John Whittingdale
Main Page: John Whittingdale (Conservative - Maldon)(12 years, 9 months ago)
Commons ChamberThank you, Mr Speaker, for this opportunity to debate the funding of the Olympics and Paralympics, although I hope that you will be generous in allowing us to examine the wider benefits that will flow from the funding of the Olympics.
It is now nearly seven years since the day on which it was declared that London would be the host city for the 2012 Olympic and Paralympic games, and I suspect that almost everyone will remember where they were and their reaction when the news was announced. It was undoubtedly fantastic news for Britain, and it was rightly celebrated, but I think that quite a lot of us also thought, “Oh dear, what do we do next?” One of the things that the Culture, Media and Sport Select Committee, which I chair, decided to do was to hold regular sessions to monitor and scrutinise the work being done to prepare for the greatest sporting event that this country has held. Over the past seven years we have held annual sessions with the chairmen and chief executives of the Olympic Delivery Authority and the London Organising Committee of the Olympic Games and Paralympic Games and with the Secretary of State for Culture, Media and Sport—first the right hon. Member for Dulwich and West Norwood (Tessa Jowell) and now my right hon. Friend the Member for South West Surrey (Mr Hunt).
It is worth observing at this point that one of the striking things about the policy towards and preparation for the Olympics is that not only did London’s bid enjoy cross-party support from the start, but in all the time since it was announced as the host city, despite occasional, small differences across the Chamber, which were inevitable, in the main both parties have worked well together. Certainly, I believe that my party did what it could to support the right hon. Member for Dulwich and West Norwood when she was Secretary of State, and since then she has worked with us to ensure that the preparations go ahead smoothly and are not marred by partisanship or political point scoring. We have now—[Interruption.] I am reminded by a cough that that applies not just to the two main parties. I pay tribute to the support and work throughout the entire seven-year period of the right hon. Member for Bath (Mr Foster), who has been a stalwart on behalf of the Liberal Democrats.
We are now only 151 days away from the start of the games, so it seems an opportune moment to debate the progress that has been made and how close we now are and to focus, in particular, on what we hope to achieve by hosting them. Inevitably, attention initially focused very much on questions of funding and how we would afford to pay for the games. Indeed, there was some anxiety about whether we could finish the work in time for the games—something that has caused concern for previous host cities.
One of the concerns, if not of many Members of the House, then of many people outside it, is that very little attention seems to have been paid at the beginning to how much this would all cost. Various figures were bandied around at that juncture, and £2.5 billion was suggested as the cost of the overall package. I accept that it is good that we have the games and that there is unity across the House about that, but it is equally important that there is an open debate on funding and other related issues, particularly the question of whether there will be the legacy we all hope for in that part of east London, which we will not have a definite answer to for at least another decade. One of the concerns at the outset—of course, that was a very different economic time—was that there was very little scrutiny of the whole funding issue.
Order. Notwithstanding the fact that the hon. Gentleman speaks for two cities, as opposed to a smaller area, a degree of economy when intervening from now on would be appreciated.
I am grateful to my hon. Friend. I do not want to disagree with him, but although he may well be right that perhaps insufficient attention was paid to funding outside in the wider world, I can assure him that the Select Committee paid close attention to it. I will deal with that in more detail, as it is the prime focus of the debate.
The previous Select Committee, on which I served, spent a great deal of time trying to examine the finances and on one specific issue: transport in London. Does the hon. Gentleman agree that many people in London will be extremely irate if the special lanes that are set aside for International Olympic Committee and Olympic traffic are used by Ministers and others seeking to have an easier time of it in a very difficult city and that it would be best if people avoided such conflicts of interest?
I agree that transport is going to be one of the great challenges, and it is one to which I shall refer and about which, I suspect, other Members will want to talk. I agree also that the reserved lanes have the potential to cause a great deal of irritation to people sitting stationary in traffic jams next door to them. I am sure that it is something my hon. Friend the Minister for Sport and the Olympics, too, is keenly aware of, and he may wish to speak about it when he responds later.
On that related point, sensibly most people recognise that there are huge security issues around the Olympic games that mean that Heads of State and Ministers will need to be looked after. The bigger concern that I have, unlike the hon. Member for Rhondda (Chris Bryant), is that a whole lot of flunkeys, hangers-on, junior people with the International Olympic Committee and sponsors are going to get that VIP treatment, when there is no necessity for the security to which I refer.
My hon. Friend brings up the other issue that is causing some anxiety, security, which I am sure we will discuss as well. To a certain extent, the IOC rules, which have proven to be quite challenging in several different aspects throughout our preparation for the games, dictate some of the issues, but again I am sure that my hon. Friend the Minister will want to discuss that.
The Public Accounts Committee examined all the finances. People do not mind so much the cost or the special lanes; the thing that really irritates them—what they are fed up with and I am fed up with—is that we applied for tickets but none of us got any bloody tickets! They are all going to the flunkeys and corporate people, so what is the Minister going to do about that?
The third issue, besides transport and security, that I was going to and, indeed, still intend to come on to, is ticketing, which I understand has caused some irritation as well. In that particular regard, however, LOCOG was in an appallingly difficult situation, which I shall come to in greater detail in due course. It was going to be criticised almost whichever way it played the situation.
Without wishing to pre-empt a fourth issue, which may come up as well, I just want to say briefly on security that we all recognise that events within 24 hours of our winning the bid in July 2005 meant that the security situation was going to be very different. Although I have, and have long had, concerns about the burgeoning funds for the Olympic games, I recognise equally that we are in a different security position, which therefore inevitably has a cost implication well beyond that which we anticipated back in July 2005.
One of the extraordinary things about how much has been achieved in preparation is that the world is different in quite a number of ways from that of 2005. My hon. Friend is entirely right that the security picture has changed enormously and, I am afraid, for the worse, so it has required much more attention, but the other big change is the economic climate, and many funding issues have been influenced by the fact that the Olympic facilities have had to be built in the teeth of a severe global recession. That has also proved very difficult. One thing that we discovered in talking to previous organisers of Olympic games was that several could not have done so had their work coincided with a recession as deep as the one that we have experienced.
I give way to my colleague, the Chairman of the Home Affairs Committee.
I commend the work of the hon. Gentleman’s Committee over several years. He knows that 10,000 athletes will be guarded by 40,000 police officers and security agents, but during his deliberations was he satisfied that the 23,000 private security agents who are going to be involved had been properly trained to deal with the situation?
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.
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.
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.
How much will be spent on the two opening ceremonies and two closing ceremonies, and how many billions of people around the world does the hon. Gentleman estimate will watch them on television?
We examined the Secretary of State on the fact that the Government have doubled the budget for the opening ceremony. That has been subject to some criticism, because these are not easy times and a substantial amount of money—£80 million, I believe—is being put in. Nevertheless, as the hon. Gentleman rightly observes, the occasion will probably achieve almost the greatest global television audience ever recorded, and all those people will be looking at London. This is a huge opportunity for us, and I therefore think it right that we should put on a pretty good show.
It is also important to recognise the contribution of partnership organisations. In Medway, the Olympic training centre for two countries cost £11 million, and its funding process will be supported by the university of Kent, the council and Sport England.
My hon. Friend makes a good point in indicating the benefits to his area. One of the challenges, which we have spent some time considering, is how the benefits of our hosting the games can be felt outside London, as the whole country should gain from it. His example of what is happening in Medway is a good illustration of that.
Returning to the point raised by my hon. Friend the Member for Colchester (Sir Bob Russell), does the Chairman of the Select Committee agree that spending roughly £80 million on a total of four major events—two opening and two closing ceremonies—will be seen by 4 billion people around the world as good value for money? Is he aware that Martin Sorrell has said that were we to pay for that sort of advertising, it would cost £5 billion?
I am grateful to the right hon. Gentleman. As I said, although perhaps not as eloquently as he did, that is my view as well. This is a unique opportunity. The alternative—that we put on a poor show that was watched around the entire world—would be so damaging that it is right that we invest in it and make sure that we get it right. I am confident that, under the leadership of Danny Boyle, that is exactly what we will achieve. As I said, the budget for the staging of the games will be tight, but I hope that it can be achieved without cost to the taxpayer. Our initial hopes proved to be rather less accurate as regards the cost of building the facilities. The original candidature file put the cost of preparing for the games at £3.4 billion, of which £2.375 billion was to be spent by the Olympic Delivery Authority. In March 2007, the right hon. Member for Dulwich and West Norwood came to the House and said that the public sector funding package would actually be £9.325 billion.
The hon. Gentleman will also recall that when I came to the House in May 2005, before we went to Singapore, I made it clear that in the event of our winning the games, a complete review of the budget would have to be undertaken because of a number of uncertainties, such as the VAT status, the degree of contamination at the site and the extent of our regeneration ambitions. We made that review between 2005 and 2007. The budget as I published it in 2007 remains the budget.
Indeed it does. I was not seeking to criticise the right hon. Lady, but merely making an observation. She is right that one of the two main reasons given for the increase was that, rather surprisingly, VAT had been left out of the original calculation and there was some uncertainty over that.
May I just deal with that point, which is tediously technical? When we compiled the budget, the status of the delivery organisation had not been settled. The definition of status could have placed the delivery authority on one side or the other of liability for VAT. If it had been, in effect, a local authority, it would not have been liable for VAT. It was judged not to be a proxy body for a local authority and was therefore liable for VAT. That was not clear until, having won the bid, we were able to nail down the role and function of the delivery authority.
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.
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.
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.
Does my hon. Friend agree that the House should not regularly follow the precedent of sequestering money from the national lottery, since it is not general taxation, and that the lottery should be independent of the House? Does he therefore agree that it is important that the lottery is recompensed as much as possible for the funds that it put into the project?
Yes, I basically do agree with my hon. Friend, but the financing of the Olympics seemed to me a legitimate use of lottery funding, because it is a sporting event and that was one of the four good causes that the lottery was originally established to fund.
Does the hon. Gentleman accept that the area of east London that the money in question is helping to regenerate was in desperate need, and that if we had not had the Olympics, the regeneration of that area may have taken decades more? Does he agree that the economic development of an area that was quite blighted is a wider and possibly more important issue than reimbursing the lottery?
I completely accept the hon. Lady’s point. Indeed, that was one of the principal motivations for making the bid in the first place, and the Olympics will plainly have a dramatic effect on the area. A number of members of the Culture, Media and Sport Committee visited the Olympic park in January, and it is absolutely extraordinary. The sporting facilities are world class, and I hope that they will have a lasting benefit and bring up the whole area in the way that she describes.
As the then Sports Minister, I was able to go to Beijing, and one thing that concerned me was whether London could compare with what went on there. Having visited them, I know that the aquatics centre and velodrome are fantastic facilities. Indeed, I would go as far as to say that they are perhaps better than those in Beijing, so I believe that we have got value for money for the investment that was put in.
I do not know whether Beijing has ever published a final figure of the amount that it spent, but I think it is safe to say that it was rather greater than the amount that we will spend. That makes the hon. Gentleman’s point even stronger. I agree with him that some of the facilities that we saw when we went to the park are just as good as, if not better than, anything in Beijing. I heard the figure of £20 billion rumoured as the cost of the Beijing games, but I do not know whether that is entirely accurate.
While we are still talking about funding, I should like to endorse what the hon. Member for West Ham (Lyn Brown) said. It would be a missed opportunity if, in an effort to reimburse the national lottery fund, we were to lose moneys that would otherwise go to regeneration. That is their raison d’être in that part of London for the next 10 years.
May I say to the hon. Member for Redcar (Ian Swales) that the independence of the lottery has long since been lost? The Big Lottery Fund, which was introduced under the previous Government, means that lottery funding goes, to a large extent, outside those main causes. It is also true that we put a significant amount of money into the millennium fund in advance of 2000. In many ways, that head was transferred into Olympic funding.
Indeed, although I would hope that one achievement of my hon. Friend the Minister will be restoring the lottery to its original purpose and putting the proceeds to the original good causes rather than to some of the causes that my hon. Friend rightly identifies.
I am grateful to the hon. Gentleman, who is being very generous with his time. Surely he recognises the unhappiness that exists in places such as Perthshire and poor places such as inner-city Glasgow at the diversion of lottery funding and at the siphoning off of money from grass-roots sports organisations and good causes. This was probably not the best day for the national lottery or the best way to pay for the Olympics.
I will give way to my hon. Friend the Member for Gillingham and Rainham (Rehman Chishti) and then to my right hon. Friend the Member for Bath, but I probably should make progress at some point.
I thank my hon. Friend for giving way to me a second time. Does he agree that the initial costs could prove in the long term to be a saving to the state, because the sports legacy of the Olympics could deal with health inequalities?
My hon. Friend is absolutely right in his aspiration, although he identifies probably the hardest challenge for the Olympics to achieve.
I apologise to the Chairman of the Committee for intervening a second time. Will he ensure that we have very clearly on the record the situation regarding the take from the lottery and good causes? He will recall that the previous Government initially wanted to take around £1.5 billion from the national lottery. There was a lot of concern about that, but they later requested a further £675 million. Many people were concerned about that further request, and it was agreed that that the additional £675 million would be returned. Will he therefore remind the hon. Member for Cities of London and Westminster (Mark Field) that £1.5 billion of lottery money has gone in to help him and will not be repaid?
My right hon. Friend is entirely right and I am grateful to him for spelling out the detail. That is exactly why the £675 million was identified.
It has rightly been said that legacy is the most important issue facing us. In the course of the Committee’s monitoring of preparations, we have visited a number of previous Olympic cities. In the past seven years, we have been to Athens, Barcelona, Seoul, Munich and Beijing, and have talked to the organisers of the Sydney and Los Angeles games. It is fair to say that none has achieved a successful, lasting legacy. Some cities have achieved some aspects, but the challenge for London was always to succeed where other cities had not.
The first challenge, which is obviously of interest to the hon. Member for West Ham (Lyn Brown), is on the facilities in east London. The Secretary of State told the House recently that six of the eight facilities now have identified tenants and uses, which leaves two. They are the two that have proved the most difficult—the stadium and the media centre. I suspect that we cannot yet say any more about how those two facilities should be used, but obviously the stadium is an extraordinarily expensive facility, and it is important that it is not just used for the Olympics and Paralympics and that we find future uses for it. All the members of the Committee who went to Athens and saw the grass growing out of the tarmac in the Olympic stadium came back determined to avoid such a thing here. I hope that the Minister will talk about that.
The other issue, which my hon. Friend the Member for Gillingham and Rainham rightly raised, is the harder task of creating a sporting legacy. Seb Coe, when he originally made the pitch, concentrated on the need to use the Olympics to inspire young people across the country to want to take up sport. The Government have not sustained the 1 million target, but nevertheless I welcome the Places People Play programme and the extra funding given to it. We are most anxious that when young people, watching inspirational sportsmen winning medals in whatever discipline on the television, think, “I’d like to take up that sport”, they should find it easy to do so. It is terribly important that we support local sports clubs, schools and sporting facilities right across the country, so that those facilities are there and we can get that immediate benefit from the inspiration that the games will undoubtedly bring to people.
I will quickly touch on three areas that my hon. Friends the Members for Gainsborough (Mr Leigh) and for Cities of London and Westminster (Mark Field), in particular, have mentioned. As I suggested to my hon. Friend the Member for Gainsborough, ticketing was always going to be difficult. LOCOG could either have pitched ticket prices at such a level that anyone who wanted one would have been likely to get one, in which case it would have been criticised for setting prices too high, or it could have done what it did, which was to set prices at such a level that they were within the reach of most people, but as was entirely predictable, I suppose, demand massively outstripped supply.
As my hon. Friend will be aware, ticketing raised £527 million up to December 2011, and could have raised considerably more had it been based on a free-market approach. Given that the model of secondary ticketing has been banned in the Olympics and given the inspirational nature of the Olympics and other cultural and sporting events, does he agree that the same model should be considered for other events too?
My hon. Friend tempts me on to another topic that has occupied the Select Committee for hours and on which I could speak for some time, but I suspect that you might interrupt me, Mr Speaker, if I strayed too far from ticketing. However, my hon. Friend makes a valid point.
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.
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.
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.
I may come to regret giving that guarantee.
I understand that this issue is a cause for concern, but LOCOG has done as much as it can to ensure that everybody who really wants to attend the games will have the opportunity to do so.
I do not want to spend a great deal more time speaking. I shall merely note the two big challenges, which have already been raised. The first is security, which we have talked about at some length. Obviously the climate has changed since the original budget was set, but the issue will always be a matter of some concern, and I am sure that the Minister will want to say something about it. The second challenge is transport, which I know has occupied the attention of the Government; indeed, it has also caused some concern to the Committee. Even if we achieve the target of reducing journeys on the part of commuters and businesses by 20% on the busiest days—asking people to change their habits to that extent is quite a demanding target—that will still, we are told, lead to half-hour delays in getting on tube trains at certain stations. That is a measure of the difficulty that the issue has caused. Indeed, if there is one issue that is causing the most anxiety to those responsible for preparing for the games, it is transport, so I am sure that the Minister will want to say a bit more about it.
I should say that I am off to a European Committee shortly, so I am grateful to the hon. Gentleman for the opportunity to get in quickly on the issue of transport. One of the biggest issues—which we are yet to resolve—for the community living around the stadium is which roads will be open and what special arrangements will be made for that community. Resolution of this issue is now desperately needed, and I hope that this afternoon’s debate might shed some light on that.
I am sure that the Minister has heard the hon. Lady’s point and will attempt to shed some light on it, if possible.
My hon. Friend is very generous. Obviously there are concerns about what will happen with transport in July, August and September. However, it is also worth putting on record that it is greatly to the credit of the right hon. Member for Dulwich and West Norwood (Tessa Jowell) and my hon. Friend the Minister that we have placed a lot of focus on getting the broader transport links in the area right. I hope that will augur extremely well for the legacy that we all wish for. There will be new docklands light railway stations and better transport in the area. I accept that there will be massive congestion during the Olympics, but those developments will stand us in good stead for the future.
I think what my hon. Friend says applies more generally. We hope not only that the London Olympic games and Paralympics will be a fantastic event that will be celebrated and enjoyed across this country and around the world, but that we will secure a lasting legacy that will certainly benefit east London and, I hope, people right across the country.
The Select Committee has inevitably concentrated on the areas of concern. We have identified where we think there could be problems and I hope we have done so in a way that has allowed them to be tackled. However, I congratulate the right hon. Member for Dulwich and West Norwood and her party, the right hon. Member for Bath—whom I could not leave out—and my colleagues on the Front Bench on the work that they have all done. In particular, I also congratulate both the Olympic Delivery Authority, which has done a fantastic job in building such world-class facilities on time and, we hope, within budget, and LOCOG, whose main job is still ahead, but which has nevertheless done a huge amount of impressive work. I look forward to the rest of the debate, but I look forward even more to a fantastic games in July and August.