Millennium Dome (Hansard, 19 December 2001)

HL Deb 19 December 2001 vol 630 cc249-52 249

§ 3.7 p.m.

§ The Earl of Northesk
My Lords, I beg leave to ask a Question of which I have given private notice; namely, to ask Her Majesty's Government what binding undertakings have been given by Meridian Delta Limited in return for exclusive partnership arrangements and the leasing of the Millennium Dome, and whether the sole shareholder of the New Millennium Experience Company will explain to Parliament the final report and financial statements of that company.

§ The Minister of State, Department for Transport, Local Government and the Regions (Lord Falconer of Thoroton)
My Lords, we agreed yesterday with Meridian Delta Limited to enter into a period of exclusive negotiations which it is intended will lead to the conclusion of a legally binding agreement which will provide for £200 million of investment in the Dome and facilitate £4 billion of investment in the regeneration of the Greenwich peninsula. Ownership of the Dome will not pass to MDL until that deal is concluded. The terms of the exclusivity involve an end date and provision for the Government to be able to bring the exercise to an end if reasonable progress is not being made.
MDL has already spent substantial sums on putting its bid together and, in agreeing to enter into exclusive negotiations with us, has committed itself to spending further substantial sums on the legal and consultancy work that will be necessary to reach final agreement. These are serious people and we chose not to announce the proposed deal until we were confident that it was deliverable.
Following the orderly winding down of operations by the New Millennium Experience Company, the company's directors yesterday took steps to commence a members' voluntary solvent liquidation and I, as NMEC's sole shareholder, have formally appointed Richard Heis and Stephen Treharne, two partners of KPMG, as liquidators.
NMEC's final annual report and financial statements for the period 1st January 2001 to 18th December 2001, produced for completeness to reflect the state of affairs when the liquidators were appointed, will be available in the Libraries of both Houses later today.

§ The Earl of Northesk
My Lords, I am sure that the whole House is immensely grateful to the noble and learned Lord for that reply. While I do not in any way underestimate the virtue of the regeneration of the Greenwich peninsula, does the Minister agree that the Dome has had an uncanny habit of mocking 250 expectation? Can he therefore confirm that a contingency plan is in place—the noble and learned Lord vaguely touched on this point in his Answer—in case the arrangement with Meridian Delta Limited goes pear shaped? Moreover, how much will maintenance of the Dome cost, and who will pay, in the intervening period before any deal is eventually finalised?

§ Lord Falconer of Thoroton
My Lords, the implication of the noble Earl's question is that there is not yet a concluded deal with Meridian Delta Limited. That is entirely correct. As I indicated, the announcement was made only when the parties to the arrangement—the Government, Anschutz, Lend Lease and Quintain—were all convinced that it was deliverable. But there is work to do. The concentration at the moment is on that work, which has to be completed by 1st May 2002. Until that work is completed, English Partnerships will be responsible for the maintenance of the Dome. I shall provide in writing the precise figure, on a monthly basis, of the maintenance costs. The maintenance costs will be recouped from the sale proceeds.
As to whether there is a contingency plan, the current focus is on ensuring that the deal goes through. That is the right place for the concentration of effort to be.

§ Viscount Falkland
My Lords, does the noble and learned Lord agree that one could be forgiven for being amazed at what appears to be a U-turn? The understanding was that the Government had moved away from the concept of the Dome being an entertainment centre towards other usage. In fact, an offer was placed before the noble and learned Lord. As I understand it from the newspapers—the Minister will correct me if I am wrong—we are now moving back towards entertainment and sport. As it is sketched out, the deal does not look to be a good one. As I understand it—again the noble and learned Lord will correct me if I am wrong-there will be a long, 999-year lease, for no consideration, to a major entertainment company which will build, over a period of years, an entertainment centre which may or may not be successful. Are we not moving back to one of the overriding problems of the concept originally—that is, content. Are the Government now relying again on content for recouping what has already been lost? One cannot call it short-termism because there will be a period of 25 years, but is there not a better way for the Government to recoup costs than again relying on paying customers coming to an area of London which may or may not attract them? Would it not be better to rely on the site's development, with warehouses, housing and so on?

§ Lord Falconer of Thoroton
My Lords, it would not be right to say that it involves a U-turn. In February this year the Government withdrew from the discussions they were having with Legacy plc. The Government believed that the deal was not deliverable and therefore withdrew. Thereafter, through their 251 agents, the Government engaged with those in the market who would be capable of delivering a longterm future for the Dome and the peninsula. There are probably only a small number of players able to deliver the complex arrangements necessary. The market has come forward with Anschutz, which is a very substantial entertainment organisation with experience of building and operating arenas of the kind proposed for the inside of the Dome. Anschutz believes that it is a deliverable venture. It is much better able than governments or the public sector to make judgments of that kind and it is entirely committed to the proposal. It is Anschutz's judgment that it is deliverable.
Having shortened to three the number of companies with which we were negotiating, we decided and announced yesterday that we would now reduce it to one, Meridian Delta Limited, because it offered the most deliverable future for the peninsula and the Dome. I do not think that that is going backwards or making a U-turn. It provides the possibility of an exciting future for the peninsula and the Dome, in particular because it ensures public access to the Dome in the long-term future.
As to whether this is a bad deal, the noble Viscount is absolutely right to say that there is no up-front payment. However, it is a standard property deal where you go into partnership to ensure that, as the value of the land goes up after development, the seller benefits as well. There is one particular aspect that I should like to emphasise: there can be no recourse for further expenditure in relation to the Dome.

§ Lord Tomlinson
My Lords, did my noble and learned friend have the opportunity this morning to listen to one of the founding fathers of the Dome project, the noble Lord, Lord Heseltine, on the "Today" programme? Does he agree with the noble Lord, Lord Heseltine, that these proposed arrangements seem to offer a real basis for a fundamental regeneration of the south-east area of London? On the radio, the noble Lord went on to compare this with the Canary Wharf project and what that had meant in terms of regeneration.

§ Lord Falconer of Thoroton
My Lords, I did not have an opportunity to hear the noble Lord, Lord Heseltine, on the radio. My noble friend will know that the noble Lord, Lord Heseltine, was one of the original millennium commissioners who made the decision to have the Dome at Greenwich. He has always been personally committed to the proposition that one of the purposes for it being put there was the regeneration of the Greenwich peninsula. Lend Lease, one of the developers and part of Meridian Delta Limited partnership, said yesterday that it expected there to be a £4 billion investment over 25 years in the Greenwich peninsula. Surely one of the things we should have been aiming for in looking for a future for the Dome and the peninsula was something which involved longterm investment in Greenwich.

§ Viscount Astor
My Lords, although the noble and learned Lord said that this is not a U-turn, it is 252 certainly a major change in policy. It is unfortunate that the announcement had to be dragged out of the noble and learned Lord by way of a Private Notice Question, rather than in a Statement yesterday as opposed to a Written Answer. Noble Lords wish to enter into this debate, which shows that a Statement was necessary.
I am not sure whether or not to congratulate the noble and learned Lord. It remains to be seen whether or not he has pulled off a conjuring trick for Christmas. He has certainly tried to produce a white rabbit from a hat, but we do not know whether he will succeed—we have to wait until May.
The Minister must have looked at the alternatives. What would have been the value of the site if the Dome were to be demolished? How much money would he receive if the site were sold without this building? A large event is to be held in the Dome at New Year. Can the noble and learned Lord confirm that the Dome has been let on an arm's-length basis and will generate a net profit to its operators and not a cost? I understand that a substantial sum of money has been paid to refurbish the Dome to get it ready for New Year.

§ Lord Falconer of Thoroton
My Lords, as to the first point, it was made absolutely clear that the details were to be given first to Parliament, and that is how the matter was dealt with; namely, by a Written Answer in this place and another place. Secondly, the precedent followed in regard to the Written Answer was exactly the same as that for the announcement in respect of Nomura and Legacy. Thirdly, I very much welcomed the opportunity to have an oral discussion with the House today and I readily agreed to the PNQ when it was tabled.
The noble Viscount said he did not know whether or not to welcome the announcement—unlike the Shadow Culture Secretary, Mr Tim Yeo, who rightly said that the kinds of proposals included here are the ones that one would wish to see in the Dome. I entirely agree with that.
The noble Viscount asked about the arrangements for the party on 31st December. The Ministry of Sound has entered into an arm's-length contract with EP for the use of the Dome. It is paying a rental of £75,000. There is a profit-sharing arrangement between EP and the Ministry of Sound in relation to the party which will produce a profit to EP should significant numbers attend. The expenses for EP consist of providing a number of people on the site that night. Other than that, no additional expense has been incurred by EP. The expenses for the party will be incurred by the Ministry of Sound. In the context that the party will be profitable, it will produce a return for EP.