Olympics and Paralympics (Funding)

Hugh Robertson Excerpts

Monday 27th February 2012 Commons Chamber

[Mr Whittingdale]

My understanding was that 23,000 was the figure for the number of security personnel, of whom a substantial proportion will be from the armed forces, but the Minister may be able to explain.

[The Minister for Sport and the Olympics (Hugh Robertson)]

I shall clear that one up straight away: 23,700 is the total man-guarding number. That comes from four sources: one is an additional commitment from the military here—from our own armed forces—of about 7,500; there is a contribution from the private sector, from G4S; there is a contribution from volunteers; and, finally, there is a contribution from a scheme called Bridging the Gap. That solution—let me give the right hon. Member for Leicester East (Keith Vaz) complete assurance on this issue—was felt to be much less risky than looking for the entire balance from the private sector, and that was one of the key drivers behind the announcement that we made in December.

[Mr Whittingdale]

I am most grateful to my hon. Friend for putting the precise position on the record. However, I am sure that we will come on to debate security at great length, and I want to say a little more about the cost of the games and how it is to be met, which is the area that we focused on to begin with.

The candidature file that was submitted to the IOC originally stated that the cost of staging the games would be £1.5 billion, and once inflation was taken into account that figure increased to an estimated £2 billion. That has largely remained unchanged. The current budget for staging the games is £2.16 billion, 36% of which will come from the IOC, 18% from sponsorship, 20% from ticket sales and 12% from official suppliers. The budget has just about been raised in its entirety, and there is left within it a contingency of £93 million, with risks identified of £88 million. The headroom left in the budget is pretty small; indeed, it was described by the chief executive of LOCOG as being very “finely balanced”. Nevertheless, the Government have so far indicated that they hope that the cost will come in within that figure—understandably, since they will have to fill the gap should it overshoot.

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[Mr Whittingdale]

I recall having that debate with the right hon. Lady in the Select Committee at the time.

The other element that increased the budget dramatically was the inclusion of the programme contingency. The Select Committee spent some time examining that, because we discovered that the £2.7 billion programme contingency came on top of the contingencies that were built into each of the individual projects. That resulted in an overall contingency within the £9.3 billion budget of £3.5 billion. We observed that that was extraordinarily large. As it happens, it will almost all be spent.

To some extent, the right hon. Member for Dulwich and West Norwood was correct in setting, right at the start, the budget with a substantial contingency, which we all hoped would not be spent, rather than having to come back and increase the budget each time. There is no doubt that there would have been far more adverse publicity if the budget had gone up every single year. The then Government decided—I do not criticise them for this—to set a substantial budget with a large contingency right at the beginning, with the expectation, I imagine, that there was no possibility that it could be overrun. As it is, it will be pretty close, but I hope that the budget will be met.

[Hugh Robertson]

My hon. Friend is absolutely right. Although it is not for me to defend the previous Government, it is worth balancing what he says by saying that the money that was expected to come from the private sector for the athletes’ village and the broadcast and media centre was not forthcoming because of the financial situation. Despite the fact that everything he says is correct, it should be balanced by the fact that the Government are already in receipt of money for the sale of the athletes’ village and will, I hope, in due course be in receipt of money for the broadcast and media centre.

[Mr Whittingdale]

My hon. Friend anticipates me. I was going to say that the clear reason why the contingency has been spent to a far greater extent than we had originally hoped was that the private sector contribution to the athletes’ village and the media centre simply failed to materialise and had to be met from the public purse. Recouping some of that money through future sales is still an issue of some interest to us, and I hope that the Minister might be in a position to say more about it.

There was always a degree of controversy about the extent to which the financing of the facilities would have to be met out of national lottery funding, and the impact that that would have on the lottery’s ability to fund projects in the rest of the country. We were always very clear that if the lottery was to meet a substantial part of the bill for hosting the Olympics, it would inevitably be less able to fund a lot of worthwhile projects elsewhere, and that some causes would therefore not get the funding that they otherwise deserved. For that reason, we expressed the hope that should the contingency not be fully spent, it could be given back to the national lottery. As it transpires, that will not be possible.

I still very much hope that even though the National Audit Office has expressed concern, the funding package will prove just about sufficient to meet all the costs. I am sure the Minister will want to say a few words about that if he is fortunate enough to catch your eye, Mr Speaker. I believe it is fair to say that it will be very tight. The NAO’s last estimate identified a residual risk of something between £127 million and £999 million, with the most likely risk being £318 million, to be met out of the remaining contingency of £354 million. That would leave 0.39% of the budget unspent, so I am afraid the national lottery will not get much from that source.

The Committee identified that future receipts from land sales could be used to compensate the national lottery, and the Government included such a provision in the funding agreement. That is still intended, I hope, to raise £675 million. Perfectly understandably, the Minister is reluctant to give a firm guarantee about that, given the uncertainty about the price of land, but I hope he shares my hope that that can be achieved.

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[Mr Whittingdale]

One reason is that financing and staging the games, which was not a cost to the public purse, required the attraction of sponsors, in which we have been very successful. However, that required that the corporate sponsors derived some benefit, and that was always going to include tickets.

[Hugh Robertson]

rose—

[Mr Whittingdale]

My hon. Friend will be able to provide greater detail.

[Hugh Robertson]

Of the tickets available, 75% across the piece were available to the general public. That is a far higher percentage than has ever been available at any other games. Of the remaining 25%, 8% are available to sponsors, in their many different forms—corporate and government. In return, the private sector has provided more than £700 million of private sponsorship. That is a pretty fair deal.

[Mr Whittingdale]

I am grateful to the Minister for supplying the figures that I did not have but which strongly demonstrate why this was necessary. I say to my hon. Friend the Member for Gainsborough that the 20,000 people who applied in the first and second rounds of ticket sales but failed to get any will be given priority over the remaining 1 million tickets about to go on sale. If he happens to be one of those who has been unsuccessful, he stands a good chance should he apply again.

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[The Minister for Sport and the Olympics (Hugh Robertson)]

Today, there are 151 days to go and the good news for the whole House is that the construction is now 96% complete and we are on track to deliver within the much-discussed £9.3 billion funding package. Of the original £9.3 billion, more than £500 million remains as uncommitted contingency, with the ODA holding just over £100 million and the Government about £400 million. The details will be released to the public, as they always are, tomorrow morning.

I thought the best way to wind up the debate would be to go through the various contributions made, the first of which was from the Chairman of the Culture, Media and Sport Committee, my hon. Friend the Member for Maldon (Mr Whittingdale). As we have come to expect from him, he made a typically sensible, informed and balanced speech and, I am delighted to say, he acted as a lightning conductor for all the early questions, thereby saving me some trouble.

My hon. Friend was right to point out that when the budget was moved from the bid budget to the delivery budget, it contained considerable contingency funding. It is a fair point that, as a result, we have been able to absorb the lack of private sector investment in both the village and the international broadcast centre/main press centre.

My hon. Friend rightly praised the ODA. I believe that the ODA has recalibrated Britain’s reputation abroad, as we saw clearly during the world athletics championship bid at the end of last year. Put simply, we are now trusted to deliver what we promise. That is the real achievement of the ODA. He rightly pointed out that the LOCOG operating budget is finely balanced. Set against that, it has done extraordinarily well both in ticketing revenue—for all that that has given rise to one or two other issues—and in gaining private sponsorship.

My hon. Friend rightly drew attention to the repayment of the national lottery, in fulfilment of an undertaking given by the right hon. Member for Dulwich and West Norwood (Tessa Jowell) at the time the new budget was set in March 2007. It will be reimbursed by land receipts. It is also worth pointing out that the national lottery is doing much better now than it was in 2005, and the amount of money that sport receives from it is due to increase from £1.3 billion in 2010 to £1.8 billion by 2016-17. In part, that is because of the change in the shares and the Olympic levy dropping out, but it is also because lottery ticket sales are rising. I believe that when people see lottery cash being spent on projects to which they can relate, they buy more tickets. The Olympic project has a part to play in all that.

I am sorry that the hon. Member for Perth and North Perthshire (Pete Wishart) is no longer here. He attacked the Scottish position, but as many in his party do, he forgot that the increase in lottery shares and in cash going to sport, the arts and heritage benefits organisations in Scotland just as it does organisations south of the border. Sport in Scotland will benefit precisely when he wants it to—around the time of the Commonwealth games.

I cannot say much about the legacy of the stadium, because we are in a contractual moment. There were 16 expressions of interest in the stadium, which is rather more than we expected, and the process is continuing. We will know at the end of March how that has gone.

My hon. Friend the Member for Maldon said that two challenges remain. In a sense, for Government there are three main challenges relating to the Olympics: security and transport, which he mentioned, and legacy, which everyone who has spoken in the debate referred to. If we get those things right, everybody will concentrate on the sport and forget about us, which is probably the ideal situation.

[Lyn Brown]

The Minister will know that I wrote to him earlier this month about local transport issues in the area and the need to let local people and local businesses, particularly my small and medium-sized businesses, know about our plans. Will he address that matter with some urgency?

[Hugh Robertson]

Yes, I will do so. That is the simplest answer to the hon. Lady’s question.

[Andrew Miller (Ellesmere Port and Neston) (Lab)]

Will the Minister give the House a commitment that the legacy will include working outside the London area? He and I have already discussed the fact that the national lottery has designated an iconic site in my constituency for post-Olympic development. Can we ensure that the Government back that up?

[Hugh Robertson]

Of course we can. A number of Members have mentioned the Places People Play legacy scheme, which involves £135 million worth of funding from Sport England precisely to try to regenerate sports facilities that, for various reasons, have fallen out of previous funding rounds. That has been so successful that Sport England plans to bring forward another £100 million worth of funding in the next cycle. Close to £250 million worth of funding is therefore going into the renovation of grass-roots sports facilities, so I am sure that the hon. Gentleman’s scheme will have as good a chance as any other, provided that it meets the criteria.

[Ian Swales]

The Minister referred to security. Is he aware of the Public Accounts Committee hearing of 14 December and of subsequent letters expressing real concern about the escalation of security costs and, in particular, the trebling of the cost of the G4S contract?

[Hugh Robertson]

Yes, I am. I am not absolutely sure that the G4S contract will treble, in the end. That judgment was probably made before the re-division of the security numbers—the man-guarding numbers—at the end of December. Let us not pretend that this is not a tricky question, however. The responsibility of every Government is the safety and security of their citizens, and of all those who attend the Olympics, so if it takes a doubling or tripling of the budget to keep people safe, that is what we will do. It is very easy to throw bricks, but it is extraordinarily difficult to get an accurate figure that can act as a comparator. Normally, with events such as these, we would look at the previous games. However, it is very difficult to draw meaningful security comparisons with the Beijing games, or with the Athens games, which took place in the immediate aftermath of a number of terrorist outrages. We therefore use the Sydney games in almost all cases when we need a comparator. They took place before the birth of the modern terrorism age, however, and it is extraordinarily difficult to get this absolutely right. I am as confident as I can be at this stage that the re-division of the security budget that took place at the end of last year will meet the challenge that is being presented to us, that the plans now being put forward are extremely robust, and that the combination of some military presence and some G4S—although not as much as originally envisaged—along with volunteers and the filling-the-gap scheme will produce the right de-risked mix of security that will enable us to deliver a safe games.

My hon. Friend the Member for Brighton, Kemptown (Simon Kirby) rightly talked about the effect of the opening ceremonies on the national economy. The GREAT campaign is designed precisely to make use of those opportunities. Through him, I would like to congratulate Brighton and Hove Albion, a club with which I have had dealings in the past, on its community work.

My right hon. Friend the Member for Bath (Mr Foster) spoke about the use of local committees to ensure benefits. Like him, I want to pay tribute to the work of Team West of England, which is an excellent example of what can be done. Two other Members made points during his contribution. My hon. Friend the Member for Ludlow (Mr Dunne) mentioned the work being done in Much Wenlock, the original home of the Olympics, and the major exhibition that is to start there. My hon. Friend the Member for Gillingham and Rainham (Rehman Chishti) talked about the good work that he and Sport England have done to bring about the events that will take place in Medway park.

My right hon. Friend the Member for Bath also made some excellent points about the four opening and closing ceremonies. When we have these debates, it is worth remembering that two of those will be Paralympic ceremonies, at which we will celebrate the contribution that this country has made to Paralympic sport. He also rightly mentioned the legacy of increased funding through the lottery, which has allowed us to fund the school games and the Places People Play scheme. He was also absolutely right about international inspiration. All of us who have seen this project from the inside regard that, in some ways, as the great untold success story of the legacy of the London 2012 Olympics. Twelve million children in 19—soon to be 20—countries have been touched directly by London 2012.

My hon. Friend the Member for Corby (Louise Mensch) was right to praise the work of the Olympic Delivery Authority. She was also correct to highlight the work of the Olympic Park Legacy Company on securing legacy uses for six of the eight main venues. The Westfield shopping centre in Stratford has also been a fantastic success. I think I am right in saying that it has broken every record by getting more than 1 million people through its front door in the first seven days.

My hon. Friend also talked about participation, and it is worth saying a few more words about that. We have set ourselves the most extraordinarily difficult task in trying to increase participation, which the national lottery has failed to do despite almost a decade of funding. It is akin to trying to turn round a super-tanker. Australia, with all the great advantages of a sporting nation—a warm climate, lots of outdoor space and so on—failed to do it on the back of the 2000 games.

There are several reasons why we have thus far failed to make much of an impression in that regard. The 1 million target was not, in itself, unrealistic, but the measurement system by which it was assessed almost certainly was. Asking people to record three separate incidents of sport a week in order to contribute to the target rather overlooks the fact that most people who play sport one level below national or international level probably train once a week and play at the weekend. That is certainly what I was doing when I was playing hockey at a reasonable level. Such people would fail the Sport England measurement target. Dave Brailsford, the performance director of British Cycling, is widely respected as a high-performance coach and a mass participation expert. He believes that cycling alone has gained 500,000 participants since the Beijing games, but that the problem is that they do not meet the target of three separate incidents a week, because most people take out their bicycle at the weekend.

It is therefore extraordinarily difficult to increase participation. Allied to that, I do not think that the governing bodies really worked out how to do it, in the early stages of whole sport plans. A lot of consumer-related work needs to be done around the subject, and many of the bodies did not realise what was involved in influencing consumer behaviour. My hon. Friend also made a good point about red button access, and I shall pursue that matter with the BBC later this week.

My hon. Friend the Member for Chatham and Aylesford (Tracey Crouch) is my constituency neighbour and a prominent footballer. She was absolutely right to pay attention to the part played by Olympians in inspiring young people to take up sport. It was also great to hear the plans put forward by my hon. Friend the Member for Hastings and Rye (Amber Rudd) for the torch relay when it stops overnight in Hastings. I will look into the question of the William Parker sports college. The problem is that, since the torch relay route was announced, she is about the 15th or 16th Member to press me to divert it just a tiny distance to take in some well-meaning group or other. I will look into her request, but such diversions almost always have a knock-on effect somewhere else; if we divert the relay to a particular school, for example, we have to take it away from somewhere else, because those days are incredibly congested. I will, however, have a look at the matter for her.

My hon. Friend the Member for Watford (Richard Harrington) was unnecessarily modest about his sporting talent. He rightly stated that many of the venues constructed for London 2012 will be iconic. Indeed, many of them already are. The velodrome has already won a number of architectural awards, as has the stadium, and the aquatic centre will undoubtedly do so.

My hon. Friend the Member for Folkestone and Hythe (Damian Collins) talked about the benefits of the torch relay to his constituency. He was also absolutely right to mention the inspirational effect of Olympians on young people. Representing the county of Kent, we both know about the work being done by Kelly Holmes, as well as younger athletes such as Georgina Harland and Lisa Dobriskey from Ashford, who have done a huge amount in that regard. He was also right to point out that the Places People Play scheme has been designed to refurbish sporting facilities on the back of London 2012. I absolutely take his point about the effect of sporting programmes on reoffending. The Home Office will no doubt lead on that issue—I am looking along the Bench to the Under-Secretary of State for the Home Department, my hon. Friend the Member for Old Bexley and Sidcup (James Brokenshire) as I say this—but we will ensure that that work is undertaken.

My hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard)—the House’s dressage expert, as he is now to be known—made some powerful points about the Paralympics. Britain is of course the home of the Paralympic games; they started here in 1948. There is an interesting parallel involved here. We started the Paralympics in that year precisely because we had so many injured servicemen coming back from the second world war, and when I look at the Paralympic teams that I see training up and down the country today, it is extraordinary to see how many servicemen and women who have been injured in Iraq and Afghanistan are finding a new future for themselves through Paralympic sports. My hon. Friend was also right to mention the Special Olympics.

My hon. Friend the Member for Hexham (Guy Opperman) spoke powerfully about the benefits of the Olympics for the north-east. I have been up there twice in the past month, including a visit last week to Durham, where a new sports centre is being opened on the back of the Places People Play programme. He was right to emphasise the tourism benefits for a region such as his, which has so many great cultural and tourism opportunities. Having seen what I have seen on both my visits in the past month, I am sure that this will be a wonderful moment for the region, and that it will definitely make the most of it.

Let me deal with this business about Olympic brands, which is sometimes as frustrating for the Government as it is for organising committees. We were keen to have a schools Olympics but were not allowed to do so. This rule can be infuriating, particularly when we see it applied to flower shows and all the other things that get caught up. However, without it sponsors would not have had the security they needed to commit to the games in the way they have done. I hesitate to make this direct connection, but I think that it is very unlikely that we would have raised £700 million of private sector sponsorship from big firms if it had not been through the security they got through the original London Olympic Games and Paralympic Games Act 2006, infuriating though it is for many small societies and organisations.

I absolutely take the point made by the hon. Member for Colchester (Sir Bob Russell) about London-centric games, which I think we are all very aware of. I cannot say too much about the opening ceremony, but there is a clue in the title revealed two weeks ago—Isles of Wonder—which does not necessarily suggest anything too London-centric. I think that he will find that his concerns have been met. Of course, the train line between Liverpool Street station and Stratford can be picked up through the “Look of London” funding, so I think that that should be possible.

Finally, I thank the right hon. Member for Dulwich and West Norwood for not only her contribution, but her ongoing work as a member of the Olympic Board and everything she has done up to now. She was right to lay out the legacy for the bid in two ways: the regeneration of the east end and the ambition to energise young people through sport. I think that we are now in as good a place as we possibly can be to try to meet that. It remains to be seen whether we can do that and then record it in a meaningful way that allows us to show that it has been done. I think that we are at last really beginning to understand what needs to be done to achieve that very laudable aim. I thank her once again for the cross-party support and the way she has dealt with this in government and in opposition. She is absolutely right that, without that, we simply would not have the public confidence in this project.

We have had a good debate today. I thank the Chair of the Select Committee, my hon. Friend the Member for Maldon, for all the work that he and the Committee have done. We are on track, on time and just under budget to deliver a great games. Tomorrow, with 150 days to go, we will be in a position to reveal that, of the original budget, over £500 million remains in unused contingency.

Question deferred till tomorrow at Ten o’clock (Standing Order No. 54).