HL Deb 11 May 1994 vol 554 cc1636-46

8.3 p.m.

Lord Howell rose to ask Her Majesty's Government what assessment they have made of the costs of staging the Commonwealth Games, and what proportions will be borne by the public sector and the national lottery, local authorities, and the private sector.

The noble Lord said: My Lords, I am grateful to the House for allowing me time to discuss the arrangements and the funding of the proposal of the English Commonwealth Games Association to stage the games in Manchester in the year 2002. I am also pleased to see the noble Baroness, Lady Trumpington, in her place this evening. I am sure that she will reply—as she always does—with great courtesy and understanding of the points that I wish to raise.

It is important that we debate such matters. The last occasion when the games were held in this country—in Edinburgh in 1986—the result was a fine sporting festival, but a total financial shambles which resulted in the late Robert Maxwell being brought in to sort things out, with even more disastrous consequences. This time we have to succeed on both fronts if we go ahead with the bid.

It will be recalled that Edinburgh did not have any major worries about capital works for 1986 as the city had most successfully staged an earlier games in 1970. Edinburgh's problem was revenue. No such situation exists with the bid about which we are talking tonight. Indeed, very little exists in the shape of major facilities. In particular, a stadium has to be built at an estimated cost of about £187 million; a swimming pool complex will have to be built at a cost of about £54 million; and a new rowing centre will have to be provided at a cost as yet unbudgeted.

Other sports require further money, notably for boxing in the G-Mex II centre where local grants seem to be a matter of concern. Moreover, lawn bowls need a new facility and at the Eastlands Arena, where badminton will be played, although funding of some £36 million to £37 million is assured from the Government and a £1 million grant from the Foundation for Sport and the Arts, as of now there is no price and no budget as the project is described as being out for "concept development". The other sports included in the programme for the year 2002, as endorsed by the Commonwealth Games Council, require rather more modest sums of money; but it all adds up.

Therefore, the first question is: where will all that money come from? Is it assured? My estimate is that at least about £200 million of new money will have to be found to add to the £120 million already provided from public funds towards the so-called millennium stadium (£72 million), the Eastlands centre (£36.5 million) and the national cycling centre (£9.5 million).

Clearly, Sir Robert Scott, the promoter of the bid, has an obligation to spell out exactly the nature of his financial proposals. The English Commonwealth Games Association can hardly present its bid without being assured of its financial viability. Her Majesty's Government and the Sports Council have a duty to the country and to Parliament to confirm to us that they have examined all the financial proposals and that they are fully satisfied that all those financial commitments can be met. No such guarantees have yet been forthcoming. I shall return shortly to some of those matters.

The second main question concerns the revenue consequences of the proposals. For example, the national cycling centre —which is desperately needed, quite apart from its involvement in the Commonwealth Games—was first thought to require an annual subvention of about £220,000 a year, after having been built entirely with Sports Council money. The council has agreed to fund that amount and the city council has committed a further sum, making £250,000 in all. I understand that the requirement of £250,000 has now risen to about £300,000 or more. Who is to find the balance?

Further, what calculations have been made of the annual costs of running the national millennium stadium, the swimming complex at Wigan (bearing in mind the fact that all swimming pools require substantial public subsidy), the rowing course and the other sports facilities? It would be unacceptably irresponsible to build any facilities unless we know the subvention required to run them and who will provide it.

The third principal question is: when those facilities are all in place, who is to own and manage them? We know about the serious financial restraints being imposed by the Government upon local authorities in the North West; for example, Manchester, Wigan, Salford, and so on. It is difficult to imagine that they can accept the financial burdens involved. I hope I am wrong but we need to know. Can the noble Baroness tell us what inquiries are being made by the Government and the Sports Council bearing in mind that it has been made crystal clear that the new lottery money should not be used for revenue purposes?

That leaves the private sector. We have heard much talk of its response. What does it amount to? I understand that the Government have asked the Sports Council to conduct a feasibility study into the private funding available. If that is correct, it is a wise precaution. Can the noble Baroness give any indication tonight of the conclusions being reached as a result of that inquiry? One Suggestion I have heard is that the £187 million stadium might be handed over to the private sector in return for its investment of some £40 million. Is that true? If so, it does not seem to me to be a very good bargain for the public sector and the public funders.

I turn now to other potential sources of public funds —the national lottery and European funding. We debated matters concerning the so-called millennium stadium in your Lordships' House quite recently and I will not go over that again. However, it will be a 65,000 seater stadium at a likely cost, as I say, of £187 million. Some £72 million seems to be in place and £40 million is said to be anticipated from private sector investment. This leaves a shortfall of £75 million. In spite of the fact that the noble Baroness made perfectly clear in the earlier debate—I totally agreed with her—that the Millennium Fund money (anticipated to be available in 10 allocations of £50 million each for different schemes around the country) would be wholly determined by the independent trustees of the Millennium Fund, Sir Robert Scott immediately repeated his previous public statements that £50 million was assured from this fund.. I do not know how the trustees of the fund will approach their task of choosing these 10 major schemes, but I cannot believe that they will not need to be convinced of the financial viability of each scheme and also to be convinced that, when built, the projects they choose can be properly managed and the funding guaranteed to meet future revenue requirements. As I say, all that has to be investigated.

Next, we have to consider the proposal that the other £25 million required to build the stadium might come from the lottery allocation to sport, which will be 20 per cent. of the lottery proceeds. The noble Lord, Lord Renton, QC, who is a recognised constitutional authority in this House, maintains his contention held in the previous debate that the lottery Act does not allow millennium money to be added to the sports allocation to go over 20 per cent. The noble Lord, Lord Renton, has asked me to apologise to the House tonight as he has, to be elsewhere, but he authorises me to say that after meeting the department' s lawyers he fervently maintains his position. He says that at the end of his meeting with the National Heritage lawyers, he told them: You have been warned. You will probably end up faced with a judicial review if you continue along your present path".

I can only say that I believe he may be right and that a much higher legal assessment is required to be made by the Government to determine that matter. In any case, it will be monstrously unfair upon cities such as Sheffield, Birmingham, Gateshead, and others, who have provided first class facilities for sport out of their own resources, in some cases—indeed, most cases—without a penny of assistance from government, if they are not to be treated equally generously in being helped to meet their ongoing financial revenue costs and future capital requirements, as Sir Robert Scott is demanding for his proposals.

As regards European funds, I believe that the same considerations will apply as those for the distribution of the Millennium Fund by the trustees. The question is again raised: is all this viable? We await the answer to that question. So from one source or another the stadium will require another £75 million of public funding. But what about the £54 million swimming complex and the £10 million rowing course, and the other facilities? Where is all that money to come from? The capital control placed upon such projects as this preclude the building of projects such as are proposed in a place like Wigan. The swimming centre will have 10 lanes of 50 metres with a further 11 lanes of 50 metres each as a warm up and training facility. I am told there has been no interest in private investment, and I would have been astonished had it been otherwise, knowing the running costs of a swimming pool.

If all the Sports Council and lottery money is going into the stadium, how can this £54 million be found from the public sector? It cannot, nor could the good people of Wigan sustain such a vast capital project and enormous annual revenue deficits. These are substantial questions, so far not even asked in public, much less answered. That is the main reason I have sought to discuss them in your Lordships' House tonight. We must insist upon hearing the answers before this project proceeds further. Not to do so, and to run the risk of being awarded the 2002 games but not being able to sustain the capital and revenue consequences, would be a national humiliation. It must not be allowed to happen.

There are other financial commitments in the Manchester prospectus which I think require clearer explanation, not least because they come under the heading of the indemnity which the city council found possible to sign although both Sheffield and Birmingham were not able to do so. For example, Sir Robert Scott's brochure suggests a payment of £12 million to the BBC to televise these events around the Commonwealth. That, it is claimed, would produce an income of £14 million. Even if South Africa enters the games—we all hope it does—that income seems doubtful. Then there is sponsorship income which is put at some £30 million. That would be surprising given previous experience. Food and lodgings for athletes and officials, plus operating costs and marketing appear to add up to some £51 million. All this will, I hope, be offset by receipts from ticket sales, refreshments, programmes and the like. One can only hope that is so, but it requires careful examination.

There are other questions to be asked. I have no time to deal with them in detail but I will give one example. The Manchester 2002 bid brochure gives the seating capacity of the Manchester University Sports Centre, where the judo is scheduled to take place, as 3,000. My inquiries reveal that this hall is licensed to seat 500 with a further 500 seated in the floor area. This is another matter that needs to be investigated.

Finally, I should like to give my own view about the policy considerations involved in providing major sports facilities of this kind. The country, and sport in this country, certainly need them; but they must be part of a national strategy for major sports provision. If the proposals for Manchester are taken on board as the first stage of a guaranteed national strategy to provide national facilities in every other part of the country, that will be welcomed. If it is at last accepted that cities which have courageously provided our present centres of excellence without much help from the Government can be assisted, that is to be doubly welcomed.

I am well aware that I have set the noble Baroness an almost impossible task tonight with the detailed issues I have thought it right, and indeed my duty, to raise. It would be unreasonable to expect a detailed reply, even though my Question has been on the Order Paper for some time now. I am sure that the House will be satisfied if the noble Baroness can ensure that all the issues which I have raised are examined and responded to in due course, although we know that, as is her invariable custom, she will give us what information she can when she replies this evening.

I thank the House for its tolerance in hearing me out on matters that I regard as very serious and of the greatest public importance to the nation and to sport.

8.21 p.m.

Lord Addington

My Lords, the noble Lord, Lord Howell, has raised a very important series of points tonight with his Unstarred Question. I shall not go in any depth into the specific points that he raised about the games themselves. I could not do so anything like as well as the noble Lord, and once the questions have been asked there is no need to repeat them.

However, the noble Lord's summing up is of crucial importance. We are talking here of the Commonwealth Games, which are a celebration of sport, far more so than any championship can ever be. The Commonwealth receives a great deal of stick in certain quarters. I believe that it is a useful body in so far as it brings together a great many divergent nations which have one common thread. A sporting celebration of that international union is very valuable in today's society. In particular, if South Africa returns to that organisation, as is hoped, that must be applauded by all of us.

If the Government like the idea of celebrations of sport, such as the games or major championships being staged in this country, it is reasonable to expect that central government should give assistance with funding at some level. It is also reasonable to expect that there should not merely be a diversion of funds from other sporting events. The National Lottery and Millennium Fund could probably be spent many times over without taking into account a major project such as staging the games.

The problem is that the Commonwealth Games do not have the same potential for revenue generation as the Olympic Games. The potential market for sporting events, regardless of their quality and competitiveness and of the number of records broken, will never be as high. Therefore, we are asking the Government to state what type of support they will give to an event which is of benefit to sport and of benefit to the country in terms of prestige—which must be a worthwhile consideration, if secondary to the sports themselves. Secondly, how do the Government see the games being funded if they are not prepared to put their hand in the Treasury's pocket? If we had some guidance on those questions it would help considerably all future plans for events because unless they are correctly funded they will benefit nobody. If there are too few events the games will not benefit the organisation we are celebrating. The Commonwealth will not benefit from badly funded games. Furthermore, that would not benefit the nation, because if we were seen to be operating a second-class sporting event we would make no contribution to the nation's prestige or the prestige of the organisation.

When she replies I hope that the noble Baroness will give some indication of the Government's attitude towards these events, and in particular towards the Commonwealth Games in 2002.

8.24 p.m.

Lord Dean of Beswick

My Lords, my noble friend and colleague Lord Howell does us a service by raising the question of funding of sports gatherings such as the Commonwealth Games.

The figures that my noble friend quoted clearly indicate that no local authority in this country could fund such a venture on its own. Being strapped for cash as they are at present, it is almost impossible for any local authority to consider funding such a project in any case. Certainly, as a former leader of the city council in Manchester, if I were still in that esteemed position I would not be prepared to raid the rate fund for one penny to provide a huge sports stadium for a prestige event. If I did it would be at the expense of funding for housing, education, the care of old people and general use in the community. Any government in office today would find it extremely difficult to say to any city, whether it be Birmingham, Manchester, Leeds, Liverpool or Glasgow, that if it succeeded in a bid to stage the games, the Government would allow for that in support from the central exchequer. That would be an impossible exercise.

There is a great deal to be said for a national strategy, as suggested by my noble friend Lord Howell. One of our centres of excellence in the past was the Richmond ice skating rink, which I understand was disposed of for redevelopment in 1986 and has never been replaced. Everybody knows that when our skaters go into action against world class skaters from Russia or America they are competing with people who have training facilities which are available seven days a week, 24 hours a day. That example from ice skating is repeated across the sporting spectrum.

In his detailed, and not overlong speech which was full of information, my noble friend referred to personalities involved in the Manchester Olympic bid and in this present bid. I start from the disadvantage that although I am a former leader of Manchester council and one would expect me to have some brief in order to put a case for Manchester, I have no such brief. The powers that be who have been dealing with the bid for the Olympic Games in Manchester perhaps thought that it was no concern of mine. Therefore, I have never been given any information. I have not been contacted. That is also the position in relation the public representatives of the city of Manchester. They have almost been frozen out of the proceedings, whereas they could have helped. That is sad. I know that in the past people such as myself were prepared to speak objectively.

I must accept that the figures which my noble friend Lord Howell mentioned tonight are accurate. Having known him for many years I know that he would not quote figures that were not realistic. However, have no information on which to base an assessment as to whether or not those figures are correct, because I have not been given a brief.

Lord Howell

My Lords, perhaps my noble friend will allow me to intervene to thank him, and to say that all the figures that I have given have been taken from the Manchester 2002 Commonwealth Games bid.

Lord Dean of Beswick

My Lords, my noble friend has the advantage of me. I am a Mancunian. I once operated in an exalted position. However, no one thought it worthwhile to send me a copy so that I might judge whether I wished to take issue on the subject. Having read it, I may not have wished to do so. I am sure that the entrepreneur in charge of the issue, Sir Robert Scott, must have known on the grapevine that this debate would take place this evening. It amazes me if such knowledge had not reached him.

I stand in this Chamber almost like St. George without the armour, waiting for the dragon to devour him. I have no defence and no argument to put forward, but not because I am unwilling or inactive—I am sure that the most partisan Member of your Lordships' House would not level that criticism against me. I am always ready to put forward a case in which I believe. However, unfortunately I have been given no information, either on the detail or on the broad issues involved.

There was much criticism from some quarters about aspects of the Olympic bid. I believe that the criticism was based on the view of many people that the issue was kept within the control of a small group of people who made it clear that with regard to others a hands-off exercise operated. I do not wish to go into that question. However, as time evolves I do not think that the subject will go away.

As I said in my opening remarks, my noble friend Lord Howell has done us a favour by highlighting the huge cost which will accrue from the Commonwealth Games. I do not believe that we should not go in for such competitions. But no city in this or any other country could bear the burden of an international competition. With the number of people in the Commonwealth who will wish to participate in such games—very often the games are a trial run for the Olympic Games —I do not believe that any single unit would be able to bear the cost. There has been reference to the recouping of money after a successful bid. The issue is all about money. For instance, looking at the last three bids for the Olympic Games, why did American cities win two out of the three bids? Sadly, that exercise was not about sports or games; it was about money and who would put back the most money.

In conclusion, I thank my noble friend Lord Howell for initiating the debate. I am sorry that I was not better briefed, but no one thought it worthwhile to do so. In some respects the argument may have been lost by default. However, in my opinion, if the country is to go in for such an exercise—and I believe with the utmost vigour that it should do so—the overwhelming proportion of the cost will have to be borne by central government. With present strictures, and as a result of past strictures with regard to local authority funding from central government, no city that I have ever known or been associated with, including the boroughs of the great city of London, could bear such costs. If they were to do so, it could be only at the expense of the community. The members have been elected to serve the community. I believe that community services are more important for the quality of life than either Olympic, student or Commonwealth Games.

8.34 p.m.

Baroness Trumpington

My Lords, first, I should like to thank the noble Lord, Lord Howell, for his views on the costs of staging the 2002 Commonwealth Games in this country. I should also like to thank the noble Lord, Lord Dean of Beswick, who contributed so vigorously to the debate. The noble Lord, Lord Addington, has taken the route of a debate on dyslexia this afternoon to reach this evening's debate and I congratulate him on both his speeches.

Before dealing with the question of the costs associated with staging the Commonwealth Games, I should like to congratulate Manchester on winning the English bid to host the 2002 event, and I am sure your Lordships will all join me in wishing it success in securing the actual bid which will be decided by the Commonwealth Games Federation in Bermuda in November 1995. I should, however, make it absolutely clear that the decision on 4th February to select Manchester as the English bid was entirely a matter for the Commonwealth Games Council for England. The Commonwealth Games Council for England is an independent sports body and it is quite right that the Government played no part in the decision to select Manchester ahead of either London or Sheffield.

The noble Lord, Lord Addington, asked me about the Government's attitude to such games. The Government recognise the sporting prestige and value attached to the successful staging of major international events in this country. However, we are concerned to ensure that only high quality and financially viable bids for such events are put forward. To assist this process, the Sports Council GB—which is sponsored by my department —is shortly to establish an advisory group comprising representatives from all home country sports councils, sports organisations and the local authority associations as well as officials from my department. The group will provide practical advice and technical guidance to local authorities and sports organisations on the various costs and risks involved in bidding for and staging major events. The Government would certainly wish the Manchester bid promoters to liaise closely with this advisory group in developing its plans to stage the 2002 Commonwealth Games.

The Manchester bid promoters have said that the city has gained immeasurable domestic and international prestige from its high profile bid for the 2000 Olympic Games. They now have in prospect some first class facilities such as the Velodrome and the multi-purpose indoor arena which are expected to be operational by October 1994 and autumn 1995 respectively. The bid spearheaded major regeneration works in the region with over £3 billion worth of Government investment in infrastructure projects over a three year period resulting in a new terminal at Manchester Airport and greatly improved road and rail links. All of this, together with the local expertise and partnership between the local authority and the private sector built up during their 2000 Olympic bid campaign, should stand Manchester in good stead in its bid for the Commonwealth Games. The Government have always made it clear that our commitment to providing financial support for the Olympic stadium in East Manchester was conditional on Manchester winning the nomination for the Olympic Games. However, through the Department of the Environment's urban programme scheme, we remain committed to providing up to £30 million towards the cost of acquiring and clearing the stadium site.

I turn to the specific question posed by the noble Lord, Lord Howell, concerning the actual costs of staging the Commonwealth Games. My department has seen a copy of Manchester's bid to the Commonwealth Games Council for England outlining its proposals, including the costs of staging the games. I gather the noble Lord, Lord Howell, has also seen a copy; but, like the noble Lord, Lord Dean, I have not, as yet. Manchester has drawn heavily on the expertise and knowledge gained from bidding for the Olympic Games in putting the bid together. However, the onus is on the bid promoters to present evidence to the Government that the bid merits support, bearing in mind that we expect the games to be self-financing. My right honourable friend the Secretary of State is meeting members of the bid team (Councillor Graham Stringer and Sir Robert Scott) later this month to discuss the bid. We will certainly be asking the bid promoters to develop in depth their proposals which were outlined in their bid document to the Commonwealth Games Council for England and to expand on how they plan to meet the costs of staging the event, plus future running costs. It would be premature for me to make any statement on the nature of government support for the bid in advance of that meeting.

I should now like to turn to the question of national lottery funding for the games. As noble Lords will recall from the passage of the National Lottery etc. Bill last year, decisions on how lottery money will be distributed will be the responsibility not of the Government but of the independent organisations that are named as distributing bodies in the Act. Those are the Arts and Sports Councils, the trustees of the National Heritage Memorial Fund, the National Lottery Charities Board and the Millennium Commission.

Regarding the points raised by the noble Lord, Lord Howell, on behalf of my noble friend Lord Renton, the noble Lord may be aware that my noble friend and I had an interesting meeting. It is clear that we do not see eye to eye on the point, although at the time the meeting finished I understood my noble friend to be satisfied. It was only later that I received a letter from him.

My legal advisers are clear that the National Lottery etc. Act does not preclude funding of the type raised with me by my noble friend Lord Renton and which the noble Lord, Lord Howell, repeated this evening. If it would help the noble Lord, I shall send a copy to him of my recent letter to my noble friend on the subject.

I understand that distributing bodies will later this year issue guidelines for applicants which will set out the eligibility criteria for lottery funding and the precise application process. The organisers of Manchester's bid for the Commonwealth Games will be able to submit an application for lottery funds to the appropriate body in the same way as any other organization—provided, of course, that they identify a project which meets those eligibility criteria. Once received each application must be considered on its merits in the context of others received. I can also assure your Lordships that there is no question of distributing bodies, and most certainly not government Ministers, committing lottery funds to any project before an official application has been received and fully evaluated. Lottery funds are expected to come on stream late this year or in early 1995. There is no question of any decisions having been taken on funding for any projects from the national lottery. The distributing bodies, including the Millennium Commission, will issue guidance on applications soon. Until then, no one should assume that they will receive funding.

I hope that in the light of that information it will be clear that it is simply not possible to state at this time whether any of the proceeds from the lottery will be used to support the costs of staging the Commonwealth Games in the year 2002.

My department is concerned to see the widest possible distribution of high quality sports facilities throughout the country. Recent developments such as the Don Valley stadium in Sheffield, the international indoor arena in Birmingham and the velodrome in Manchester have greatly increased our chances of successfully staging major events and further enhancing our international sporting profile. The GB Sports Council is currently developing a new national facilities development plan which will assess the need for facility provision throughout the country. It will be taken into account by the Sports Council in considering lottery applications, but applications cannot be ruled out solely because they do not fall within the plan.

I am grateful to the noble Lords Lord Howell, for saying that I do not have to reply to his many questions. I shall read the debate most carefully and write where the need exists. I conclude by saying that I assure your Lordships that we are alert to the problems as well as the pluses involved in hosting the 2002 Commonwealth Games.

Lord Howell

My Lords, perhaps I may conclude by thanking the noble Lord, Lord Addington, and my colleague and noble friend Lord Dean for their support and contributions. I especially thank the Minister for what I thought was a realistic and therefore much appreciated response to the debate.

House adjourned at a quarter before nine o'clock.