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Baroness Anelay of St Johns: My Lords, I wish to raise one matter for clarification, which I understand is permissible. The noble and learned Lord said he thought he had addressed all my questions. I asked specifically whether he had offered his resignation and it had been refused.
Lord Marsh: My Lords, there is a danger that we may waste an awful lot of time talking about which party is primarily concerned with this mess. At this stage of the proceedings, even now, if I had to choose between the noble and learned Lord, Lord Falconer, and Mr Heseltine, I should have some sympathy with the noble and learned Lord, Lord Falconer.
The issue is extremely simple. It is wholly and solely about the financial management and control of a massive public project. What I find most worrying is that the board does not seem to have had at any time a clear understanding of a situation which was becoming increasingly serious. It must have had, at every meeting, a cash flow forecast. That is one of the easiest financial documents to follow and yet the evidence is--and the Minister has confirmed it this afternoon--that the true position was revealed by PWC and Nomura of all people, a company intending to buy the project.
Will the Minister confirm that at the meeting on 22nd August, Mr Dipankar Ghosh of Pricewaterhouse formally warned the directors that there was a serious and immediate danger that they might become guilty of wrongful trading while insolvent or that that was a technical danger at least? Will the Minister confirm that Mr Ghosh took the trouble to set out the personal liabilities which the directors would suffer as a result as late as 22nd August?
We need a picture of just how well prepared and how well informed about the situation the Government, the Minister and the board were in dealing with this matter. Therefore, will the Minister tell the House the date on which the £47 million grant was formally requested; the date on which it was formally agreed; and why such serious and fundamental problems, which were obvious to outsiders, were not even dimly apparent to either the board or the Minister?
Lord Falconer of Thoroton: My Lords, the point about financial control is utterly critical but one should not lose sight of the fact that the amount by which the budget may have been exceeded is somewhere between 4.6 and 5 per cent. By comparison with other projects, particularly projects of this sort, that is not excessive.
Secondly, I was asked about the Pricewaterhouse report. I believe that it was on about 10th August that Pricewaterhouse was instructed to carry out the report. Throughout the time that it was undertaking the report--from 10th to 22nd August--it kept the chairman of the board informed, and he kept me informed, of the results of that inquiry. Secondly, officials of the Millennium Commission were kept informed as to the position.
The most significant revelation of that report was that wind-down costs after 31st December had not been adequately provided for. So it was not the cash problem that was revealed but rather that, at the end of the day, unless adequate funds were made available, it was not possible to balance the books at the end of the project.
Millennium Commission officials have been kept fully informed as to how the report developed. Within a very few days of 22nd August a formal application was made to the Millennium Commission which considered it first on 31st August, and on 4th September the formal grant was made. It was dealt with as expeditiously and sensibly as possible.
The gentleman to whom the noble Lord, Lord Marsh, referred was saying that if there is no reasonable prospect of obtaining an additional grant from the Millennium Commission, then one may be in a position of insolvency. A judgment was made by the board, which turned out to be correct, that there was a reasonable prospect of obtaining that money.
Lord Barnett: My Lords, I ask my noble and learned friend to understand that many of us will share the unhappiness about the financial failures of the Dome. But perhaps some may share with me the regret at the positive searching for and hounding of scapegoats. That does not help us at all. Nor does the party political tone of the noble Baroness help us in any way in understanding what is the problem here.
I ask my noble and learned friend to ignore the over-clever--and I do not include the noble Lord, Lord Marsh, in this--and somewhat simplistic view of a definition of insolvency which has been taken in this matter.
As regards cash flow, if one were to take the case right across the board of companies not being able to make payment of debts, or deliberately delaying so doing, many hundreds if not thousands of large and small companies would be declared insolvent tomorrow. All that will come later when we debate the detail which is not before us. I am obliged to my noble and learned friend for setting out as much detail as possible today, which was helpful. To blame him for everything that has happened is frankly absurd. As he indicated, it is important to proceed as rapidly as
Lord Falconer of Thoroton: My Lords, I agree with the concluding comments of my noble friend's question. Perhaps I may comment on the cross-party aspect. This was a cross-party scheme, supported by both parties, which involved a risk. It is unfortunate that once the risk turned out in some respects in a bad way, the party opposite immediately dropped off. This is obviously a bandwagon on which it no longer wishes to be.
Lord Tebbit: My Lords, does the Minister recollect answering a Written Question from me on 27th July? I asked him if he could break down the costs of clearance and preparation of the site, the construction of the building and the ancillary works. He replied two months ago stating that he would write to me when the information was available. Is he aware that he has still not done so? I assume that that is because nobody knows what those costs were. Is not that a sad commentary on the way this project has been bungled throughout from its earliest days? Would the Minister further agree that unless those figures show that the site has been adequately cleared and the pollution risk fully dealt with for other developments to proceed, most of that money will be shown to have been wasted?
Lord Falconer of Thoroton: My Lords, I am surprised that I have not answered the Written Question dated 27th July as I recollect having answered a similar Question in the past. Perhaps I may write to the noble Lord as I believe those figures are now available. As regards the substance of the question asked by the noble Lord, I do not accept, for a number of reasons, that the money has been wasted. First, the regeneration benefits were there at the time the Millennium Commission made its earliest decision. That decision remains one of the reasons for the project going ahead. Secondly, the Dome has attracted millions of visitors, far more than any other paid visitor attraction in the country, the vast majority of whom enjoyed the experience.
Lord Lea of Crondall: My Lords, the Opposition state that none of this would have happened in Docklands because it is in the private sector. But does my noble and learned friend agree that in 1991 the government announced a decision to spend £3 billion on the Jubilee Line extension in preference to a route which had a high rate of return--namely Crossrail--in order to rescue Canary Wharf, as Mr Heseltine will corroborate? Canary Wharf is now the jewel in Dockland's crown.
Lord Falconer of Thoroton: My Lords, I agree with that comment. I believe that if one were to come back in a number of years' time to look at the Dome, Canary Wharf and the whole area, one would see a picture of regeneration which has had a major effect on the Thames gateway.
Lord Lamont of Lerwick: My Lords, I accept the validity of some of the points made by the Minister and sympathise with him on having inherited this project. However, is there not one aspect of this matter from which the Government cannot escape responsibility? I refer to the adequacy of the financial reporting upon which the Nomura deal floundered? It is not an adequate response to that point to say that this was originally a cross-party project. Can the Minister confirm that the accounts of the project are inadequate? It is astonishing that the assets of the company cannot be established. Is that not at least some criticism, if not of the Minister, of other people in Whitehall to whom the management of the New Millennium Experience Company reported?
Lord Falconer of Thoroton: My Lords, as regards financial control and financial management, it is plain from the report of PricewaterhouseCoopers that that was not adequate, if for no other reason than the wind down liabilities were not adequately provided for. We need to look precisely to see why that was. The National Audit Office is currently looking into that and a report is imminent.
As regards the asset list, yes, there were debates between Nomura and NMEC as to precisely what was available and an asset list. It is obviously most unsatisfactory that there was not a complete asset list. However, that was a problem that was being dealt with and worked through with Nomura. The letter from Mr James, which I shall place in the Libraries of both Houses, shows the detailed truth of that. It is regrettable that there was no such list. However, I believe that that should be looked at in the context of all the other things being done by the company and what it was up against at the time.
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