter, which I have not seen—

  492. We have only just seen it ourselves, dated yesterday.  (Mr Smith) From your description of Mr Casey's letter that does accurately reflect my understanding of the situation, that the original December 2000 deadline for the first £3 million payment was obviously not achievable because it was always understood that it depended on the finances being put in place. It is our expectation that that payment will be made as soon as the funding deal is put in place and the remaining payments of £3 million, £3 million, £5 million and £6 million will be made according to the originally agreed timetable as set out in Mr Casey's letter.

  493. Two further things on that, before I return to you, Mr Fraser. First of all, since we are getting on for four months after—thinking of December 1 rather than December 31—when do you think the arrangements will be in place for the first repayment? When do you believe the first repayment will be made?  (Mr Smith) Of course, this depends very much on the progress which Sir Rodney Walker and his team make in securing the private sector finance that he requires in order to proceed with the Wembley project. When I last discussed this with him, which was about a week ago, he was extremely confident that things were going well. However, beyond that, obviously, he would not, I suspect, wish at this stage to reveal commercial confidentialities which must inevitably be part of this process.

  494. This Committee has got a very clear record of it never asking for commercially confidential matters to be revealed in public; it has an equally clear record of asking for the commercially confidential information to be provided to us privately. However, in view of the fact that the timetable for the first repayment has slipped and may slip substantially, it is very important to clarify—and this is a good opportunity to do it—who has the authority to require those repayments according to a given timetable? Sport England are perfectly clear in their letter, signed by Mr Casey, that they believe that the four subsequent repayments will be on the anniversary of the date which we do not know and may not know for some time. You, on the other hand, are clear in what you are saying to the Committee today, that whatever the date of the first repayment the four subsequent repayments have got to be made on December of this year, December 2002, December 2003 and December 2004. Have you got the authority and power to require that that happens?  (Mr Smith) Chairman, there may be some misunderstanding, because I had understood you, in giving Mr Casey's interpretation in his letter—and I am at a disadvantage in not having it in front of me—to say that he was saying the same as I was saying, that the payments would come in on the original schedule. That is my understanding of the agreement. It is an agreement, of course, between Sport England and the Football Association, brokered by ourselves in Government, in the first instance, and that is my clear understanding of what will be expected.

  495. I am sorry to labour this but it is important, and this is the only opportunity we are going to get for quite a while of clarifying this situation. If I, inadvertently, misrepresented him in my reading of this letter I apologise. Sport England say that their working assumption (whatever that may mean in terms of precision) is that the four subsequent payments after the first payment will be made as per the original schedule, which is what you are saying—whenever that is. On the other hand, they say that WNSL has a different interpretation in the agreement, which would result in the second, third, fourth and fifth being made on the anniversaries of the first—the date of which we do not know and we may not know for some time. Since this is public money (Mr Bates would say it is not public money because it does not come from the taxpayer but I think the rest of us would agree it is public money), and we being, if we are anything on this Committee, the custodian of public money, would like to be clear in our minds—you having been very clear—that your interpretation of the agreement is that whatever the date of the first payment the four subsequent payments are made in the Decembers, starting with December of this year. Now, since Sport England tells us that WNSL's interpretation was different, do you have power to enforce your interpretation?  (Mr Smith) No, because it is an agreement between Sport England and the Football Association. Indeed, WNSL do not have the ability to enforce their interpretation either. I would look to Sport England and the Football Association to maintain the spirit and, as far as possible, the letter of the original agreement. I will make that very clear to all parties.

  496. What happens if they do not, Secretary of State? After all, in the end, this money—and I do not want to be derogatory to anybody about this—which is floating around in the ether like a piece of flotsam, is our money, paid by all our constituents by buying Lottery tickets. A disagreement between Wembley and WNSL on a very substantial amount of £20 million is something which, it is perfectly clear, Secretary of State, you are not willing to allow to impede these repayments. I am not going to press you on this, it would be idle to do so, but I do put to you, Secretary of State, that there will be severe anxiety if, due to a disagreement between two bodies over which you have no direct power, this public money is not repaid according to the schedule by which you expected it to be repaid.  (Mr Smith) My expectation is entirely clear, as I have indicated to you. That is also Sport England's expectation. I have no reason to believe from the Football Association that they demur from that interpretation. I will be doing everything I can to make it clear to all parties involved in the agreement that on behalf of the public that is the expectation which we have.

  497. The problem is, Secretary of State, and I hope you will forgive me because it is far from my intention to put you on the spot in any way about this, if we do not clarify this now it is going to be quite a while before we can clarify it. Mr Casey goes on in the next paragraph to say this: "It is our intention to clarify this point as the arrangements are finalised with the FA/WNSL prior to financial close. However, I am sure you will appreciate that Sport England was not a party to the original agreement between the Secretary of State and Mr Bates, so we believe that the DCMS and the FA/WNSL are best-placed to end this uncertainty." So what Mr Casey has done, I am sure with the best possible will in the world, is to kick the ball right back to you.  (Mr Smith) With the best possible respect in the world, Chairman, I have kicked the ball firmly into goal by indicating very clearly what my understanding of the agreement is and what my expectation of the agreement is.

  498. Perhaps, Secretary of State—and please do accept that on my part there is no intention whatever to put you on the spot but this has arisen in the past 24 hours and it is our duty to try to clarify it—it would be helpful if you could write us a letter, and write us a letter reasonably quickly so that we can include taking account of that in the report which we are about to draft.  (Mr Smith) Chairman, I have made it as clear as I possibly can, and I will redouble that clarity in any letter which I will willingly write to you. Indeed, I have in front of me the letter of 7 January last year, from me to Mr Bates, in which I set out very clearly the agreement that had been reached. That agreement, that letter, does not refer to annual intervals, that record of the agreement refers very specifically to the commencement of repayments in the year 2000 (and that is where the financial close issue has, of course, arisen, but it then says " ... paying £3 million per annum in each of 2000, 2001 and 2002, £5 million in 2003 and £6 million in 2004." There is no 12-month gap indicated there, it is clearly by date and that is how we intend to maintain it.

  499. Just a small matter, Secretary of State, because it is not clarified in Mr Casey's letter. When it says December in each of these cases, have you any idea whether they mean December 1 or December 31?  (Mr Smith) I do not.

  Chairman: Thank you, Secretary of State.


 
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