Millennium Dome

– in the House of Lords at 3:03 pm on 27th September 2000.

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Photo of Lord Falconer of Thoroton Lord Falconer of Thoroton Minister of State, Cabinet Office 3:03 pm, 27th September 2000

My Lords, following events in connection with the Dome over the Summer Recess, I should like to update the House on the developments that have taken place since the House last met.

This Government acknowledge that the Millennium Experience has not been the success that the majority of this House had hoped for. The project was too ambitious given the time constraints of design and build and the one year only operation. The target of 12 million visitors was too ambitious; and it was not appropriate for the public sector to manage a large visitor attraction.

However, this should not distract us from what has been achieved. The Dome is the number one pay-to-visit attraction in the UK, with over 4.6 million visits so far, and number two in Europe--with visitor satisfaction ratings among the industry's highest.

The Dome has been the catalyst for the regeneration of the Greenwich peninsula--one of the Commission's main objectives in its proposal for a Millennium Exhibition. The Greenwich peninsula is now beginning to flourish, with a variety of new developments, community facilities and fresh ideas creating an exciting new urban quarter for London.

The benefits have been felt right across the United Kingdom. Over £300 million worth of construction contracts have been awarded to UK companies; 13,000 employees have gained work in construction and operation of projects on the Greenwich peninsula; and there has been a substantial boost to the UK economy from foreign visitors in 2000. This will benefit the whole country.

There is still a great deal of work to done to secure the achievements of the Millennium Experience project and to secure a long-term future. I am determined to see this project through and secure those benefits.

Despite the setbacks of recent months the workforce remains committed to the project and proud of its achievements. Visitor numbers are encouraging, with around 48,000 people visiting the Dome last weekend.

I can assure the House that there are lessons to be learnt; and we are aware of the lessons to be learnt. However, we cannot put the clock back, and we are where we are. The project is three months from its conclusion and there are still vital tasks to be accomplished: making sure that those 283,000 people, including school parties, who have already booked tickets for the Dome and the many thousands whom we expect to visit in the run up to Christmas and the New Year get the day at the Dome to which they have been looking forward; making sure that all those employed directly and indirectly are able to see out their contracts; making sure that the contracts with the sponsors and exhibitors are honoured; in essence, to avoid insolvent liquidation which would be much more costly and damaging than trading until the end of the year; and securing a long-term future for the Dome, which continues to maximise the regeneration benefit to Greenwich, the wider Thames Gateway and London as a whole.

We recognise the disappointments of the project and of the summer. It is important that I now update the House in detail. First, as regards the appointment of David James, on 5th August the Millennium Commission agreed to provide a further grant to the company of £43 million, drawn forward from the expected £53 million receipt from the sale of the Dome to Nomura.

The then chairman of NMEC, David Quarmby, with the support of the board, in consultation with the Millennium Commission, concluded that NMEC required additional corporate financial expertise and that this was required at executive chairman level. Mr Quarmby therefore approached PricewaterhouseCoopers Corporate Recovery Group to carry out an independent financial review of NMEC's finances and also to suggest potential candidates for the post of executive chairman. Mr Quarmby approached David James in early August and he worked on a fee free consultancy basis with the NMEC team and PWC during the review of the company's finances. The report was presented to the board of the company on 22nd August. I have requested PWC's approval to place copies of this technical corporate finance report in the Libraries of both Houses. NMEC appointed David James as executive chairman on 5th September. He has taken on this role on a non-fee basis.

The report indicated that, in order for the company to meet its liabilities, to continue trading until the end of the year and to achieve an orderly wind-down, a further £47 million was required on top of the £43 million advanced in July. (A major reason for the additional grant was the failure of the company to assess its wind-down costs). The report further indicated that, should the Millennium Commission not provide the £47 million, the company would have to cease trading immediately. Insolvent liquidation of the company would have resulted in the immediate loss of up to 5,000 jobs for people directly and indirectly employed at the Dome; creditors would go unpaid; small businesses would suffer; and tens of thousands of visitors and many schools with pre-booked tickets would be disappointed. The PWC report considers in detail whether it would be cheaper to close earlier than 31st December. It concluded unambiguously that it would be more expensive to close early than to continue until 31st December. This is because the expenditure saved would not be as high as the revenue lost and the likely claims which would be made in the event of earlier closure. The report indicated that if the company were to honour its obligations then it would be cheaper by some £30 million to £40 million to trade until the end of the year than to close early.

The report also indicates shortcomings in the financial controls in the company. On 22nd August, immediate changes in the executive management of the company were made. David James was appointed executive chairman of the company and John Darlington was appointed as finance director and steps were taken to support them. Overall, the budget is exceeded by only 4.6 per cent. While controls are vital, one should not lose sight of the extent of the overspend.

In evidence to the Select Committee on Culture, Media and Sport on 17th July, and in a Written Answer that I gave in the House on 27th July, I stated that NMEC was trading solvently. I gave those answers on the basis of the views of the company, which has had the benefit of independent legal and accounting advice throughout the year. The PWC report revealed the need for further grant from the Millennium Commission. That was obtained by the company as soon as possible after the shortfall became apparent, thereby rectifying the situation. The answers that I gave on 17th and 27th July obviously did not contain the material subsequently revealed in the PWC report because I did not know it. I have taken the first opportunity to put the record straight in the House.

The events that have evolved over the summer and the additional information that has come to light following the PWC report are, of course, very disappointing, but I trust that noble Lords will agree that the Millennium Commission and the Government have taken the only sensible course of action available to them, consistent with minimising further financial costs and preserving the many benefits that are accruing from the project.

On 11th September, Nomura withdrew from the legacy competition. Subsequently, the Millennium Commission reaffirmed its commitment to the project following Nomura's decision to withdraw. The claims made by Mr Guy Hands of Nomura in his letter of 11th September to the competition director, withdrawing from the competition, have been refuted by Mr David James, NMEC's executive chairman. I am placing a copy of that correspondence in the Libraries of both Houses.

I can confirm that the Government are in discussions with Legacy plc regarding the sale of the Millennium Dome. Legacy plc was the second shortlisted bidder in the competition previously established for the future of the Millennium Dome. Subject to satisfactory progress, Legacy plc could be granted preferred bidder status within approximately one month.

The Government are also exploring other options for keeping the Dome in parallel with the Legacy plc discussions, but we are not soliciting offers, nor are we in serious negotiation with any other party. I assure noble Lords that the Government remain committed to a long-term future for the Dome.

It was important that Parliament had the true position as soon as possible after I became aware of the true facts. I shall not attempt in this statement to give noble Lords a detailed breakdown of the budget at the beginning of the year and the budget as it now stands. However, I shall place details in the Libraries of both Houses as soon as possible. I can confirm that the current budget is based on 4.5 million paying visitors. As I have already said, we recognise that the original estimate of 12 million was far too optimistic. However, the company has continually revised its visitor target as it has become informed by actual attendance figures. The Millennium Experience has not been as successful as we had hoped and the impact of the drop in visitor numbers and the resulting downturn in revenue has been by far the most significant pressure on NMEC's budget. The enhanced management team is focused on successful trading until the end of the year.

Since May 1997, the Government have answered over 1,100 Parliamentary Questions; there have been numerous debates in this House and the other place and there have been five Select Committee inquiries on the subject, to which the shareholder has always given evidence, as have other Ministers. The government response to the Select Committee report published in July will be published on 23rd October, when the other place returns. Scrutiny has been rigorous and will continue to be so, as is right for a project of such a scale.

In addition, the National Audit Office investigation is progressing. I hope that noble Lords agree that the current investigations should be completed and the PAC's findings published before any judgments are made.

As I have said on many occasions, I am determined to see the project through to the end. The enhanced management team is focused on making the project work until the end of the year and ensuring an orderly wind-down of the business. That is our objective, which I remain committed to seeing through.

Photo of Baroness Anelay of St Johns Baroness Anelay of St Johns Conservative 3:13 pm, 27th September 2000

My Lords, I welcome the fact that the Minister has been prepared to come to the House to make a Statement today, but does he understand that his account of what he refers to as the disappointments--I stress that word--of the summer comes far too late to meet the widespread public anger about how the Government have bungled the handling of the Dome project? It was new Labour's flagship project.

Noble Lords:

No.

Photo of Baroness Anelay of St Johns Baroness Anelay of St Johns Conservative

My Lords, I notice that the word "new" seems to have been dropped from most of the hoardings at the Labour Party conference this week, but the project was Labour's reflection of new Britain. It was a project on which they said that their competence could be judged. Today the Minister asks the jury to wait a little longer before returning its verdict. Is it not a fact that the jury has long since returned its verdict and the judgment on his management of the project is that he has failed utterly?

Financial monitoring has been negligent. Although the Minister has told the House that he saw the Dome company's papers and was getting weekly trading figures on his desk--indeed, that he attended board meetings and has been in constant contact--nobody even knew what the assets of the company were. It missed its trading targets by millions and millions of visitors--targets that were set and agreed by this Government after a thorough review of the circumstances surrounding the Dome project. They were agreed by the Cabinet in June 1997.

This summer, the Dome has been shown to have been trading insolvently. I welcome the Minister's comment today that he has approached PricewaterhouseCoopers and asked for permission for its report to be placed in the Libraries of both Houses. Many of us have already read most of it, because it was posted on a website by the Sunday Times recently. Will the report that the Minister publishes include the missing section on page 39, headed "Implications for Directors", which includes shadow directors?

The Minister has referred to the fact that one rescue deal has collapsed--the deal that he told the House on 27th July had secured the future of the Dome. In his Statement he referred to the fact that on 5th August the Millennium Commission agreed to provide a further £43 million, which was drawn down out of the £53 million receipts expected from the sale of the Dome. What happens now? The Millennium Commission gave out money to be received from a sale that we are now told will not take place. What is the position with regard to that £43 million that has been handed over?

There has been contractual chaos throughout and two chairmen of the company have been sacked along the way. The project has been a fiasco, but the sole shareholder--the Minister--sails blithely on. When will he accept his responsibility and go?

When the Minister told me on 27th July that the Dome company was trading solvently, I trusted him, as I had always trusted him. Today, when he read the Statement, he said that he gave me that answer on the basis of the views of the company. I expected better than that from a Minister whose duty it is to carry out a thorough review of the spending of the public's lottery money--now £629 million of it. As a Minister, did he receive independent advice? If not, why not?

When did the Minister first notice that the Dome company had failed to do something as basic as construct an asset register? When did he notice for the first time that it had offered open-ended contracts without any fixed liability, so that certain contracts could not be cancelled without the possibility of vast sums being incurred in compensation? When did he first notice that the company had failed to calculate the simple costs of closing the exhibition? As sole shareholder, it was his responsibility alone to safeguard the use of the public's money. After all, if such a huge project had been in the hands of the private sector and had been so spectacularly mishandled, one thing is certain: the person in charge would have gone long ago.

The noble and learned Lord is well respected in this House. He has been and still is a popular figure when he comes into this Chamber. Many people suspect that he is acting as a type of air raid shelter for the Prime Minister and other leading members of this Government who made the decisions early on and who have driven the project from day one.

Can the Minister say whether he has ever offered his resignation to the Prime Minister and, if so, whether it has been refused? Of course, it may be an honourable position to stand by your friends. However, will he accept that it would be far more honourable and add to the respect in which he is held if he now accepted ministerial responsibility for what his colleague, Clare Short, has called the "disaster" of the Dome and lay down the office that he currently holds?

Photo of Lord Harris of Greenwich Lord Harris of Greenwich Liberal Democrat 3:20 pm, 27th September 2000

My Lords, I am grateful to the noble and learned Lord for having taken this step as soon as the House was recalled. I believe that the one thing on which we can probably all agree is that today we are talking about a fine old mess. I understand that we shall soon have the benefit of a debate on this issue. Therefore, today I want to make only a few preliminary observations.

I want to put one specific point to the noble and learned Lord concerning Nomura. Apparently, Nomura claims to have asked for detailed figures. It claims that it was not given those figures. I find that extremely puzzling, so perhaps the Minister can explain why that was so.

I do not propose to become involved in a finger-pointing exercise about who has the major responsibility for the problem that we are discussing today. Speaking as an individual, I cannot pretend that I was unduly enthusiastic about the Dome when it was first announced by the previous Conservative government. However, once the project had also been backed by the new government, I, with many others, I am sure, hoped that it would prove to be a success.

Unfortunately, others were just as determined that it should be a failure. We have only to study the speech of the former Deputy Prime Minister, Mr Michael Heseltine, delivered in the House of Commons on 21st February this year, to see the difficulties that he and the former government encountered as a result of the hostility of a number of tabloid and other newspapers.

Noble Lords:

Oh!

Photo of Lord Harris of Greenwich Lord Harris of Greenwich Liberal Democrat

My Lords, I am surprised that the Conservative Party is demonstrating doubts on that matter. I am referring to what the former Conservative Deputy Prime Minister said.

Although it would be sheer humbug for me to pretend that I was one of Mr Heseltine's most passionate admirers when he was a Minister of the government in which so many Members of the Opposition Front Bench in this House served, I always considered that his record in Liverpool and subsequently in Docklands was absolutely first class. The Docklands project is one of the most impressive developments in Europe. For that, Mr Heseltine deserves enormous personal credit. As he said, the 300 acres of dereliction and contamination, now known as the Dome site on the other side of the river, now represent an area of huge potential. It has made a major contribution to the economy of south-east London and to its infrastructure.

Therefore, it is very sad that we have arrived at the situation that we have today and that we must recognise the failure--indeed, the substantial failure--of the Dome project. Some of the errors are now fairly obvious. Estimates for the number of visitors were wildly optimistic; and there was something even more fundamental. It would have been far better if from the start Ministers had kept an arm's length relationship with the project. However, that was not done. I believe it was a serious mistake.

To some extent at least, I can understand why Ministers were so deeply involved. The previous Conservative government decided that they had to raise approximately £150 million from private sector sponsors. At that time, the government were in an extraordinarily weak political position. Therefore, they decided that they simply had to have clearly defined backing for the project from the then opposition. As Mr Heseltine reminded us recently, it was,

"an all-party concept".--[Official Report, Commons, 21/2/00; col 1317.]

That approach has been perhaps not quite so obvious this afternoon.

I believe that that is only one of the reasons why Ministers became directly involved in the project. It would have been far better to have had a public body of the kind established by Herbert Morrison with, of course, significant private sector representation but with no Ministers of the Crown directly involved.

As I said, we understand that we shall return to this issue within the next few weeks. I hope that on that occasion we shall do our best to limit the kind of rancorous exchanges that do so little to enhance the reputation of British politicians. Serious and, indeed, grave errors have been made by a significant number of people over the Dome, but to try to pin responsibility on a single individual is absurd.

Photo of Lord Falconer of Thoroton Lord Falconer of Thoroton Minister of State, Cabinet Office 3:26 pm, 27th September 2000

My Lords, I deal, first, with what the noble Baroness, Lady Anelay, said. Have we bungled our handling of the issue and has the financial monitoring been inadequate? As was touched on by the noble Lord, Lord Harris, this scheme was conceived on a cross-party basis. The Millennium Commission supported and promoted it. It was conceived as a way of celebrating the millennium and regenerating that part of the United Kingdom. When we came to power, we examined the scheme and decided to support it. We took the view that it was right to give the project a real chance because the benefits to be obtained for the standing of the country and for that part of the United Kingdom were substantial.

I am sure that everyone, including the Millennium Commission, recognised that a risk was involved. In very many respects that risk has not paid off and we are paying for it now. However, I believe that it is wrong for people suddenly to say, "Oh, it was obvious right from the start that you shouldn't have taken that risk". I believe that it was a risk worth taking and that it was an honourable risk.

So far as concerns the management, we supported a scheme which involved the setting up of a private limited company with one shareholder; namely, someone who represented the Government. That position was filled first by a number of Conservative Ministers, then by Mr Peter Mandelson and then by myself. The aim was to ensure that the shareholder would be accountable to Parliament but the company would run the operation. That had never been tried before. To the people who conceived it, it appeared to be a good idea. Further examination will reveal whether or not it was. However, as the noble Lord, Lord Harris, pointed out, such a scheme gives rise to very real difficulties as to precisely where the line is drawn in the relationship between, on the one hand, operational management and, on the other, accountability to Parliament.

So far as concerns accountability to Parliament, the one matter of which I am absolutely sure is that I should rely on the professional advice given to the company. I should let the board of directors make the commercial decisions and I should not start to interfere in operational decisions. The one thing that is clear--and that was clear right from the outset--is that a visitor attraction cannot be run from Whitehall.

I am surprised by the suggestions of the noble Baroness, Lady Anelay, that I was not being full and frank in relation to what I said either today or on 12th or 27th July. So far as concerns 12th and 27th July, the views of the board were based on advice which it had received from lawyers and independent accountants. I did not believe that it was my duty to go into the detail to that extent. I was entitled to rely on the advice which was being received. Of course, what has happened is disappointing but we must look at the overall picture to see why it went wrong rather than simply focusing on particular matters.

The noble Baroness asked me about the PWC report. In the past few days, we have asked what is the position in relation to that. We have not yet got to the bottom of what permissions we require to place the PWC report in the Libraries of both Houses. We shall deal with that as quickly as possible in the hope that the whole of the report, not just those parts which are on the Sunday Times website, is placed in the Library.

Thirdly, the noble Baroness asked me about the £43 million. She is absolutely right that the Millennium Commission's grant of £43 million--the one at the beginning of August, not the second one--was posited on the basis that the Nomura deal would go ahead and all that £43 million would be repaid. The moment it became clear that that was not the position, the company went back to the Millennium Commission which indicated that it was content to continue with that advance, even though the Nomura deal had fallen through. Of course, if there is a subsequent deal, the matter will be brought straight back to the Millennium Commission for further discussions.

I have dealt with questions about 17th and 27th July. The noble Baroness asked me when I became aware that there was no basic asset register. I did not become aware of it until Nomura mentioned it. She asked when I became aware that there were open-ended contractual liabilities. I am not clear to which particular contracts the noble Baroness refers. The PWC report refers to a particular number of contracts where they may be claims and figures have been put in relation to that.

She asked when I became aware of the total costs of closing. I assume that she means the liabilities after the experience has ceased to operate for the public. They were first identified in full by Pricewaterhouse. That was when I first became aware of them.

The noble Baroness referred to my position. I recognise that I am the Minister responsible for the Millennium Dome. I conceive my responsibility in relation to it to be to see it through to the end. In the context of the Millennium Dome, I am talking about procuring a legacy for it and protecting the rights of the people who have dealt with and worked at the Dome. Those interests and the interests of the public purse are best served by somebody staying on to the end. Mr David James, who is now the executive chairman of the company, has expressed the same view.

I have covered most of the issues raised by the noble Lord, Lord Harris. He referred to a debate in this House. It is not for me to say whether or not there should be a debate in this House. I say only that the appropriate time for a debate is after the National Audit Office and the PAC reports are available, which I understand will be some time in October and November when the matter can be debated in full. Whether or not and when that debate takes place is a matter for the usual channels.

Photo of Baroness Anelay of St Johns Baroness Anelay of St Johns Conservative

My Lords, I wish to raise one matter for clarification, which I understand is permissible. The noble and learned Lord said he thought he had addressed all my questions. I asked specifically whether he had offered his resignation and it had been refused.

Photo of Lord Marsh Lord Marsh Crossbench 3:32 pm, 27th September 2000

My Lords, there is a danger that we may waste an awful lot of time talking about which party is primarily concerned with this mess. At this stage of the proceedings, even now, if I had to choose between the noble and learned Lord, Lord Falconer, and Mr Heseltine, I should have some sympathy with the noble and learned Lord, Lord Falconer.

The issue is extremely simple. It is wholly and solely about the financial management and control of a massive public project. What I find most worrying is that the board does not seem to have had at any time a clear understanding of a situation which was becoming increasingly serious. It must have had, at every meeting, a cash flow forecast. That is one of the easiest financial documents to follow and yet the evidence is--and the Minister has confirmed it this afternoon--that the true position was revealed by PWC and Nomura of all people, a company intending to buy the project.

Will the Minister confirm that at the meeting on 22nd August, Mr Dipankar Ghosh of Pricewaterhouse formally warned the directors that there was a serious and immediate danger that they might become guilty of wrongful trading while insolvent or that that was a technical danger at least? Will the Minister confirm that Mr Ghosh took the trouble to set out the personal liabilities which the directors would suffer as a result as late as 22nd August?

We need a picture of just how well prepared and how well informed about the situation the Government, the Minister and the board were in dealing with this matter. Therefore, will the Minister tell the House the date on which the £47 million grant was formally requested; the date on which it was formally agreed; and why such serious and fundamental problems, which were obvious to outsiders, were not even dimly apparent to either the board or the Minister?

Photo of Lord Falconer of Thoroton Lord Falconer of Thoroton Minister of State, Cabinet Office

My Lords, the point about financial control is utterly critical but one should not lose sight of the fact that the amount by which the budget may have been exceeded is somewhere between 4.6 and 5 per cent. By comparison with other projects, particularly projects of this sort, that is not excessive.

I deal with the specific points raised by the noble Lord, Lord Marsh. He asked about cash flows. At every single board meeting which I attended, cash flows were available on particular bases which were considered in detail by the board. Of all the matters of which this company was obviously aware, it was aware of the need to know how much cash was coming into the company.

Secondly, I was asked about the Pricewaterhouse report. I believe that it was on about 10th August that Pricewaterhouse was instructed to carry out the report. Throughout the time that it was undertaking the report--from 10th to 22nd August--it kept the chairman of the board informed, and he kept me informed, of the results of that inquiry. Secondly, officials of the Millennium Commission were kept informed as to the position.

The most significant revelation of that report was that wind-down costs after 31st December had not been adequately provided for. So it was not the cash problem that was revealed but rather that, at the end of the day, unless adequate funds were made available, it was not possible to balance the books at the end of the project.

Millennium Commission officials have been kept fully informed as to how the report developed. Within a very few days of 22nd August a formal application was made to the Millennium Commission which considered it first on 31st August, and on 4th September the formal grant was made. It was dealt with as expeditiously and sensibly as possible.

The gentleman to whom the noble Lord, Lord Marsh, referred was saying that if there is no reasonable prospect of obtaining an additional grant from the Millennium Commission, then one may be in a position of insolvency. A judgment was made by the board, which turned out to be correct, that there was a reasonable prospect of obtaining that money.

Photo of Lord Barnett Lord Barnett Labour

My Lords, I ask my noble and learned friend to understand that many of us will share the unhappiness about the financial failures of the Dome. But perhaps some may share with me the regret at the positive searching for and hounding of scapegoats. That does not help us at all. Nor does the party political tone of the noble Baroness help us in any way in understanding what is the problem here.

I ask my noble and learned friend to ignore the over-clever--and I do not include the noble Lord, Lord Marsh, in this--and somewhat simplistic view of a definition of insolvency which has been taken in this matter.

As regards cash flow, if one were to take the case right across the board of companies not being able to make payment of debts, or deliberately delaying so doing, many hundreds if not thousands of large and small companies would be declared insolvent tomorrow. All that will come later when we debate the detail which is not before us. I am obliged to my noble and learned friend for setting out as much detail as possible today, which was helpful. To blame him for everything that has happened is frankly absurd. As he indicated, it is important to proceed as rapidly as possible to find an appropriate buyer. In the meantime, in the public interest we must ensure that the financial losses are stopped as quickly as possible.

Photo of Lord Falconer of Thoroton Lord Falconer of Thoroton Minister of State, Cabinet Office

My Lords, I agree with the concluding comments of my noble friend's question. Perhaps I may comment on the cross-party aspect. This was a cross-party scheme, supported by both parties, which involved a risk. It is unfortunate that once the risk turned out in some respects in a bad way, the party opposite immediately dropped off. This is obviously a bandwagon on which it no longer wishes to be.

Photo of Lord Tebbit Lord Tebbit Conservative

My Lords, does the Minister recollect answering a Written Question from me on 27th July? I asked him if he could break down the costs of clearance and preparation of the site, the construction of the building and the ancillary works. He replied two months ago stating that he would write to me when the information was available. Is he aware that he has still not done so? I assume that that is because nobody knows what those costs were. Is not that a sad commentary on the way this project has been bungled throughout from its earliest days? Would the Minister further agree that unless those figures show that the site has been adequately cleared and the pollution risk fully dealt with for other developments to proceed, most of that money will be shown to have been wasted?

Photo of Lord Falconer of Thoroton Lord Falconer of Thoroton Minister of State, Cabinet Office

My Lords, I am surprised that I have not answered the Written Question dated 27th July as I recollect having answered a similar Question in the past. Perhaps I may write to the noble Lord as I believe those figures are now available. As regards the substance of the question asked by the noble Lord, I do not accept, for a number of reasons, that the money has been wasted. First, the regeneration benefits were there at the time the Millennium Commission made its earliest decision. That decision remains one of the reasons for the project going ahead. Secondly, the Dome has attracted millions of visitors, far more than any other paid visitor attraction in the country, the vast majority of whom enjoyed the experience.

Photo of Lord Lea of Crondall Lord Lea of Crondall Labour

My Lords, the Opposition state that none of this would have happened in Docklands because it is in the private sector. But does my noble and learned friend agree that in 1991 the government announced a decision to spend £3 billion on the Jubilee Line extension in preference to a route which had a high rate of return--namely Crossrail--in order to rescue Canary Wharf, as Mr Heseltine will corroborate? Canary Wharf is now the jewel in Dockland's crown.

Photo of Lord Falconer of Thoroton Lord Falconer of Thoroton Minister of State, Cabinet Office

My Lords, I agree with that comment. I believe that if one were to come back in a number of years' time to look at the Dome, Canary Wharf and the whole area, one would see a picture of regeneration which has had a major effect on the Thames gateway.

Photo of Lord Lamont of Lerwick Lord Lamont of Lerwick Conservative

My Lords, I accept the validity of some of the points made by the Minister and sympathise with him on having inherited this project. However, is there not one aspect of this matter from which the Government cannot escape responsibility? I refer to the adequacy of the financial reporting upon which the Nomura deal floundered? It is not an adequate response to that point to say that this was originally a cross-party project. Can the Minister confirm that the accounts of the project are inadequate? It is astonishing that the assets of the company cannot be established. Is that not at least some criticism, if not of the Minister, of other people in Whitehall to whom the management of the New Millennium Experience Company reported?

Photo of Lord Falconer of Thoroton Lord Falconer of Thoroton Minister of State, Cabinet Office

My Lords, as regards financial control and financial management, it is plain from the report of PricewaterhouseCoopers that that was not adequate, if for no other reason than the wind down liabilities were not adequately provided for. We need to look precisely to see why that was. The National Audit Office is currently looking into that and a report is imminent.

As regards the asset list, yes, there were debates between Nomura and NMEC as to precisely what was available and an asset list. It is obviously most unsatisfactory that there was not a complete asset list. However, that was a problem that was being dealt with and worked through with Nomura. The letter from Mr James, which I shall place in the Libraries of both Houses, shows the detailed truth of that. It is regrettable that there was no such list. However, I believe that that should be looked at in the context of all the other things being done by the company and what it was up against at the time.

Photo of Lord Haskel Lord Haskel Labour

My Lords, does not my noble and learned friend agree that the noble Baroness, Lady Anelay, and the noble Lord, Lord Marsh, were being uncharacteristically unfair to him? Some of their complaints may be justified. However, it seems to me that they should be directed towards the directors, who were experienced businessmen. Where were their antennae? Where were they when all the financial shortcomings and lack of financial controls were going on? Does my noble and learned friend agree that perhaps it is time for some of the directors to put their heads above the parapet and take some of the flack?

Noble Lords:

Hear hear!

Photo of Lord Falconer of Thoroton Lord Falconer of Thoroton Minister of State, Cabinet Office

My Lords, I am not prepared to start pointing the finger at anybody at this time. In the context of what has happened it is important to try to ensure an orderly conclusion to the project.

Photo of Lord Chalfont Lord Chalfont Crossbench

My Lords, as someone who has never been to the Dome and has no intention of so doing, I had not intended to intervene today. However, I must confess and ask the noble and learned Lord to accept that I am distressed at the way in which this seems to have turned into a party political scrap, and the way in which some of this has been directed at the noble and learned Lord. With the greatest respect to the noble Baroness, it seems to me that there is a case here of firing at the wrong target. When I was in the Army, that was a court martial offence.

The noble and learned Lord was handed a package marked "The Crown Jewels". When he came to open it, it was a can of worms. He should not be held responsible for that, but the donor of the package. There are many long trails of incompetence leading back through this whole story. No one party or person can possibly be blamed. I hope, therefore, that many illustrious heads will fall before we can legitimately fire at the noble and learned Lord.

Photo of Lord Falconer of Thoroton Lord Falconer of Thoroton Minister of State, Cabinet Office

My Lords, I am grateful to the noble Lord for the remarks concerning my personal position. However, as I have said, I am keen not to point the finger at anybody, but to ensure that the project reaches an orderly conclusion.

Photo of Lord Boardman Lord Boardman Conservative

My Lords, in the Statement the noble and learned Lord said that when the facts were known to him, he took certain action. One of the key facts which we assume has been inquired into, is what would be the rundown costs. What was he faced with? Who concealed the answers to those key facts from him? Was anyone fired for so doing or did the Minister not bother to ask?

Photo of Lord Falconer of Thoroton Lord Falconer of Thoroton Minister of State, Cabinet Office

My Lords, there was a figure for rundown costs. I shall not say what that was. That figure was then investigated by PricewaterhouseCoopers, which came up with a much higher figure. That was one of the main reasons for the problems which emerged during August. There have been changes at the company. It would be wrong for me to say here, before people have had a chance to defend themselves, the names of the people involved.

Photo of Baroness Gibson of Market Rasen Baroness Gibson of Market Rasen Labour

My Lords, does my noble and learned friend agree that when we debate the Dome in this Chamber we should always remember those who are often forgotten in the midst of party political thrust; that is, the workers in the Dome? The regeneration of the area gave many of those workers employment for the first time in their lives. Many of them are young; many are black. I ask the Minister to support me in urging people not to forget that the regeneration of Greenwich produced thousands of jobs for people who did not previously have work and who, when the Dome closes, may not have work in the future.

Photo of Lord Falconer of Thoroton Lord Falconer of Thoroton Minister of State, Cabinet Office

My Lords, I am grateful for that intervention. I entirely agree. Perhaps I can make a point which is not made often enough; that is, that 4,800 people work at the Dome. They are the ones who are totally innocent in this story. They remain totally committed to the Dome. I hate to mention once again the opinion polls in relation to the Dome, but over 90 per cent of its visitors say that the staff are first class. The staff need to feel that people are committed until 31st December and let us remember, whoever else's fault this problem is, it is not theirs.

Photo of Lord Naseby Lord Naseby Conservative

My Lords, will the Minister clarify for us the exact position in relation to the £43 million? Is that now a gift to the company; is it a secured loan; or is it just totally unsecured?

Photo of Lord Clarke of Hampstead Lord Clarke of Hampstead Labour

My Lords, the noble Lord, Lord Harris of Greenwich, drew attention earlier to the fact that the Dome concept had all-party support. That statement has been repeated once or twice since. Can my noble and learned friend say whether that support is reflected in the membership of the Millennium Commission? Who, apart from the representatives from the Government, are members? Are there members from other political parties? I do not ask that in any sense of looking for a scapegoat; I am seeking to find a balance as to who was involved and would appreciate the Minister's comments.

Photo of Lord Falconer of Thoroton Lord Falconer of Thoroton Minister of State, Cabinet Office

My Lords, the Millennium Commission is an independent body. It has members from the Government and is always chaired by whoever holds the post of Secretary of State for Culture, Media and Sport. It also has two members from the Conservative Party; that is, the noble Lord, Lord Glentoran, and Mr Michael Heseltine. It also contains a mix of business people and people from the world of the media and entertainment, who all contribute to its deliberations.

Photo of The Earl of Onslow The Earl of Onslow Conservative

My Lords, the noble and learned Lord is perhaps too young to remember the Tanganyikan groundnut scheme, but this situation reminds me irresistibly of that. Is he aware of the quote from Julius Caesar:

"The fault, dear Brutus, is not in our stars,

But in ourselves, that we are underlings"? The Government have not been able to sell the Dome to Nomura. They are now trying to hawk it around to anybody who will buy it. People will sit on their hands and wait until the price goes down. What happens when nobody buys the Dome because the queries raised by the question of my noble friend Lord Tebbit have not been answered? At the end of the year the Government will be left with an unsold Dome--running it, or whatever--because the likelihood of anybody buying it when they see a distressed sale, especially in the East End of London, is nil.

Photo of Lord Falconer of Thoroton Lord Falconer of Thoroton Minister of State, Cabinet Office

My Lords, this situation is not like that of the Tanganyikan groundnut scheme. This was a scheme which everybody hoped would work. Everybody knew the risks, the main one of which was whether it would achieve the visitor numbers. It did not achieve those numbers. But nobody was in any doubt that that was one of the factors which had to be satisfied for it to be a success.

We are not hawking the Dome around. As I described in my Statement, discussions are presently taking place with the person who was second in the competition list. I set out what would happen in that regard. If a sale cannot proceed, we shall look at other options. I do not believe for one moment that the market regards this as a distressed sale.