– in the Scottish Parliament at 2:30 pm on 5th April 2000.

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Photo of Lord David Steel Lord David Steel Presiding Officer, Scottish Parliament 2:30 pm, 5th April 2000

We move to a statement by Mr Sam Galbraith on Hampden. The minister will take questions at the end of the statement, so there should be no interventions. It would be helpful if members who want to ask questions would press their buttons as soon as possible.

Photo of Tommy Sheridan Tommy Sheridan SSP

On a point of order. I know that you are not obliged to comment, but why was the amendment that referred specifically to Glasgow not accepted? That decision was anti-democratic and anti-Glasgow.

Photo of Lord David Steel Lord David Steel Presiding Officer, Scottish Parliament

That relates to the debate that, for obvious reasons, I will not chair. I thought it proper to leave the choice of amendments to my deputies, so you will have to ask them, when they take the chair.

Photo of Sam Galbraith Sam Galbraith Labour 2:34 pm, 5th April 2000

As members are aware, Queen's Park Football Club and its subsidiary, the National Stadium plc, ran into serious financial problems last year while carrying out major redevelopment work at Hampden stadium. I am delighted to report that a rescue package has now been agreed, which will secure the future of Hampden and the survival of Queen's Park, which is Scotland's oldest football club.

The negotiations over the rescue package were concluded last Friday night and all elements of the restructuring were put in place. The deal was finalised on Monday of this week and I reported that to Parliament in a written answer to Mike Watson that day.

I want to take this opportunity to thank all those who were involved in the development of the rescue package. I described the broad structure of the rescue package in my statement to Parliament on 16 December 1999. At that point, the Executive and the other parties to the negotiations believed that agreement in principle on a detailed rescue package had been reached and that completion would follow soon.

The negotiations were protracted because many difficult and complex issues had to be addressed, including detailed inter-contractual issues. Queen's Park's decision in early January to petition the court for an interim administration order made it clear that the club and the National Stadium were unwilling to complete the deal as negotiated before Christmas.

In my statement to Parliament on 12 January, I said that the Executive saw the new situation as a further opportunity to progress the negotiations over the rescue deal within a constructive and objective framework. I also made clear that the Executive remained willing in principle to participate in any arrangements that were based on those that had been agreed previously for the rescue of the stadium and Queen's Park Football Club.

The interim managers explored all the other possibilities and concluded in late February that the restructuring proposals that were negotiated almost to completion before Christmas represented the best available option.

Clearly, the passage of time made the deal more difficult and more costly to achieve. There are three main reasons for that, the first of which is the worsening financial position of Queen's Park Football Club. Secondly, some elements of the deal that was marshalled before Christmas were no longer achievable and thirdly, the professional fees that were involved had increased substantially, largely as a result of administration.

Because of that, the Scottish Executive agreed to contribute an additional £600,000 and Glasgow City Council agreed to increase its contribution by the same amount. That additional £1.2 million was not sufficient to close the funding gap, but the administrators negotiated successfully with other parties to achieve that. The directors of Queen's Park and TNS are now also fully committed to the deal.

The co-funders—the Scottish Executive, the Millennium Commission, Glasgow City Council, sportscotland and the Glasgow Development Agency—are contributing a total of £5.75 million to the rescue package, of which the Scottish Executive's share is £2.75 million.

The money will be used to pay off Queen's Park's creditors—in particular Sir Robert McAlpine and the Royal Bank of Scotland plc—in accordance with the terms of the settlement that was agreed among the various parties. The administrators have indicated that a process is under way to finalise the sums that are due to the historic creditors of both Queen's Park and TNS. Payment to such creditors is expected in the next four to six weeks. The money that will be paid to the Royal Bank will reduce Queen's Park's indebtedness to a level that can be accommodated within the new management arrangements.

As I said in my statement in December, the Scottish Football Association has agreed to take on the responsibility for the future management of the stadium under a lease granted by Queen's Park. That lease will run for 20 years, with the option for the SFA to extend it for a further 20 years. The level of rent payments will enable Queen's Park to pay off outstanding debts and derive an income that will help to meet its running cost requirements. Queen's Park will continue to own the stadium and the adjacent land.

There is a reciprocal rights agreement between the SFA and Queen's Park, which will enable Queen's Park to continue to use the main stadium for matches and other purposes. It will also enable the SFA to make use of Lesser Hampden for squad training and car parking when major matches are being staged in the main stadium.

The co-funders' consultants examined carefully the viability of the stadium operation in the longer term. The co-funders were satisfied, as a result of that work, that there was a viable business there, so long as it did not have to serve an unduly high level of debt that had been incurred in the construction phase of the project. The work persuaded the SFA, which carried out its own due diligence, to accept responsibility for managing the stadium.

In taking on a full insuring and repairing lease, the SFA is, of course, accepting the operational risks and liabilities as well as the potential rewards. Responsibility for drawing up and implementing a business plan for the stadium now rests with the SFA. The SFA intends to set up a subsidiary company to manage the stadium and market it aggressively as a visitor attraction. All staff who were previously employed by TNS have been informed that they will transfer to the new company. When the museum of football, the lecture theatre and the sports injury clinic become operational and the football bodies move into office accommodation at the stadium, Hampden will have life about it on a daily basis that it has never enjoyed before.

The stadium and its excellent ancillary facilities are a magnificent asset of which Scottish football and the nation can be proud. I am confident that the new arrangements are in the best long-term interests of Scottish football. The co-funders, including the Scottish Executive, have overcome considerable difficulties and saved for the nation our national football stadium.

I commend this statement to the Parliament.

Photo of George Reid George Reid Scottish National Party

The minister will now take questions on the issues raised in his statement. I intend to allow around 20 minutes for such questions, after which we will move to the next item of business.

Photo of Nicola Sturgeon Nicola Sturgeon Scottish National Party

I thank the minister for the advance copy of his statement. I welcome the statement; in particular, I welcome the minister's confidence that the rescue package that has been agreed will secure the future of Hampden and the survival of Queen's Park. I am sure that both those outcomes were desired by members across the chamber and by the Scottish people.

This episode has thrown up a number of questions, which the Education, Culture and Sport Committee will have an opportunity to address in full in its inquiry. I am sure that the minister will co-operate with that inquiry, but I want to ask him three questions today.

First, can he confirm the time scale that is covered by the business plan's projections? The SFA has a 20-year lease. Can the minister guarantee the long-term viability of the business plan, or is there any chance that in a few years' time we will face new financial problems? Many people will have noted the reluctance of David Taylor, the SFA's chief executive, when he was interviewed on the BBC the other night, to give any guarantee that the SFA would not at some time during the duration of its lease look for additional public funds.

Secondly, given that the SFA is now paying £300,000 a year less for its lease than was originally agreed with TNS—a loss of income of £3 million over the original 10-year lease period—will the minister specify what measures have been proposed in the business plan to make up the shortfall?

Thirdly, will the minister specify what changes the Executive has made to the financial monitoring procedures to ensure that in future it is fully aware of the financial well-being of such projects, into which the Executive has put substantial sums of taxpayers' money, and to ensure that it is alerted early to any financial problems?

Everyone in Scotland wants Hampden to survive and flourish, but the current position has been reached at substantial cost to the public purse. The public has a right to know that lessons have been learned, to avoid such problems recurring in future.

Photo of Sam Galbraith Sam Galbraith Labour

I am grateful to Miss Sturgeon for her comments, and I will deal with each of them in turn.

Members will remember that, before we agreed to put money into the project, we required a viable long-term business plan. Our consultants provided that, and the plan laid out clearly the stadium's long-term viability, with a bright and rosy future.

There is £300,000 less per year than in the original SFA proposal because we are no longer comparing like with like. Originally, the SFA was going to use the stadium only from time to time. Under this plan, the SFA takes over the lease, under which it has to pay for all upkeep and repairs and development of the stadium. That accounts for the difference.

There are certainly lessons to be learned, the most important of which is that we should not consider again putting such large sums of money in the hands of an amateur club to run a national asset such as the national stadium.

Photo of George Reid George Reid Scottish National Party

I remind members that this is an occasion for questions, not secondary statements.

Photo of Mary Mulligan Mary Mulligan Labour

The minister said that the SFA has taken on much of the responsibility for running Hampden, including various financial responsibilities. Will the minister confirm the viability of funding commitments already made by the SFA? In particular, will the minister address the viability of the youth development programme?

Will the minister confirm, yet again, that he is willing to attend the Education, Culture and Sport Committee as soon as possible to discuss the Hampden situation?

Photo of Sam Galbraith Sam Galbraith Labour

As Mary Mulligan knows, I am interested in youth development, which is an important area of sport. The SFA will maintain its commitment to the youth development programme and I have told the SFA that, if that programme were to be threatened, we would consider the situation.

I am more than delighted to come along to the committee, at the committee's convenience. We have a good record on Hampden, and I will be proud to defend that record to the committee.

Photo of Brian Monteith Brian Monteith Conservative

I thank the minister for coming before us today and for giving us his statement, which is welcome. I also thank him for the advance copy of that statement. I am pleased that he finally has documents on which the ink has dried, and I ask him to ponder whether, in future, he should come before the chamber before an agreement has been reached.

I have some specific questions for the minister. Will he confirm that there are severance packages for members of National Stadium plc, as reported in the media? What effect, if any, will the rates revaluation have on Hampden? From where within the budget does the minister intend to find the additional £2.75 million? Can he explain why he has such faith in the SFA as the new tenant, given that it has no history of running a stadium? One could compare the SFA's record to that of the Scottish Rugby Union, which has a record of running a stadium and which has run up considerable debts. Is not that a lesson that the SFA had better heed?

Photo of Sam Galbraith Sam Galbraith Labour

I am grateful to the minister[Laughter.] Just because Brian Monteith is bald like me, there is no need for me to think that he is the same person.

I am grateful to Brian Monteith for his comments. As I am a doctor, one of my great problems is that I can never read my writing, but I have worked it out now.

The first question was whether I would refrain from making early statements in future. I made that statement because the chamber demanded that of me. I thought that it was courteous of me to come to the chamber—I am surprised by Mr Monteith's comments on that point.

Severance packages are matters for AR Ltd, the trust fund and Queen's Park—they are confidential matters and are not for me at this stage.

I am confident that the rates revaluation can be handled. The SFA said that it is confident that the sums involved can be reduced significantly and dealt with through other sources of income. However, as with youth development, I told the SFA that, if the rates revaluation proves to be a problem in future, I will certainly consider the matter sympathetically.

The SFA is the correct organisation to run the stadium because it represents more than 50 per cent of the business plan; without the SFA, there is no business plan. That important point locks the national stadium into the sport's governing body. The SFA intends to establish a wholly owned subsidiary to run the stadium under a new director who will have business expertise.

Therefore, with a business plan in place in which the SFA has a large stake, I am confident that those involved in the SFA are the best people to run the stadium.

Photo of Fiona McLeod Fiona McLeod Scottish National Party

I am sure that the minister heaved a great sigh of relief on Friday evening, along with many Scottish football fans.

I want to question the minister on two points that arise from his statement. We know about the rental stream shortfall. The minister said that there are reasons for that, which we understand, but he has not explained how the rental stream shortfall of £300,000 per annum will be made up.

Further, the minister has not dealt adequately with the question whether financial monitoring within the business plan will ensure that the Executive will have early warning of any similar situation that arises in the future.

Photo of Sam Galbraith Sam Galbraith Labour

I thought that I had explained the £300,000 difference—people are comparing apples with pears. The SFA is taking on the running of the stadium, which involves maintenance, repairs, and so on. It is a very different organisation that is doing all that.

As for the financial monitoring, this project was monitored up until the last sum was paid; further sums were made available, mostly because the returns that we were getting were clearly not showing the whole picture. That is certainly a method that all of us need to re-learn and look into, and I hope that the committee will do that as well.

Photo of Ian Jenkins Ian Jenkins Liberal Democrat

I welcome the minister's statement and congratulate him on his patience, perseverance and phlegmatic approach to this difficult problem. I share his hopes that the agreement is in the long-term interests of Scottish football.

In his statement, the minister talked a great deal about the viability of the SFA's business plan. However, I want to return to the end of Fiona McLeod's question. What role will the Scottish Executive, or any of the co-funders, have in any direction or monitoring of the new financial arrangements? Will the Executive or the co-funders be involved in the company in any way?

Photo of Sam Galbraith Sam Galbraith Labour

I sincerely hope that we will not be involved in the company. Nicola Sturgeon said to me, "I bet you hope that this is your last statement on Hampden"; I said, "You are absolutely right." A private company has been set up; it must be an on-going private concern, and should not be a public organisation or a drain on public funds. Nevertheless, I assure Ian Jenkins that we will continue to take more than a passing interest in the subject.

Photo of Mike Watson Mike Watson Labour

Along with everybody else, I welcome the minister's statement and the successful conclusion to what has been, if not a saga, a fiasco over Hampden. I hope that that has been drawn to a conclusion.

It has been noticeable that today there has been an absence of the rancour that was shown after previous statements on this subject—notably from the Opposition parties—and that everybody recognises the role that has been played by Sam Galbraith and the Executive in investing the necessary money to bring this to a successful conclusion.

I have two questions for the minister. First, is Queen's Park Football Club now relieved of the administration into which it went, voluntarily, some weeks ago? Secondly, is it possible to say anything about the SFA Museum Trust, the future of which is in doubt? The trust has had to make employees redundant because it was caught up in a situation over which it had no control.

Photo of Sam Galbraith Sam Galbraith Labour

Yes. I agree that there has been an absence of rancour, and I am grateful to all members for that. As this situation has continued, people have begun to realise how difficult and complex it is. We did not set the thing up in the first place, and we have been a small player, but we have acted in the public interest.

As for the administration, that is a technical matter and I am not a lawyer or administrator and am unsure of the technicalities; if that has not happened, it will happen.

The SFA Museum Trust is in a complicated position. Its funding stream is different. The trust was run separately from the stadium, although it rented an area within it. I assure you that the SFA is committed to establishing and running the football museum, which will be part of the attraction of the stadium, along with the sports clinic. It is for the committee to develop that as one of the highlights of Hampden, which people from all around will come and visit.

Photo of George Reid George Reid Scottish National Party

That concludes questions to Mr Galbraith. We move on, a little ahead of time.