2012 Olympics

Business of the House – in the House of Commons at 12:11 pm on 15th March 2007.

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Photo of Tessa Jowell Tessa Jowell The Secretary of State for Culture, Media and Sport 12:11 pm, 15th March 2007

With permission, Mr. Speaker, it gives me the greatest pleasure to make a statement on progress towards the Olympic games and the Paralympics in 2012.

This will be the world's greatest sporting event here in our country, but it will also act as a catalyst for the most ambitious regeneration programme in recent memory. That will include the largest new urban park in Europe for more than 150 years. There will be five new permanent sports venues and a number of temporary venues, which will be used around the UK after the games. The 1 million sq ft media centre for the games will provide in legacy a state-of-the-art business space. Four thousand homes will be converted from the village, and a further 5,000 will be provided elsewhere in the redevelopment. And there will be one of the largest shopping centres in Europe, which will involve an estimated £7 billion private sector investment. That money has been invested because we won the Olympic games.

Across the country, the games will inspire a whole generation of young people to play sport, volunteer in their communities and be proud of what their country has achieved. We chose to host the games at a site where the need was greatest and where the benefits would be most keenly felt. We chose east London, because of the challenge to regenerate one of the most deprived areas not only in the UK, but in the whole of Europe. The site of the Olympic park needs remediation before construction work can even begin. That work is well under way. Essential utilities for the area need to be installed. That work is also well under way.

Developing the Olympic village requires the largest number of homes ever to be built in one place, at one time, in this country. The planning for that work is on schedule. As the National Audit Office report in January set out, when we bid for the games, we estimated the cost of the Olympic park, infrastructure and an element for community and elite sport at around £3 billion, plus an additional £1 billion as part of the wider lower Lea valley Olympic regeneration. This made the total cost of preparing for the games and Olympic regeneration just over £4 billion. Those costs were net of tax and of wider security costs.

I made it clear to the Culture, Media and Sport Committee on 15 May 2005, which was before we won, that if we were successful, I would institute a detailed review of costs. That review began in early autumn 2005, after we had won the bid. The budget for every venue, every bridge and every facility on the park has been scrutinised. The Olympic Delivery Authority's private sector delivery partner, CLM, has unrivalled expertise in advising five Olympic cities on their plans. CLM has made a detailed study of the site and all the attendant risks inherent in a project of this magnitude and tight time scale. The site master plan has been amended to avoid potential costs in the region of £600 million. However, other costs have been judged to have increased, as I set out for the Select Committee in November, resulting in a net increase of £900 million.

We will now set a budget for the ODA, the body established to manage the delivery of all the structural and regeneration elements of the games, and I can today confirm what the budget will be. The ODA will be given a budget to cover the construction costs as a whole of up to £5.3 billion up to 2012. That comprises £3.1 billion for building the Olympic park and venues—the core Olympic costs—£1.7 billion for Olympic infrastructure and regeneration linking the park to the rest of the lower Lea valley and a £500 million allowance for programme contingency, which represents 12 per cent. of the total programme contingency that has been allowed. I am placing a summary of the ODA 2007-08 business plan in the Library today as well as details of this investment.

Those costs, as in the 2004 bid, are net of tax. The ODA will pay tax, but the cost at around £840 million will be covered in full by the Government contribution. I can assure the House that the tax treatment of the ODA will have no impact on other funders. The Government have also decided that as the funder of last resort, it is prudent that a programme contingency should be held within Government under very tight conditions. This will be drawn on should the need be demonstrated, so as to ensure that the timetable is met and that quality is maintained. The level of contingency is £2.7 billion, of which, as I have said, £500 million will form part of the base budget of the ODA. Within that overall budget, we have also allocated a figure of £600 million for wider security, which is on top of the ODA budget for site security. This £600 million figure has fluctuated as assessments have changed and will obviously be subject to continued oversight and scrutiny in the coming months and years by the relevant Cabinet Committee, the Home Secretary and the Metropolitan police.

Lastly, as we announced at the time of the bid, around £390 million will be invested in non-ODA provision, including in sport—for example, community coaches—and in the Paralympics. That figure was included in the public sector funding package, but it is not part of the ODA budget.

Let me turn now to how the budget will be funded. At the time of our Olympic bid, the lottery and the London contribution was estimated at £2.4 billion, and as I told the House on 2 February 2006, the Government will contribute a further £1 billion as part of our commitment to Olympic regeneration.

I can announce today that central Government provision will be £6 billion. This comprises the £1 billion already committed for Olympic regeneration, the funding of the tax bill, broader regeneration, infrastructure within the park, wider security and programme contingency. Without any further increase for London council tax payers beyond that already committed, or any increase in transport fares to fund the Olympics, the Mayor will over the lifetime of the Olympic programme be making a further £300 million available to help meet Olympic costs.

The lottery will make a further contribution of £675 million. This will mean a total contribution of £2.2 billion from the lottery, which is 20 per cent. of lottery income for good causes from 2005, when the Olympic lottery started, to 2012-13. In addition to the £410 million already confirmed, which will be shared according to the normal lottery shares, I propose to transfer after 2009 £425 million from the Big Lottery Fund and £250 million from the other good causes. No transfer will be made from UK Sport, which is responsible for preparing our sportsmen and women for the Beijing Olympics and the London Olympics in 2012. The decision to take a further share from the lottery has been taken only after very careful consideration, and implementation will take place only after full consultation about the implications with the lottery distributors and the other stakeholders.

The original memorandum of understanding made it clear that should we win the games, we would call on the lottery to help fund them. I believe that that principle is widely accepted. However, I am determined to ensure that this temporary diversion from the existing good causes to the Olympic good cause is done with the least possible disruption. I will continue to consult the lottery distributors about how best this can be done, but I assure the House that it is the Government's intention that no existing lottery projects need be affected. We have also agreed with the Big Lottery Fund that resources for the voluntary sector will be protected and will, as it expects, continue to receive the £2 billion from the Big Lottery Fund between now and 2012. The decision on the lottery will be subject to an affirmative resolution in both Houses in due course.

London 2012 will bring financial gain to London and, indeed, across the country. For example, land values in the Olympic park are expected to increase considerably as a result of the investment that we are making. In my view, it is only fair that the lottery good causes, having contributed to the Olympics, should share in any such windfall. The Mayor of London and I have agreed that we will rewrite our memorandum of understanding and put in place profit-sharing arrangements to enable the lottery and future regeneration needs of the local area to benefit from the returns on the investment that we are making in the Olympic park.

As I told the Culture, Media and Sport Committee, the NAO has agreed to work closely with us in scrutinising the budget from now on, and the team overseeing the project in the ODA has a world-class reputation. This makes generous funding provision for the project as a whole, of which £3.1 billion is the core Olympic cost, net of tax and contingency.

Only a fortnight ago, the International Olympic Committee said that it was "assured and impressed" by the work under way after its visit to London. The announcement that we make today means that it is full steam ahead for 2012. The London Olympics will change Britain for the better for ever. The fact of hosting the Olympic games is already changing lives and communities and building ambition. I commend that, and this statement, to the House.

Photo of Hugh Robertson Hugh Robertson Shadow Minister (Culture, Media and Sport)

I start by thanking the Secretary of State for her statement and for honouring her commitment to warn us last night that it was coming. Let me also place on the record my party's congratulations to the organising committee, which announced Lloyds TSB as its first top sponsor yesterday.

I only saw the statement 20 minutes ago, but three indisputable facts stand out. First, if one adds together all the separate parts, the budget for which the Government are responsible has nearly trebled since the London Olympics Bill left Parliament under a year ago— [Interruption.]

Photo of Hugh Robertson Hugh Robertson Shadow Minister (Culture, Media and Sport)

Secondly, as a consequence, in raiding the lottery for a further £675 million to make up the shortfall, the Government will penalise precisely the clubs and small organisations throughout the country that were supposed to benefit from the Olympics.

Thirdly, as the Secretary of State has given us only the main column headings, we do not yet have the full, open and transparent budget that was necessary to restore confidence in the financing of London 2012.

As time is short, I should like to ask the Secretary of State five questions. The first concerns disclosure. As a result of information obtained under the Freedom of Information Act 2000, we now know that KPMG identified serious risks to the Olympic budget as early as October 2005, yet a month later the Secretary of State was still assuring the House:

"we believe that our budget is sound."—[ Hansard, 21 November 2005; Vol. 439, c. 1224.]

The Minister for Sport assured the House—Members will enjoy this—

"I shall never forget the person who said, 'Do not underestimate the budget. If you have to go higher, it will be seen as a failure so make sure your calculations are realistic.'"—[ Hansard, 21 July 2005; Vol. 436, c. 1505.]

The Bill did not leave Parliament until March 2006—a clear six months after KPMG had first raised concerns. My first question for the Secretary of State is therefore this: when were she and the Treasury first aware of concerns that the original budget was not deliverable, and why did not she share those concerns with Parliament?

Secondly, on contingency, the requirement to add whole project contingency to the individual project contingency already built into the bid has added, as the Secretary of State told us, £2.7 billion to the Olympic budget. Why did the Treasury and the Chancellor fail to identify that cost when they signed off the original budget?

Thirdly, on tax, given that we lifted our structures directly from Sydney, where no VAT was payable, and that VAT was not payable for the Manchester Commonwealth games, why did the Treasury and the Chancellor sign off the bid budget, without VAT, before adding, as the Secretary of State announced, a further £840 million to the budget? Can she assure the House that this is, indeed, simply a case of transferring balances and that no tax money will actually be collected?

Fourthly, on the private sector contribution, the NAO report highlighted the fact that £738 million was to come from the private sector in order to reduce the need for public funds—and is, presumably, still part of the new budget announced today. The Department for Culture, Media and Sport has so far refused to answer any parliamentary written questions on this issue, always merely saying that it will let me have a reply in due course. Can the Secretary of State therefore explain to the House how that figure was reached, and will she confirm that it is still robust? If it is not, further public money will clearly be required to fill that additional shortfall.

Finally, on the lottery, the Secretary of State has announced that she will raid the national lottery for a further £675 million to pay for the Olympics. Despite the fact that

"enabling young people through sport" was one of the key elements of the bid, the element of funding for sport that comes through the lottery has now been cut from the 25 per cent. that was originally proposed when the lottery was set up to about half under today's proposals—a point consistently made by the Central Council of Physical Recreation. Can she confirm exactly what percentage sport—and, indeed, heritage, the arts and the Big Lottery Fund—will get under these new proposals, and, crucially, what assessment she has made of the financial impact of this in each and every constituency throughout the country?

Many Members in this House supported the Olympics and support them still. My party is among them. However, this statement confirms that the cost has almost trebled in the year since the Bill left Parliament and that the lottery will bear an extra £675 million shortfall. One of the key drivers for that is that the Treasury and the Chancellor signed off the original budget but failed to allow for VAT, at £840 million, or for contingency, at £2.7 billion, which they have now added to the bill.

The key thing now is for the Government to put a full, open and transparent budget in the public domain so that everybody knows who is paying for what, and when, and then to stick to it. That will do more than anything else to restore public confidence in the London 2012 Olympics. If they do not do that, I fear that the Secretary of State, or her successor, will be standing in front of us a year from now to admit that costs have risen further.

Photo of Tessa Jowell Tessa Jowell The Secretary of State for Culture, Media and Sport

The hon. Gentleman must work harder to persuade not only the House but the country that the Opposition are behind the Olympics instead of taking every opportunity to undermine the excellent work that is being undertaken not only in London but throughout the country to support the games.

Let me deal with the specific questions. As I took care to set out in my statement, I have referred at every stage—before and after we won the bid—to the cost review that is under way. The hon. Gentleman must understand the scale and complexity of reviewing not only the time scales but the contractual expectations and other management aspects of every single project. That is why we have a world-class delivery partner, which has undertaken that work for us. Similarly, I signalled that the cost review, which was begun almost immediately after we won the bid, would be necessary before we became the host city.

On the prudence of a programme contingency, VAT and other provision that the Government are making, I hope that the hon. Gentleman understands the clear distinction between the budget for the ODA, which I set out today—the money we expect it to spend—and the funding provision to safeguard the project against any as yet unforeseen risks. That is a clear distinction.

There is a specific reason for Manchester's exemption from VAT. The Commonwealth games operated on a host city basis and local authorities are exempt from paying VAT.

We have now allowed for private sector contribution in the budget, but on a pessimistic basis against the full expectation of what might be raised from that sector. Negotiations are under way all the time with different private sector partners, so it is possible, but not certain, that that may change. If the hon. Gentleman wants to know about private sector investment in the Olympic park, I refer him to the confidence that Westfield has shown in investing in the largest retail park at Stratford city and residential development because of the Olympic games.

Let me deal with the point about raiding the lottery. Such criticism is hard to take from an Opposition who made a manifesto commitment to wind up the Big Lottery Fund, which they are now defending, and conduct some sort of moral audit of grants that it made. Nothing has done more to galvanise sport and ambition among young people in this country than the prospect of London hosting the Olympic games. We are guardians of that ambition. Despite the knocks from the Opposition, we shall continue to be so.

Photo of Don Foster Don Foster Shadow Secretary of State for Culture, Media and Sport

We remain delighted that London won the right to host the 2012 games. The involvement of Lloyds TSB is clearly great news. Properly managed, the 2012 games will bring huge and lasting benefits to all parts of the country. Sadly, today's statement and the chaos that has surrounded the past 12 months and more calls into question the Government's ability to provide that proper management. Why has it taken so long to resolve some of the most basic issues?

Was not the Select Committee right to express surprise that the VAT position was not established from the start? Why has it taken so long to resolve the overall contingency? Were not the Treasury Green Book requirements known all along? How will the Secretary of State square the contingency figure with the comments of the Mayor of London? When asked about a contingency of 60 per cent., he said:

"There are no circumstances on earth under which I will agree... to a contingency of that size."

What confidence can anyone have when the management costs of building the Olympic structure have leaped from approximately £16 million to nearly £400 million? Surely the Select Committee was right to say that cost control procedures were not fully thought through when the bid was submitted.

How can the Secretary of State have miscalculated by nearly £700 million the contribution from the private sector towards the building costs? How are the public to react when different members of the Olympic board, which is meant to be in charge of the enterprise, say different things? For example, when, in November last year, the Secretary of State told the Select Committee that costs had risen by £900 million, why did the Mayor—another member of the board—say that the original figure was still the right one?

In the Secretary of State's statement to the Select Committee that referred to £900 million, she also said,

"let me be absolutely specific about that: we are not talking about regeneration; we are only talking about the Olympic Park".

A day later, the Mayor stated:

"The big extra costs we're talking about are not to do with the Olympic games; they're to do with what we do with the land around afterwards."

Who are we to believe?

The Chancellor must rue the day when he said:

"Britain works best when Britain works together and there is no better example than our preparations for the Olympic games."

Far from working together, the past 12 months have been characterised by chaos, confusion and in-fighting of epic proportions.

Now we have a new set of figures. The Secretary of State says that the Government are working closely with the National Audit Office. Will she confirm that the NAO has verified the new budget? Will she agree to present regular reports to Parliament for debate in Government time so that we have a regular opportunity to scrutinise the progress of the Olympics?

Will the Secretary of State reconsider her plans to make a further raid on national lottery good causes? Surely she realises that the benefits of hosting the 2012 games rely on legacy. A new hit on the lottery of the extent that she proposes represents a cut of £1 million to every constituency in the land. The very projects that would help secure lasting benefits in those constituencies are now under threat, as will be the good will that currently exists towards the games.

Today's statement is a sad indictment of the Government's ability to deliver the best ever games on time and, above all, on budget. The confusion, in-fighting and, above all, writing of blank cheques must end.

Photo of Tessa Jowell Tessa Jowell The Secretary of State for Culture, Media and Sport

That is a rant worthy of Victor Meldrew that does not take us any further on. If one believes everything that is written in the papers—the work of our dear friends the journalists who watch our work—rather than working through the solutions to difficult problems, I suppose one feels that one can justify such a rant. I have always invited the Opposition parties to be part of the plans to develop the games and to champion them and young people's ambitions. Yet they default at every turn to a position of point scoring, party political advantage, allegation and slur. The Olympics will be legacy games. One can build temporary structures in any part of any city and host Olympic games. The games that we host will create a legacy in one of the poorest parts of our country. My Labour colleagues and I celebrate that as an expression of why we are in politics.

Photo of Kate Hoey Kate Hoey Labour, Vauxhall

May I caution the Secretary of State not to treat every question that raises an important issue as meaning that people oppose the Olympic games?

Will she give a commitment that not one single grass-roots sports project in constituencies will be cut as a result of the move from lottery money at the grass-roots? What will happen if the public suddenly change their minds and stop buying or buy fewer lottery tickets?

Photo of Tessa Jowell Tessa Jowell The Secretary of State for Culture, Media and Sport

I thank my hon. Friend for her contribution and I welcome her support for the Olympic games. It is absolutely right that the decisions, costs and every aspect of the Olympics should be subject to scrutiny. I have set out today as best I can both the consequences of a further take from the lottery and the safeguards that we are extending. I have made it absolutely clear that it is not the Government's expectation that any current lottery-funded project should see its funding either cut or withdrawn as a result of the Olympics. The problem, of course, lies with giving an absolute blanket assurance in respect of hundreds of thousands of lottery projects throughout the country, as some may close for reasons quite unrelated to the Olympic games. My assurances about lottery-funded projects have been put on the record in the House today and I am absolutely sure that all hon. Members will come back if they find the consequences in their constituencies to be any different.

Photo of John Whittingdale John Whittingdale Chair, Culture, Media and Sport Committee

Is the Secretary of State aware that today's announcement that another £675 million has been taken from the lottery on top of the existing £1.5 billion will be greeted with dismay by arts and heritage organisations, charities and grass-roots sports? Will she accept that that makes it all the more imperative that those causes should not suffer a double hit with an announcement of a cut in direct grant funding as a result of the comprehensive spending review? Can she give the House an absolute guarantee that this is the final figure for the call on the lottery, and that if there are any further increases in costs beyond the figures announced today, they will not be taken from the lottery but met by the Treasury through central Government expenditure?

Photo of Tessa Jowell Tessa Jowell The Secretary of State for Culture, Media and Sport

I will make two points in response to the hon. Gentleman. First, this is intended to be the final lottery contribution to the costs of the Olympic games between now and 2012. Secondly, we should not forget that a major part of the Olympics and Paralympics will be the cultural Olympiad, which starts next year when London becomes the host city and Liverpool becomes the capital of culture. There is not a single aspect of our heritage, our culture, our community sport or our national life that cannot be enriched by our hosting of the Olympic games. Finally, the hon. Gentleman asked about the comprehensive spending review, but without wishing to be coy, I am sure he will accept that that is an announcement for the Chancellor, not for me.

Photo of Meg Hillier Meg Hillier PPS (Rt Hon Ruth Kelly, Secretary of State), Department for Communities and Local Government

I welcome this pinning down of the finances— [Interruption]—particularly the money that is already being spent in my constituency. I also welcome the commitment to fund the broadcast centre—a proper legacy for jobs and business in Hackney. Will my right hon. Friend tell me and the House what work she and other agencies are doing to ensure that the money that she has unveiled and discussed today is recycled so that local and UK businesses are in a good bid position—ready to bid for the contracts that will come up? That will help to ensure that the money is invested in jobs and businesses in the UK, east London and London as a whole.

Photo of Tessa Jowell Tessa Jowell The Secretary of State for Culture, Media and Sport

I thank my hon. Friend for her work to support the Olympics in her own constituency, which will ensure that her constituents benefit from the job and training opportunities as well as the sporting opportunities that will arise from hosting the games. It is well known that 12,000 or so new jobs will be made available and the commitment to pre-volunteering is also important, because some socially excluded people in the Olympic boroughs will have the opportunity to get into work and to acquire the skills that will keep them in work. That will stem from their volunteering in the run-up to the games.

My hon. Friend has made a very important point, because part of the legacy of the games will be world-class facilities and a new urban park in one of the poorest parts of the country. Another legacy is just as important to my hon. Friend's constituents and those of other colleagues with east London constituencies—the prospect of new jobs and new skills in a part of London where unemployment is significantly higher than in the rest of the country.

Photo of Iain Duncan Smith Iain Duncan Smith Conservative, Chingford and Woodford Green

May I gently say to the Secretary of State that it is possible for an east London MP to be in favour of the Olympics and also utterly astonished at the change in the budget figures announced today, which will so affect my constituents? May I, without any ranting, simply ask her to answer the following questions? First, will she now guarantee, as my hon. Friend Mr. Whittingdale requested, that there will be no further increases in demands on the lottery fund? Secondly, will she also guarantee—the Secretary of State will forgive me for not trusting the Mayor, as she may do—that no further demands will be placed on council tax payers in my constituency?

Photo of Tessa Jowell Tessa Jowell The Secretary of State for Culture, Media and Sport

On the first question, I have said clearly that there will be no further call on the lottery between now and the Olympic games in 2012. On the second, the Mayor has also made it absolutely clear that he does not expect to levy further council tax increases on Londoners.

Photo of Dawn Butler Dawn Butler Labour, Brent South

I thank my right hon. Friend for her statement, and I would like to say how important it is to keep stressing the part of the Olympics that money cannot buy—not just the legacy, but the hopes, aspirations and dreams of many young people, especially in my constituency of Brent, South. I thank the Secretary of State for coming to the opening of the Willesden sports centre. We hope that at least five to 10 of those young people will be able to compete and win medals in the games. It is also important to stress that some of the Olympic games will come to Wembley stadium— [Interruption]—and I would like to tell the House that that will be opened on Saturday. As I said at the outset, it is so important to stress the aspects that money cannot buy.

Photo of Tessa Jowell Tessa Jowell The Secretary of State for Culture, Media and Sport

I thank and congratulate my hon. Friend. The ambition of the young people now training at the Willesden sports centre to win medals at the London Olympics is unequivocal. All power to their success. My hon. Friend is absolutely right to say, despite all the cynical barracking from Opposition Members, that Wembley stadium will be one of the finest in the world. It will host the football events in the 2012 Olympics.

Photo of Mark Field Mark Field Conservative, Cities of London and Westminster

We all regret that the Secretary of State has had to come back to the House as she has. In all honesty, I suspect that on 5 July 2005 she did not expect us to win the Olympic bid; hence the budget was much slacker than it otherwise might have been. She rightly points that there has to be legacy, and that providing a catalyst for regeneration is the raison d'être of the Olympic games. We all know that it will be a spectacle and a great sporting success in 2012, but without that legacy it will have been a wasted opportunity. My fear is that with the budget now set at £6 billion—much higher than the original budget—it is the regeneration that will be lost if costs continue to spiral as they have. Will the Secretary of State

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

Order. A question can be inferred from what the hon. Member has already said.

Photo of Tessa Jowell Tessa Jowell The Secretary of State for Culture, Media and Sport

I think that we should ask for a declaration of interest from Conservative Members before every contribution, if what they really mean is that it would have been better if we had not won the Olympic games bid. [Interruption.] To deal with the hon. Gentleman's point, yes, legacy is absolutely— [Interruption.]

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

Order. There may be tensions in the House about this issue, but the Secretary of State must be heard, as must every hon. Member who is asking questions.

Photo of Tessa Jowell Tessa Jowell The Secretary of State for Culture, Media and Sport

The hon. Gentleman's question is specifically about legacy. The investment in regeneration and Olympic infrastructure in and around the Olympic park is precisely about legacy, because the sporting venues that will be built will be used for decades to come—long after the 60 days of the Olympics and Paralympics. That is one of the reasons why we should look at this not just as a cost but as an investment in the quality of life of those communities for decades to come.

Photo of Phyllis Starkey Phyllis Starkey Labour, Milton Keynes South West

A key aspect of the legacy is that it will bring into beneficial use a huge area of land in east London that is very close to the City, but hitherto could not be used because of its highly contaminated nature. I was interested to hear the Secretary of State mention profit sharing in relation to the added value of the site. Does she intend to return to the House with more details of those profit-sharing arrangements? If not, will she ensure that there is another opportunity to examine how the profit will be shared between regeneration projects and returns to the lottery fund?

Photo of Tessa Jowell Tessa Jowell The Secretary of State for Culture, Media and Sport

I will of course provide the House with details of the redrafted memorandum of understanding between the Mayor of London and me, which will set out how the profit sharing will work.

Photo of Andrew Pelling Andrew Pelling Conservative, Croydon Central

Will the Secretary of State, as a fellow London MP, concede that additional money will now have to come from London taxpayers, despite the agreement that there should be no increase in the Olympics tax? The £300 million that needs to be found by the Mayor will have to come either from a reprioritisation of his budget or from an increase in that other element of council tax, the main council tax itself. Will not additional money also have to come from London taxpayers through the so-called profit sharing, bearing in mind that the London assembly had previously been assured that all the money coming from the increased value of the land would be secured by the London Development Agency? Now that extra money is to be taken away from Londoners.

Photo of Tessa Jowell Tessa Jowell The Secretary of State for Culture, Media and Sport

Let me deal specifically with that point. The intention will be to return to the LDA the cost of the land that it has acquired for the Olympics. Any profit resulting from the sales will be shared between the lottery and the regeneration of the east end.

Photo of Andrew Love Andrew Love Labour, Edmonton

As a number of Members have already pointed out, what is unique about these Olympics is the legacy and regeneration benefits. Regeneration is critical to the area, which is one of the most deprived parts of the country. It will involve 9,000 homes, a shopping centre and a media centre—and I could go through all the benefits and additional jobs that have been mentioned. I understand that the infrastructure costs have risen from £1 billion to £1.7 billion. Will my right hon. Friend tell me how much of that increase is due to inflated construction costs, and how much will be additional regeneration benefits that will link not only the five boroughs but the rest of London and the rest of the country to all the benefits that the Olympics will bring?

Photo of Tessa Jowell Tessa Jowell The Secretary of State for Culture, Media and Sport

In relation to construction costs, when I appeared before the Select Committee on 21 November I made it clear that we had revised the estimate of construction inflation from 5 to 6 per cent. and that we had allowed for the cost resulting from that. My hon. Friend has been an incredible champion of the Lea Valley athletics centre, which is a state-of-the-art world-class training facility just up the road from Stratford. That is a good example of how regeneration can be brought to a deprived community through world-class investment in sport.

Photo of Bob Neill Bob Neill Conservative, Bromley and Chislehurst

Will the Secretary of State accept that many people in London will regard the suggestion that Manchester is a different kind of host city from London as the biggest load of baloney yet to come from her Department on this subject? Given her announcement that the memorandum of understanding between herself and the Mayor is to be rewritten, will she undertake that it will spell out specifically that there will be a binding cap on council tax increases for Londoners, and that it will give a specific indication of how much money will be given away by the London Development Agency to the rest of the country through the percentage of the profit to be transferred out of the LDA

Hon. Members:

That's a vote for Paris.

Photo of Tessa Jowell Tessa Jowell The Secretary of State for Culture, Media and Sport

That is right: that was a vote for Paris.

I want to deal with the matter of VAT status. The city of Manchester ran the Commonwealth games, and it was therefore exempt from VAT. London is constituted on a different basis, as it is making a contribution to the cost of the games. I, too, am a London Member of Parliament, and I do not think that those of us who represent London constituencies need a binding cap on the take from the council tax, because we know precisely—and are sensitive to—the views of our constituents. I am quite sure that the rewriting of the memorandum of understanding between the Mayor and me will reflect that.

Photo of Jim Dowd Jim Dowd Labour, Lewisham West

I am grateful to my right hon. Friend for her assurances about the position of London council tax payers. However, there is a concomitant concern that a loss of other resources might occur. We shall have to return to that issue over time. Will she give me an assurance that in the search for private sector partners—especially sponsors—to fund the games, regard will be given to those whose commercial activities conflict with Government health priorities, particularly those in the fast food and food processing industries?

Photo of Tessa Jowell Tessa Jowell The Secretary of State for Culture, Media and Sport

I thank my hon. Friend for his question. I would like to remind him of the scale of private sector investment that has already come into London as a direct result of the games, and of the potential tourism dividend, which has been estimated at between £1.4 billion and £2 billion, 40 per cent. of which is expected to be enjoyed not by London but by the rest of the country. I understand what my hon. Friend's question about private sector partners is getting at, but a number of the sponsors are nominated and contracted by the International Olympic Committee rather than directly by the host city.

Photo of Nick Hurd Nick Hurd Conservative, Ruislip - Northwood

The Secretary of State should be aware that people in my constituency in west London will be profoundly sceptical about her statement that the Mayor does not expect to increase the council tax for London beyond current commitments. I want to ask her a simple question: can she guarantee that my constituents' council tax will not rise beyond current commitments?

Photo of Tessa Jowell Tessa Jowell The Secretary of State for Culture, Media and Sport

The decision about council tax is a decision for the Mayor. It is not a decision for me as Secretary of State and Olympics Minister. I have set out for the House this morning the budget for the Olympic Delivery Authority and I have indicated the scale of the wider funding provision. There is a memorandum of understanding, and the Mayor has made his position very clear. If the hon. Gentleman wishes to pursue this point—which, again, I take as a vote for Paris—he should take it up with the Mayor.

Photo of Sadiq Khan Sadiq Khan Labour, Tooting

Is my right hon. Friend aware that some members of the Public Accounts Committee, on which I sit, will be devastated by the fact that she has set this budget today, because it takes away the one weapon that they had with which to attack the 2012 Olympic games? Does she share my frustration that some of the wider benefits of the games—the regeneration, the improved transport infrastructure, the housing—have been included in the public perception of the costs of the Olympics, which takes away from the perception of the huge benefits that we will see in London?

Photo of Tessa Jowell Tessa Jowell The Secretary of State for Culture, Media and Sport

My hon. Friend is absolutely right. The message not only for London Members of Parliament but for those representing constituencies up and down the country is that there will be opportunities for all their constituents, and they can help them to achieve them. So the responsibility also lies with them. My hon. Friend referred to the Public Accounts Committee, and I would remind him that we welcome the National Audit Office report on the Olympic games. In presenting the budget and the wider funding provision today, we have addressed the outstanding risk about which the NAO expressed concern, in what was overall an extremely positive report.

Hon. Members:

Hear, hear!

Photo of Nigel Evans Nigel Evans Conservative, Ribble Valley

Yes, it is good to have a non-London Member asking a question about the cost of the Olympic games. The cost will be borne equally by my constituents, who receive as much national lottery funding as anyone else. Will the Secretary of State tell the House what assessment she has made of the impact on the sporting bodies, especially those outside London, that will now lose their budgets because of this extra raid on the national lottery of £675 million? Who will be the losers? The Government will get a gold medal for the biggest increase in the cost of an Olympic games ever. The Olympic rings are hanging like a noose over future generations, who will have to pay the huge debt that the Government have created. They have completely lost control of the financing of the Olympic games.

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

Order. I do not want non-London Members to suppose that they must speak for longer than London Members. I am trying to allow every Member who wants to speak to do so. Another important statement and then a debate on higher education are to follow, however, so I would appreciate short questions and concise answers.

Photo of Tessa Jowell Tessa Jowell The Secretary of State for Culture, Media and Sport

Thank you, Mr. Deputy Speaker; I fear for the health of Mr. Evans when he rants as he does. Briefly, the answer to his question is that the lottery is not the only source of money for sport in this country. That is why so many more young people have been taking part in sport and so much more has been achieved. Sport has been enjoying an unprecedented level of investment, and we need that to continue.

Photo of Derek Wyatt Derek Wyatt Labour, Sittingbourne and Sheppey

Dick Pound, who was on the International Olympic Committee for 20 years, said that the bid books were the best piece of creative accounting he had ever seen. Given the legacy of Atlanta, Sydney and Athens, we should not be surprised to know that, by and large, the figures double. I ask my right hon. Friend to step back from the lottery £625 million. I sit on the South East England Development Agency and Kent county council Olympic groups, and we need a challenge fund to bid for elements of the Olympics in 2012. Therefore, if she is going to take some of the lottery money away, will she reconsider the 12p in the pound that the lottery takes in tax and use that 12p, not cuts in the lottery, to resolve the dilemma?

Photo of Tessa Jowell Tessa Jowell The Secretary of State for Culture, Media and Sport

I pay tribute to my hon. Friend, who chairs the all-party group on the Olympics. As I always say when he raises this question, lottery duty is a matter for the Chancellor.

Photo of Pete Wishart Pete Wishart Opposition Whip (Commons), Shadow Spokesperson (Cabinet Office), Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (International Development)

During those heady, euphoric, nonsensical days when London was first awarded the Olympic games, the Scottish National party and Plaid Cymru were alone in warning of the spiralling costs and highlighting the threat to our national lottery, while the other Opposition parties were compliantly silent. Surely it is not credible or realistic to suggest that further raids on the lottery will not result in real pain. Why should grass-roots sports and good causes in my constituency lose out to pay for the regeneration of east London, when the London taxpayer will not pay a penny more?

Photo of Tessa Jowell Tessa Jowell The Secretary of State for Culture, Media and Sport

I do not think that the hon. Gentleman supported the idea of the Olympic games in London or in Paris—but perhaps he does support the prospect of holding the Commonwealth games in Glasgow. I welcome the support in Scotland, Wales and Northern Ireland for the London Olympics. Young people in those countries will also be beneficiaries of the unprecedented investment in sport.

Photo of Clive Efford Clive Efford Labour, Eltham

It is the duty of every Member of the House to scrutinise budgets and make sure that we get value for money, particularly with expensive schemes such as the Olympics. What the Opposition have shown, however, is that they know the cost of everything and the value of absolutely nothing. Over the past two generations, the affected part of east London has seen factories, docks and, south of the river, the Woolwich arsenal close. Is not two thirds of the budget announced by my right hon. Friend for infrastructure and regeneration? If what we have heard in the Chamber is the sort of publicity that the Olympics is going to get, it is important for the Olympic movement to make every community a part of the games, to overcome the penny-pinching and negativity of Opposition Members.

Photo of Tessa Jowell Tessa Jowell The Secretary of State for Culture, Media and Sport

My hon. Friend is absolutely right. To sound a note of warning to the Opposition, I remind them that public support is with the Olympics. In every school in this country, young people are counting the years and the months until the Olympics. The Olympics have lifted prospects, ambitions and aspirations, as more young people take part in sport. The approach of the Conservative party is to say that it is a great supporter of the Olympics, but then to seek to destabilise, carp and criticise at every turn.

Photo of Patrick Cormack Patrick Cormack Chair, Northern Ireland Affairs Committee, Chair, Northern Ireland Affairs Committee

It is possible to be in favour and yet express concern. Is the Secretary of State aware that all those who are concerned about arts and heritage matters, for which she has national responsibility, fear a destructive distortion in her budget over the next five years? They fear that she will go down in history as the most expensive lady since Helen of Troy, whose face launched a thousand ships—and those, at least, were operational.

Photo of Tessa Jowell Tessa Jowell The Secretary of State for Culture, Media and Sport

The hon. Gentleman, who has a proud and distinguished reputation for representing the heritage in this House and beyond, is being a touch apocalyptic. The Government welcome scrutiny of everything that we and our associated partners are doing in relation to the Olympics. We deplore, however, the cynicism that undermines the optimism felt by young people up and down the country.

Photo of Sally Keeble Sally Keeble Labour, Northampton North

I welcome my right hon. Friend's statement. Will she ensure real engagement with local communities through the nations and regions group, so that all communities outside London can see the benefits of the games, especially in increased participation in sports, which I believe will be one of the strongest legacies of the games?

Photo of Tessa Jowell Tessa Jowell The Secretary of State for Culture, Media and Sport

My hon. Friend has set an example in her constituency for how enthusiasm for the Olympics can be brought together through local organisations, sports clubs and local sponsorship. I hope that Members from both sides of the House will rise to that challenge. She is absolutely right that sustaining public confidence and support for the Olympics means making clear the benefits that will come to towns, cities and communities across the United Kingdom. That is what we want to achieve.

Photo of Philip Davies Philip Davies Conservative, Shipley

The Secretary of State should apologise to the House for presiding over such a shambles, allowing costs to spiral out of control by so much so quickly, and expecting good causes and charities in our constituencies to bail her out. How much confidence can we have in the new budget, given that there are another five years to go until the Olympics? If she has not already been sacked, will she resign if she has to come back and demand more money for the games?

Photo of Tessa Jowell Tessa Jowell The Secretary of State for Culture, Media and Sport

I wonder what young people who may read or watch this debate at home—if they have nothing better to do—must make of the Conservative party's attitude. [Hon. Members: "Scrutiny."] Scrutiny is absolutely fine, but cynicism is not. Of course we will continue to be scrutinised, to explain and to justify, but I will never apologise for having had the vision and confidence to bid for the Olympic games and, against all the expectations of the nay-sayers, win it for London.

Photo of Tom Watson Tom Watson Member, Labour Party National Executive Committee

With more than 40 major construction contracts likely to employ more than 20,000 people, many of whom will come from the west midlands, does my right hon. Friend agree that framing the contract is now vital? What the construction industry needs is certainty about who—preferably, a single organisation or even a named person in that organisation—is making the decision. Does she further agree—

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

Order. The hon. Gentleman should know to sit down as soon as I rise to my feet. He had a good ration.

Photo of Tessa Jowell Tessa Jowell The Secretary of State for Culture, Media and Sport

To focus for a moment on procurement, my hon. Friend is absolutely right. The Olympic Delivery Authority has already published its principles for good procurement, which laid heavy emphasis on the importance of sustainability for the games. Yes, the governance procedures are clear and robust, precisely as is necessary to ensure that the project is delivered on time and with proper cost control.

Photo of Brian Binley Brian Binley Conservative, Northampton South

I was delighted to hear the Minister talk of opportunity. I am also delighted that in Northampton my colleague Ms Keeble and I are working together so closely to ensure that we exploit all the opportunities. I pay tribute to her energy and dedication in that regard.

As the Minister will know, the development of Crossrail may take place at the same time as the development of facilities for the Olympic Games. That will involve an enormous amount of resources, which will be focused on London. I am concerned about how the rest of the country will be affected, and I therefore ask whether any assessment—

Photo of Tessa Jowell Tessa Jowell The Secretary of State for Culture, Media and Sport

I think that we should hear it for Northampton! My admiration for my hon. Friend Ms Keeble is undimmed on learning of the steps that she has taken. As for Crossrail, decisions will be made in due course, but I have always made clear that there is no reliance on Crossrail for the Olympic transport plan, which is very well advanced.

Photo of Jim Sheridan Jim Sheridan Labour, Paisley and Renfrewshire North

Will my right hon. Friend assure us that if lottery money is to be diverted, she will begin with the arty-farty projects? I am thinking, for instance, of the £2 million that we gave the Churchill family for paintings that 95 per cent. of the British public have never seen and have no desire to see. Will my right hon. Friend also assure us that the construction contracts will be given to British companies employing British-registered workers, complying with British employment law and using British products?

Photo of Tessa Jowell Tessa Jowell The Secretary of State for Culture, Media and Sport

I can tell my hon. Friend that the ODA takes what he said in the second part of his question very seriously. As for the first part, without substituting my judgment for that of the distinguished lottery distributors, I remind him of the safeguards that the settlement provides for the voluntary and community sector, which the lottery enables to play a vital part in the life of communities throughout the country.

Photo of Mark Pritchard Mark Pritchard Conservative, The Wrekin

May I make the Secretary of State an offer which I hope she will not refuse, and which may even cheer her up? Would she like to come to the midlands with me this weekend? If she does, she will see that construction there is delivered at about 25 per cent. of the cost of construction in London. If this really were a national rather than a London Olympics event, there would be far more building in the regions, which would solve some of the problems that the Secretary of State faces today.

Photo of Tessa Jowell Tessa Jowell The Secretary of State for Culture, Media and Sport

I can resist the hon. Gentleman's invitation, because I was in the midlands yesterday or the day before, and while I was there, I was told by the Olympics director of Birmingham city council that the American track and field team would be based in Birmingham in the run-up to the games. There have been some 700 expressions of interest in hosting preparation camps, and the midlands are getting in early to ensure that the benefit of the Olympics will extend to Birmingham.