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Lord Goodhart: My Lords, I am grateful to the Minister for giving way.

Baroness Hollis of Heigham: My Lords, I remind the noble Lord that I must finish my response to the Front Bench in two minutes.

Lord Goodhart: My Lords, I am sorry. I should merely like to ask why the Minister in the House of Commons referred to the cost as an extra £4 billion, rather than the £9 billion that has been mentioned.

Baroness Hollis of Heigham: My Lords, it is an extra £4 billion in total on the £8 billion of the protected rights scheme. That is the difference between the two schemes over 50 years.

Three points were raised about information. The first related to letters to individuals. As soon as the Secretary of State was aware of the problem early in 1999, he wrote further letters to people who had written to the department. The second question, raised by the noble Lord, Lord Goodhart, related to information for staff and the cascade of knowledge. The noble Lord was absolutely right; this has been a weakness within the DSS. We are strengthening the system as regards information: we have developed the IT system and it is being rolled out. However, the noble Lord is right--unless staff in local offices have the requisite information they cannot advise people accordingly. The third question associated with information was what knowledge would go to pensioners and prospective pensioners.

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First, we are writing to all those who contacted us--some 20,000--and giving them information. We are developing a campaign to ensure more widely that those who are affected will know about it. We shall work with Age Concern and the relevant organisations to ensure that that knowledge is as widely dispersed as possible. Secondly, we shall be producing an integrated pension statement. From next year people will receive information about both their state retirement pension and their SERPS. We hope that from the following year we shall also be able to provide them with information about their private pension, so that they will be able to see what their future expectations may be and whether they want to take additional action in order to build up their pension rights.

I hope that with that response on cost, on the question of remedy and on information, noble Lords opposite will feel that I have answered their questions.

5.17 p.m.

Lord Brett: My Lords, I rose to make a premature contribution because I, too, was taken aback by what I felt was a churlish response from the Opposition Front Bench. I have been concerned over the past months at our inability to arrive at a full solution in terms of removing the fear on the part of innocent people who have been subject to maladministration through no fault of their own. I am delighted to congratulate the Minister on the Statement and on finding a solution. My only advice to those on the Opposition Benches is to remember the comments of the noble Lord, Lord Healey, some years ago: "When in a hole, stop digging".

Baroness Greengross: My Lords, I thank the Minister for this welcome Statement. The Government have indeed listened to older people and to the organisations that work with them. This campaign has been hard-fought both for and by those people. I would mention in particular the All-Party Group on Ageing and Older People and the noble Lord, Lord Rix, who have done a great deal; as has my own organisation, Age Concern--both when I worked directly for it and since then.

I first wrote to the DSS in October 1998 and my letter set some alarm bells ringing. I am delighted that the new scheme is much more along the lines of what we suggested during debate on the Child Support, Pensions and Social Security Bill earlier this year. That is good news. I am very pleased that current pensions will be unaffected by the change to SERPS.

I hope that the Government will consider most carefully how the taper will work for new pensioners. Does the Minister agree that one of the most significant parts of the Statement relates to a point made by both noble Lords opposite who have spoken; namely, that future changes to state pensions will be better publicised. Changes to pensions are not the same as other changes to the law. I say that because they involve planning by people for their future. It is a long-term task. I believe that there is a moral, if not a legal, obligation to inform people about such changes.

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Of course, it might also be necessary for it to be a legal requirement. It is terribly important that this point should be taken on board for the future.

Can the Minister tell me what consultation will now take place? Can she say specifically whether this House will still consider the proposed regulations in detail and, if so, can she also say within what sort of timescale that might happen?

Baroness Amos: My Lords, before my noble friend the Minister replies, perhaps I may remind the House that, in order to maximise the time available to deal with Statements, noble Lords should confine their remarks to questions rather than making general comments.

5.21 p.m.

Baroness Hollis of Heigham: My Lords, I very much welcome the thanks and support expressed by my noble friend Lord Brett and, indeed, the generous welcome given to the Statement by the noble Baroness, Lady Greengross. I should like to pay tribute to the noble Baroness for her efforts in this respect. That applies also to the noble Lord, Lord Rix, who, I am sorry to say, is not present in the Chamber. I pay tribute to him for his supportive and constructive but, none the less, terrier-like campaign on these issues. As I say, I believe that we have achieved an outcome that is decent, honourable, fair and, above all, workable.

As the noble Baroness identified in her remarks, the advantage in our scheme is that there are no cliff edges; it is a taper. I am delighted about that. I can tell the noble Baroness that the regulations will be produced in draft form. They will, therefore, go to the Social Security Advisory Committee and be made available to the Select Committees, and so on. As a result, there will be ample opportunity for further consultation about the detail of this implementation.

Baroness Carnegy of Lour: My Lords, my noble friend asked the Minister whether the Government still have only the duty of care or whether there will now be greater responsibility placed upon them. Can the Minister say whether the issue of combined pensions statements mentioned in the Statement, which she subsequently explained and to which the noble Baroness, Lady Greengross, referred, mean that the Government are now taking greater responsibility in this respect?

Baroness Hollis of Heigham: My Lords, it is not so much a matter of responsibility; it is a question of providing information. In the light of available information, we are--absolutely rightly, in my view--trying to help people plan for their retirement by giving them the best forecast that we can as to what their contributions so far in a possible variety of pension schemes may produce for their future. We hope to start issuing such statements on an annual basis from next year for retirement pensions and SERPS. We shall also include information in that statement about occupational pensions. However, these are forecasts: they are future projections, with all the relevant health

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warnings attached. We are trying to ensure that people have the fullest possible knowledge to enable them to plan for their future old age.

Baroness Turner of Camden: My Lords, I thank my noble friend for repeating the Statement. As she knows, I have not always been fully supportive of the Government's policies on pensions. However, on this occasion, I welcome the Statement with great pleasure. As noble Lords know, I have been present in the Chamber on every occasion upon which there has been discussion about inherited SERPS and the problems that have arisen because of the failure of the previous government to see through the decision that they made in 1986. Indeed, reference has been made to the latter by noble Lords on this side of the House and by noble Lords opposite.

I am particularly glad that the position of present pensioners is to be fully safeguarded and that proper transitional arrangements are in place. An important consideration in pension matters is that people ought to know about their entitlements. They have to plan for their future and they must know about their pension provision. I was especially pleased to hear that it is intended to issue combined pension statements. That will serve to focus people's attention on pension provision. If this is to be done on an annual basis, with mention being made of occupational provision, as I believe my noble friend said, that will also be a very valuable aid to people when planning their pensions.

This is an excellent Statement. I am most grateful to my noble friend for the announcement. I am sure that she had a great deal to do with these measures behind the scenes. I thank my noble friend most sincerely for having secured such a satisfactory settlement.

Millennium Dome

5.25 p.m.

The Minister of State, Cabinet Office (Lord Falconer of Thoroton) rose to move, That this House takes note of the planning, management and operation of the Millennium Dome, and of its future.

The noble and learned Lord said: My Lords, I welcome this debate. Indeed, I have always wanted a detailed debate in relation to the Dome, and this is the first opportunity to do so since the recent Third Readings of various Bills in this House. It is right that this project has been the subject of sustained and detailed parliamentary scrutiny throughout its life. It has been the subject of more than 1,200 parliamentary Questions, eight debates, including today's, five Select Committee inquiries, a National Audit Office report and a PAC inquiry.

Today's debate will inevitably cover material similar to that considered by the NAO report. But it will go wider. This debate will cover the planning and the building of the Dome, not just its year of operation. It will also, rightly, look forward to the future. It is not appropriate for the Government to respond in detail to

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the recommendations of the NAO report; that must await publication by the PAC of its conclusions. However, the NAO report can provide a mine of factual information on the year of operation and the history of the Dome. In this debate, I shall seek to cover all the main issues on the Dome and answer specific points raised.

In many respects, the Dome is a remarkable achievement. It has become the UK's top pay-to-visit attraction. It has been at the centre of the drive to revitalise the once contaminated and abandoned North Greenwich peninsula, bringing jobs and opportunities to thousands. And yet, in truth, the Dome has not lived up to the expectations of those who supported and initiated it. At the heart of its unpopularity is the additional lottery funding of £179 million over that budgeted which it has required during 2000.

As the NAO concludes:

    "The main cause of the financial difficulties is the failure to achieve the visitor numbers and the income required".

These visitor numbers were ambitious and inherently risky. It was the failure to meet those numbers which caused the need for the additional lottery funding. We need to learn lessons from the experience, in particular about what the public sector can and cannot do. But we also need to ensure that the problems that the Dome has faced do not obscure its very real achievements. Relative to its target of 12 million visitors, the Dome has not succeeded. Relative to every other pay-to-visit attraction in the UK, it has succeeded. It has received more than any other rival this year. It has made a significant contribution to the Thames Gateway and will bring a substantial legacy in jobs and regeneration to the area.

The story of the Dome starts in 1994, when the then Heritage Secretary, the right honourable Peter Brooke, said that he supported the idea of a millennium festival with a substantial exhibition at its heart. Right from the start the idea was driven by politicians, not the commercial or business sector. The previous government recognised this. The co-ordination of decisions in relation to arrangements for the millennium, including the Dome, were taken at Cabinet Committee level. The Cabinet Committee, Gen 36, was set up in February 1996, the same month as Greenwich was chosen for the site of the exhibition. The committee was chaired by the then Deputy Prime Minister. Among its members was the present Leader of the Opposition.

At the time of its selection, the North Greenwich site had negligible transport infrastructure and extensive contamination. It was selected, as the Select Committee in another place found,

    "because it offered ... an opportunity to provide economic and environmental regeneration".

Although private-sector operators were sought, it became apparent during 1996 that no such operator could be found. The risks and demands associated with the project meant that it would never be attractive to a private operator: an immovable deadline; and a year to start, run, finish and make a profit out of an

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entirely new visitor attraction. Although it was not attractive to private-sector operators, it is, nevertheless, a venture that has had to trade as effectively as its well-experienced competition; namely, the museums, the waxworks, theme parks and attractions, which are competing for visitors throughout the year.

The previous government set up a structure which involved a private company running the exhibition. This company had, rightly, all the restrictions which apply to limited liability companies. It was also a non-departmental public body, so it had all the bureaucracy and transparency which, rightly, go with those bodies. All its funding which did not come from visitors or sponsorship came from the Millennium Commission. That body, rightly, was responsible for ensuring that the substantial sums it granted to the Dome were properly spent.

The sole shareholder in the private company (which was also a non-departmental public body) was a Minister, the then Chancellor of the Duchy of Lancaster, the noble Lord, Lord Freeman. The chairman of the Millennium Commission was also another Minister, the right honourable Member for South West Surrey, Virginia Bottomley. The arrangements for building and running the Dome involved two Ministers, a chairman, chief executive and board of directors, three accounting officers and nine millennium commissioners.

The final part of the jigsaw required in the planning stage was to determine how much of the funding was to come from the lottery. This depended, in large measure, on the number of visitors expected. The figure on which the final budget was based was 12 million. In 1995, when the idea of the exhibition was being developed, the figure of 12 to 30 million visitors had been proposed by the Millennium Commission. By the time the budget was being prepared before the previous election, the figure, having veered around, had been put at 12 million. The Millennium Commission, on which the primary duty for appraising the business plan fell, believed that the 12 million figure would be achieved.

The proposal for the project was ambitious and impressive in its vision. But, in 1996 and early 1997 when the planning was going ahead and significant sums were being spent in the preparatory stages, it would have had no chance of progressing in time unless the then Opposition indicated that they were willing to support it in principle. Without our support in principle there would not have been that degree of certainty which comes from a bipartisan project. We considered it very carefully. We recognised the risks. We also saw the regeneration gains and the benefits to be obtained from a successful exhibition.

In January 1997, we agreed the terms of an announcement with the then Heritage Secretary, the right honourable Virginia Bottomley, in which we indicated that, subject to a review if we were elected, we supported the idea of a national exhibition. The announcement which we agreed specifically drew attention to the fact that the decontamination and

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regeneration of the 300 acre site--the largest derelict site in southern England, just six miles from Westminster--would be one of the great legacies of the event. We completed our review within eight weeks of coming into office and the project proceeded. We accept full responsibility for that decision. We think that the prize was worth fighting for.

In the period between June 1997, when we decided to go ahead, and 31st December 1999, a major capital project had to be completed, a huge exhibition mounted and a large, complicated show written, rehearsed and opened. The project, as is well known, was delivered on time. Not only was the building completed, but also all the zones and the central show. There is a multitude of views about the contents of the Millennium Dome. Some, but not all, are bad. Many of them are good. I quote what Jon Snow wrote in the Evening Standard on 9th June:

    "Spectacular from all quarters, vast and dramatic on arrival, and last week, crammed with people of all shapes, ages and conditions actually enjoying themselves".

He continued,

    "We in the media have gone to unparalleled lengths to rubbish the thing. And we have failed".

Charles Spencer, the theatrical correspondent of the Daily Telegraph, wrote in that paper on 3rd January of this year:

    "I saw it through the eyes of my six-year old son, who was completely gobsmacked by the Dome and all its works ... It's not often that one shares in a moment of communal, uncomplicated, good-natured joy but this was one of them".

We never expected everybody to like all of it. But equally we never expected the very high levels of visitor satisfaction which the Dome has enjoyed throughout the year.

In the course of 1999, the Dome company decided that 1 million free school places should be made available in the pricing structure. This was an idea that the Government advanced and supported. The Dome was keen to reach as many people as possible, particularly young people, who might not otherwise go. We did not want the schools which organised trips to be only those which would not be put off by a charge of £8 per head. It has cost us some revenue--the NAO estimates £7 million--but it has probably also generated some. The number of children who bring their parents because they liked it when they visited with their school is unquantifiable.

As the Select Committee in another place pointed out in its 5th report, the Dome company has been criticised for providing free school tickets, but would undoubtedly have been criticised if it had not. I believe that we were and are right to have made that decision on free school places. In a letter to the Prime Minister from Eastburn Junior and Infant School, Bradford, a teacher wrote:

    "I took a party of 40 Year 5 and 6 children to the Dome. Without exception every child thoroughly enjoyed the experience. I have never known such an enthusiastic response from children".

I move to the year 2000. On four occasions throughout 2000 the Dome company was awarded further grant by the Millennium Commission. The total value of the additional grant was £179 million.

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The vast majority of this money was not allocated to deal with additional costs but to replace estimated income which did not materialise. As the NAO report states:

    "The financial difficulties were largely the result of the shortfall in income".

This is the view of the National Audit Office, the Dome company, the Millennium Commission and those advising them. These problems have not pushed up the money spent by the Dome (though the budget has gone up for other reasons by 4.6 per cent), but they have meant that a greater proportion of the Dome's budget has had to be provided by the Millennium Commission rather than by revenue from visitors.

Once the Dome had been constructed and much of the project cost had been incurred, the room for manoeuvre in the face of low visitor numbers was, in the words of the NAO, "very restricted". Its view is that closing the Dome or liquidating the company during the year of operation

    "would not have made financial sense".

This is a view shared by the Dome company, the Millennium Commission, David James, the accountants advising the Millennium Commission and PricewaterhouseCooper. The only people who do not share this view appear to be those in the Conservative Party.

On 6th September 2000, Mr Peter Ainsworth said,

    "We believe the Dome should close".

This, despite the fact that by then David James had made public the figures for how much more expensive it would have been to close the Dome early.

The right honourable William Hague, the Leader of the Opposition, seeing the passing bandwagon and ignoring the figures, said the next day that the plug should be pulled. It is not realistic, I suppose, to expect financial sense from the Conservatives, but surely it is reasonable to expect some degree of honour and consistency. We supported the scheme when they asked for our support. I pay tribute to the right honourable Michael Heseltine who has supported the project through thick and thin. He said:

    "Our task is to maximise the national gain and recognise that this is a non-party-controversial issue; it is an all-party endeavour".

Those on the Opposition Front Bench, on the other hand, have washed their hands of any responsibility. The electorate are angry about the extra lottery money involved. We accept our responsibility for it. But it was a bipartisan project from its inception. The idea was conceived under the Tories. They selected the site. They set up the company to build the Dome. They devised the complex management structure highlighted in the NAO report. They set the visitor numbers. They persuaded people to work on the project on the basis they supported it. They knew the risks. But at the first sign of trouble they abandoned the project. There can be no more depressing sight than the right honourable Leader of the Opposition standing outside the Dome with his spin doctor and a camera crew denouncing the project he and his

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government started. There was a no-car policy at the Dome, but that did not stop the right honourable Leader of the Opposition parking his bandwagon there. The gutless hypocrisy of the party opposite impresses no one.

Throughout the year, the New Millennium Experience Company (NMEC) and the Millennium Commission have worked closely together on solving the problems which have come from the shortfall in income. The NMEC has, rightly, been concerned to ensure that the quality of the experience and the stability of the company should be preserved. The Millennium Commission has rightly been concerned that costs should be kept to a minimum. It has provided staff and had its own accountants and consultants to help and inform them throughout this period. That is an appropriate and healthy tension.

The NMEC is a company which has been under considerable pressure during these 11 months. Any company which had just completed a massive capital project and had then opened a huge and novel visitor attraction would be.

As was agreed in February 2000 with the Millennium Commission, the NMEC's strategic priorities during the year have been to maximise revenue and keep cost to a minimum. Its financial systems have needed, and have had, improvement. As the NAO report pointed out, its record keeping of contracts, assets and invoices was at the beginning of the year unsatisfactory. But a thorough study of its contracts revealed no net increase in liabilities; that the failure in relation to invoices was delays in recording rather than missing debts, and that the asset register is well on the way to being prepared. Paragraph 3.4 of the NAO report sets out the detailed improvements which have gone on throughout the year in record keeping and financial management.

David James, the present executive chairman, confirmed during his evidence to the Public Accounts Committee on 15th November that,

    "NMEC has not lost money as a result of inefficiency".

We go back, as ever, to the visitor number estimates which, as the NAO found, was the cause of the problem. The problems should not have occurred, but I think that it is fair to give a company going through the experience which the NMEC was going through some extra time to get its record keeping up to date.

Whatever may be going on among the politicians about the Dome, there is a complex and difficult business which needs running down in Greenwich. Throughout the months of operations, the Dome company has been doing that. That has required a high degree of determination and leadership from the people running the business. To ensure the effective management of the Dome, changes at board level have been required. In February, it was plain that the Dome needed experienced visitor-attraction leadership. The appointment of PY Gerbeau as chief executive provided that. At the same time, the Dome and the Millennium Commission agreed priorities for the board to pursue and some new structures. The issues of corporate governance were very thoroughly

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discussed at this time between myself, the Millennium Commission and the NMEC. We all shared the same goals.

In May 2000, Bob Ayling, who had overseen the delivery of the Dome on 31st December and who had been instrumental in bringing in the new chief executive in February, resigned and was replaced by David Quarmby. Shortly before that, Malcolm Hutchinson joined the board in an executive capacity to oversee cost-cutting strategies. At David Quarmby's suggestion, in early August 2000 David James was brought in, first in a consultancy capacity and then as executive chairman.

Throughout this year the company has remained focused and upright. It has changed its management in response to events and has survived a battering to which less strong companies would have succumbed. The company is running the most popular pay-to-visit attraction in the UK. It has a highly committed staff despite the exhibition ending in a month. It has competent and confident management. It is doing the right thing in operational and financial terms. It has responded to problems and crises appropriately and quickly. That it did not get everything right from the outset is hardly surprising. Hindsight is a wonderful thing.

The failure to meet the visitor targets on which its budget was based has meant that the Dome's solvency has depended primarily on replacing the lost revenues with additional grant from the Millennium Commission. Throughout the year of operations the NMEC has been in detailed touch with the commission. The commission has always been required to be satisfied on every penny of extra grant--and rightly so. As the board and its advisers have always recognised, it can only continue to trade when it is solvent, or it can within a very short time make an application to the Millennium Commission for additional funds. With the exception of the period between the delivery of the PricewaterhouseCooper report on 22nd August and the application to the Millennium Commission on 5th September the board always believed that it was trading solvently. During that short period I have mentioned, it rightly continued to trade pending the application to the Millennium Commission.

In answering Questions in Parliament about the solvency issue, I have always scrupulously reflected the views of the board and its advisers. On 27th July, I answered that the company was solvent because that was the view of the board. The company was entitled to a substantial share of the proceeds of the Nomura deal and it was reasonable to suppose the Millennium Commission would advance money again against those proceeds, which it duly did on 4th August 2000. The board had, since May, received independent legal advice from a City firm on solvency issues. On the basis of that view, I considered the company to be solvent. It would have been wrong of me to have given any other answer than the one I gave on 27th July.

The PWC report delivered on 22nd August identified certain liabilities, in particular wind-down liabilities which had not been identified by the

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accounts department of the NMEC. This meant that the application made to the Millennium Commission was incomplete. It was necessary to make a further application to the Millennium Commission, which was done on 5th September. I informed the House of this error at the first opportunity; namely, on its first day back after the Summer Recess, on 27th September. I reject absolutely any criticism of my parliamentary conduct. While the error was sufficiently important to merit immediate correction at the first opportunity, it is important to recognise the reality. The Millennium Commission, after proper and detailed consideration, has recognised during the year 2000 the same point as the National Audit Office. It makes no financial sense to close early during the year of operation. It therefore decided that it would support the Dome during the year 2000. This meant that its creditors would be paid and possible insolvency avoided.

The exhibition continues for another month. So far 5.6 million visitors have attended. National programmes of worth and value have been running this year and were run last. Nineteen million pounds have been raised for the children's charities by the children's promise appeal. The "Our Town Story", in which every local education authority in the country took part, provided an opportunity for each community to tell its own story.

Legacy plc has been appointed preferred bidder in the competition to find a buyer for the Dome. There is work to be done before the contracts can be signed but there is an innovative and regenerating bid, backed by blue chip financial backers, which will produce a reasonable value-for-money return--comparable with any likely alternative use of the site, with or without the Dome.

The Dome is a building of distinction and worth. It has won architectural and design awards. It is world famous. It is a building we would be wrong to pull down. Six hundred and twenty-eight million pounds-worth of lottery money has or will be spent on the Dome. On the other side of the balance sheet, the Dome has contributed to the regeneration of the biggest derelict site in the south of England. In the next 10 years the investment by the public sector, including the "Dome Effect", is forecast to attract investment of around £1 billion: about £260 million by 2006 in relation to Legacy plc development; £250 million for the millennium village; £90 million for associated development such as Sainsbury's, cinema and hotel; and about £400 million on residential and mixed use between the village and Dome site.

We have stated that the Government should not run visitor attractions. We tried to deliver a visitor attraction within a budget--and to a degree of success which Disney could not manage. We should have realised that. But we have stayed in the arena fighting successfully to deliver a first-class visitor attraction which is well-managed and contributing to the legacy and future of the area for generations to come.

I hope that this debate will help us to learn lessons. I personally am very willing to accept them. But I also hope that the debate will recognise what has been

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achieved in this brave national project. The Tories can pretend that they never supported it. The Tories can abandon the people they persuaded to work for it. They can reduce public life by their short-term opportunism. They can run down a national project. But we will continue to work for and deliver the jobs and regeneration that North Greenwich so badly needs. I beg to move.

Moved, That this House takes note of the planning, management and operation of the Millennium Dome, and of its future.--(Lord Falconer of Thoroton.)

5.49 p.m.

Lord Crickhowell: My Lords, that was an amazing speech. I, too, shall take a great deal from the NAO report, described as a mine of factual information, rather than the Alice in Wonderland information which seems to be the noble and learned Lord's principal source.

Before I get to the meat of the matter I must declare not an interest but feelings of prejudice and irritation which arise from two episodes. The first was when the Millennium Commission took its deplorable decision to reject the bid of the Cardiff Bay Opera House Trust for what in comparison with the Dome expenditure was an almost ridiculously insignificant amount of money; and Jennie Page justified the decision on the ground that the commission did not have confidence in our business plan. The dome project then went ahead under Jennie Page's direction on the basis of a business plan that was deeply and fundamentally flawed from the outset.

The second episode began in July, when it appeared to me that the noble and learned Lord, Lord Falconer of Thoroton, had, at the very least, acted with an extreme lack of prudence when he repeatedly expressed confidence that the New Millennium Experience Company would deliver the project within its lifetime budget at precisely the moment when the company was warning in its annual report that there were significant risks that might prevent it from so doing and just after he had received a letter from the chairman advising him of a further deterioration in the company's finances. I had to wait two months for a reply to my letter on the subject, which, when it came, failed to answer my question.

We all know that the noble and learned Lord is a very nice man. I was going to say that, having put aside my irritation, it pained me to have to be critical of his role as a Minister and as the government shareholder of the New Millennium Experience Company. However, after hearing his speech, I feel much less embarrassed at my line of criticism.

I start with his defence that it was all just as much the fault of the previous Conservative Government because they began the project and gave it its initial structure. The noble and learned Lord is not only a very nice man, but, by all accounts, a very clever one. If he has a case, he ought to be able to do better than that.

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Let me remind the House of the timetable. As the National Audit Office report says, in January 1997 the Millennium Commission offered £200 million,

    "to enable further development of the business case and preliminary work, including the letting of major contracts".

In May 1997--the month of the general election--the company submitted a revised business plan to the Millennium Commission and the incoming Blair government. At that time, final decisions had not been taken on the Dome's content, on ticket prices, on marketing strategies and on whether there would be access by car.

The new Government reviewed the project thoroughly, so we have been told. That review went far beyond the details of the business plan to ask the fundamental question of whether to continue with the project. The issue went to the Cabinet, where some members apparently thought that the answer should be "no". However, the collective decision was an emphatic "yes". The project was to be a symbol of new Labour. There is a ring of truth about the reported comment of one senior Cabinet Minister: "If Tony has made a decision, we will all have to support it". Tony had made a decision and they did support it.

Presumably the Cabinet had before it the Millennium Commission's written appreciation of the business plan which said that it lacked detail on commercial, operational and pricing strategies and that it contained no information on the key drivers for the company's business--the contents of the Dome.

Having taken the decision, the Government had two-and-a-half years to make sure that the business plan was sensibly developed and workable strategies were put in place. That is a long time. Ministers can hardly argue that they simply left in place the very preliminary arrangements that had been barely sketched in when the previous government left office. On the contrary, Ministers involved themselves to an extraordinary extent--probably unprecedented in the history of non-departmental public bodies. The co-ordinating group, chaired by the shareholder, met regularly from June 1997 until the opening of the Dome. Throughout 1999, the shareholder met weekly with officials from the Dome and the company. The noble and learned Lord became the shareholder in January 1999.

The NAO report reminds us that the shareholder is responsible, among other things,

    "for setting the strategic direction of the company and for monitoring its programme in terms of cost, content, national impact, legacy and effective management".

The noble and learned Lord attended 16 of the company's 22 board meetings held between April 1999 and 12th September 2000 and was represented at two that he could not attend. Once he had been given the thankless task of acting as shareholder by his old friend the Prime Minister, he was in it up to his neck. He is a nice man and a clever lawyer, but he appears to have been totally out of his depth.

The extent of the noble and learned Lord's involvement was extraordinary and most unusual. The normal--and very wise--practice is for Ministers to

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stand back from non-departmental public bodies. That prevents them from becoming party to the decisions taken and puts them in a position from which they can form a dispassionate judgment and, if necessary, take effective remedial action. To act otherwise obscures where responsibility lies. That is particularly likely to be the case when the structure is highly complex, as the NAO report confirms is the case here.

The confusion created by those arrangements is startlingly revealed by the correspondence reproduced in the NAO report. The noble and learned Lord had got himself into a position in which he appeared to be acting as chairman of the company--or at least as joint chairman.

The letters exchanged in February and March are remarkable. Chris Smith, as chairman of the Millennium Commission, wrote a highly critical letter, insisting that corporate governance at NMEC would have to improve. The letter was addressed not to Robert Ayling, but to "Dear Charlie". It said:

    "The NMEC board does not appear to have played the role we would have expected in confronting the problems and providing leadership. This is disquieting on issues relating to commercial and operational strategy and media handling, and extremely serious when it comes to solvency and financial management. Either the Board did not see or it chose to discount the warning signs of the cash flow difficulties. As a result it seems possible that it failed to take decisions until after a date when the company became technically insolvent".

Chris Smith went on:

    "The Board must be encouraged to take responsibility for overall stewardship of the company and provide the clarity of direction any good management team needs".

The noble and learned Lord, not the chairman, replied, to be followed a week later by a reply from Robert Ayling rejecting the concerns that had been raised.

Neither response satisfied the Millennium Commission, which remained so concerned that Chris Smith arranged a meeting with the noble and learned Lord in May to discuss his anxieties. By all normal conventions, it is odd that Chris Smith's original letter about board conduct did not go to the chairman, even if, by his attendance at the majority of the board meetings, the noble and learned Lord had inevitably become associated with and party to the failure to provide leadership, to take decisive action until after a date when the company was technically insolvent and to provide the clarity of direction needed. Has a Minister ever written more devastatingly critical and damaging comments about a colleague?

There was a second, and equally remarkable, exchange of letters in September, between the Earl of Dalkeith, writing on behalf of the Millennium Commission, and the noble and learned Lord. Lord Dalkeith said that the PricewaterhouseCoopers report made salutary reading, with its conclusions that there were serious financial weaknesses in NMEC, that budgeting was inadequate, that an exit plan had not been properly thought about, costed or resourced and that any further funds given to NMEC would be at risk without,

    "substantially enhancing the skill and resources of the company".

29 Nov 2000 : Column 1378

The noble and learned Lord replied:

    "Like you, I was shocked by what the PWC report implied about NMEC's financial management and corporate governance".

Why was he shocked? He had attended 16 of the 22 board meetings and been represented at two others. He had been repeatedly warned by the Millennium Commission. He had the full resources of the Cabinet Office behind him. How could he possibly have failed to observe those shortcomings? Did he never inquire about the adequacy of the budget, the cash and solvency position of the company, whether it had a proper assets register and what were the contractual liabilities and those likely to arise from closure?

As the months and years passed after the Government had concluded their initial thorough--we have had confirmation from the noble and learned Lord that it was thorough--review of the business plan, did he and his colleagues--Peter Mandelson, who was the initial shareholder, and Chris Smith--never question the reality of a plan which meant that the Dome had to attract more than four times the number of visitors as the next most popular UK pay-to-visit attraction achieved in 1999? Did they never inquire whether there was a clear plan in advance of how the company would respond if visitor income fell significantly below the required levels? Surely that would have been an obvious question, particularly after it became clear quite early on that sponsorship income was also much less than originally planned.

With a business plan so obviously highly risky, was it wise of the Government to insist that up to 1 million schoolchildren should be admitted free, at a cost of at least £7 million? The noble and learned Lord said that the idea had come from the company. The NAO report is quite specific that, having considered the request, the company accepted the Government's view.

One would have expected that the noble and learned Lord would have asked all those questions and taken appropriate action. As I pointed out, from January 1999 he was responsible for monitoring progress in terms of cost, content, national impact, legacy and effective management. It is difficult to avoid the conclusion that he failed to carry out his responsibilities effectively. The failure to achieve visitor numbers was not, as he appeared to suggest, an act of God. It was the result of a business plan that was from the outset fatally flawed. And it was the result of the grave deficiencies of management exposed by the NAO report--grave deficiencies with which the noble and learned Lord was so closely associated.

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