Memorandum of Understanding

MQT on 2007-06-20
Session date: 
June 20, 2007
Question By: 
Bob Neill
GLA Conservatives
Asked Of: 
The Mayor


What progess has been made in negotiations with the Secretary of State regarding the revised Memorandum of Understanding?


Answer for Memorandum of Understanding

Answer for Memorandum of Understanding

Answered By: 
The Mayor

I am continuing to discuss the matter with the Secretary of State.

Bob Neill (AM): Well that is riveting news, but it is a bit troubling because when I asked the Secretary of State in the House of Commons back at the beginning of this month, she said that the work on it was in progress. I imagine that is probably what she has told you. Do you have any idea, Mayor, as to when we are likely to come to a conclusion on this?

Mayor (Ken Livingstone): It is not a question of what she tells me, because the negotiation is between her and me. We made very good progress initially based on the various commitments she had given in the House of Commons; the most important of those was that the £500 million contingency would be given to the ODA (Olympic Delivery Authority) to deal with and not drawn down on a case by case basis, because that is a recipe for long term delay leading to real problems delivering the Olympics on time. I was happy with that package and we are virtually signed up to it.

Civil servants in departments other than DCMS (Department for Culture, Media and Sport) have rolled back from that, saying they think, as the contingency is coming from their budgets, it should be drawn down on an item by item basis. I am resisting that. It is a very serious point here, not about who is paying what, but the mechanism. I can see all the traditional civil service minds just seeing endless committees where effectively David Higgins [Chief Executive, Olympic Delivery Authority] is having to go to the ODA Board to say, `This is the cost overrun on, say, the utilities works'. They will agree it. Then it would go to a committee of civil servants, comprising all the departments having to give up the money, and they will start second guessing; they will say, `Well, the Government has appointed now a new supremo to advise on the management of the Games and they think you could do it differently'. Several months will go by, as has been the case in one instance already, and this will add to delays to the timetable. Therefore I am holding on.

I agreed to put £300 million in as part of an overall package, one of the elements of which was that the £500 million would be made available to the ODA. There will not be any £300 million from me, if what we are having is a committee of civil servants slowly start to take over the running of the Olympic Games. In actual fact I would not want to be associated with it because it will be the 2013 Games if civil servants get their hands on it!

Bob Neill (AM): If that commitment was not adhered to, it would be a serious breach of faith on the part of the Government.

Mayor (Ken Livingstone): It was an undertaking to Parliament.

Bob Neill (AM): Indeed.

Mayor (Ken Livingstone): It was an undertaking by the Secretary of State to Parliament, and I do not think it is right that civil servants should be trying to unpick an undertaking given by the Secretary of State to Parliament. Vigorous work is going on on this front, but it is a pretty widespread ramp from across Whitehall departments to undermine the Secretary of State's undertaking to Parliament.

Bob Neill (AM): The Secretary of State may not sadly be much longer for this political world many of us think, and she is in a difficult position. Are any of you are likely to still be around when Mr Brown forms a new government.

Mayor (Ken Livingstone): For how long?

Bob Neill (AM): Under those circumstances is it not necessary, if need be, for you as a prominent figure within the Labour Party, nationally as well as in London, to go directly to the current Chancellor, the future Prime Minister, and say it is absolutely crucial for your credibility on the Olympics with Londoners that the undertaking which Tessa Jowell gave to the House of Commons is adhered to and not watered down? Will you be doing that?

Mayor (Ken Livingstone): My offer of £300 million is conditional on the undertakings that were given to Parliament being adhered to by the Government and by myself. This was a package agreed, signed off by all departments; it cannot be unpicked afterwards. If in any way it was an attempt to improve it, is there anyone on the face of this planet that thinks it would be improved by a committee of civil servants getting to discuss every shift and turn of the Olympics contracts? I trust the judgement of David Higgins and his proven ability to deliver. He has a business background, and I trust his judgement rather than a committee of civil servants meeting in private, drip-feeding funds in after great delay.

Bob Neill (AM): I agree with you on that and I hope all sides of the Assembly will support you on that. Can I just ask this as well; since we have the need to rewrite the funding agreement for all the reasons that we know about, have you pressed the Secretary of State to take that opportunity to make absolutely specific and cast iron the guarantee that there will be no further call upon London Council Tax payers? I know you have said that it is not what you want to do, but can we have it in the agreement as well?

Mayor (Ken Livingstone): The last time I met the Secretary of State that was in the draft; a clear commitment; no further increase in the Council Tax or fares, in there, firmly spelt out. I was quite happy to sign the draft at that point. The only wording change still outstanding then not agreed was that I wanted a clear undertaking that this agreement would be voided if there was a sudden dramatic reduction in the budget of the LDA, because the London Development Agency is our vehicle. If suddenly the Government massively cut grants to the LDA, that presents Londoners with very difficult choices because all of our commitments to fund the Olympics are coming through the LDA. If the Government suddenly changed the whole basis or quantum of funds available to the LDA, I think the agreement would have to be void. That was the only sticking point at that stage.

Gradually, since then, more have been added by civil servants from other departments, not the DCMS.

Bob Neill (AM): I understand. As far as you understand now, is that commitment to London Council Tax-payers in the draft or is that being pulled back?

Mayor (Ken Livingstone): It was in the last draft I saw, but who knows what civil servants are working on as we speak.

Bob Neill (AM): We share that cynicism but obviously it is a concern. The other bit I was interested in - again an opportunity that may avail itself to you during these negotiations ' is have you been lobbying to say, `Well, this is also an opportunity for you to pass back the 12p tax on the Olympics lottery which is at the moment going straight to the Treasury'? Have you pushed for that to come to London or to mitigate some of the other funding?

Mayor (Ken Livingstone): I am adhering absolutely to the deal that Tessa Jowell put before Parliament, and that was not in there. I share your broad sympathy that it should be, but it was not. I think basically we just stick to what was said to Parliament and that is what we expect to see in the final Memorandum of Understanding. I would love it if I could persuade the Government to pay for the whole thing, but it is not going to happen.

Bob Neill (AM): The other issue finally that I wanted to raise with you - I think you and I would say it was regrettable, particularly if the other elements are not honoured - is that we know that the LDA has, understandably enough, taken out quite a number of loans, from which it is hoped that we will get a return in due course when the sites are disposed of. In her statement on 15 March the Secretary of State said that a profit-sharing arrangement would be put in place. What progress has there been made on that? Will that cover just the capital? Will it cover interest as well, and profit on top of that? Will there also be any calculation to mitigate in some way the extra £300 million that you are putting in?

Mayor (Ken Livingstone): This was why we made such good progress, because the number crunching on the big figures was rapidly resolved, we were all happy, and it is on these smaller points that the actual mechanisms of governance started to unravel.

We commissioned work about what the likely value of the land to be sold was. Taking the average figure for the increase in land prices in London over the last 10 and 20 years, they are the same figure - 19% over 20 years and 10% over the last 10 years - and looking at a reasonable expectation of what you would get on a site for site basis in terms of density, we got up to a figure of just under £2 billion for disposal. That would mean that we not only got our money back and the Lottery got its money back, but we would be able to fund 50% affordable housing on every housing site without any call on central or local government funds, just with the profits from the land.

People can say, `Well the land may be about to collapse' and all of that but look at the pattern of the last ten years, and look at the pressures for development. It was because the money would be able to repay the Lottery, repay London and give us the affordable housing that we resolved it very rapidly. It is only on issues of governance, not money, that we have run into problems.

Bob Neill (AM): One of the things that David Higgins said when he came before us was that the Cabinet's final decisions on the budget were absolutely crucial, `a crucial milestone' was the phrase that he used. I think that has been reinforced, perhaps. Whilst, fortunately, I am pleased to say, the IOC (International Olympic Committee) broadly has been very supportive of progress, one of the few areas where they wanted more clarity was on the budget as well. What system is there for you to have an input into that final Cabinet decision on the budget?

Mayor (Ken Livingstone): That is part of the argument about governance. Given that it is the signature of the Mayor, the British Olympic Association and Jacques Rogge [President of the IOC] - these are the only three signatures on the contract - and the Government undertook to stand behind that contract, I think it is absolutely ridiculous if you do not have both myself and, effectively, Seb Coe (Chair of London 2012) or his successor - he intends, as far as I know, to carry on until 2012 - not involved in those key decisions.

If you had a situation in which civil servants, meeting in private, were working directly to the ODA and bypassing the Olympic Board - which has Seb [Coe] and myself and Tessa [Jowell] and Colin Moynihan [Chairman of the British Olympic Association] on - and de-scoping projects, so what we ended up with was rather sub-standard and unattractive buildings that did not honour the commitments on legacy that we have given, this would be a disaster, because they would then come to the Olympic Board with a fait accompli with huge pressures of time, so as well as the debate about the contingency, there is an intense debate about who is going to be present.

Tessa [Jowell] made it absolutely clear she thought I should be on the Funders Committee. There are civil servants resisting that because it is the end of civilisation if someone who is not a minister is present at one of these things. I would go further; I think it is absolutely essential that Colin Moynihan and Seb Coe - the other two Members of the Olympic Board - should be there with the Minister and the Mayor, otherwise you are getting into layers. They need to be present whilst we discuss exactly what is being built.

We have made huge progress on the main stadium; we have got it back within budget and so on. We have done that all working together. That would not be the case if there was one layer of government and another layer of the Olympic Board. The Olympic Board is enshrined in law. Parliament passed it. There was no attempt then to say it should be subordinate, or effectively managed, by a secret meeting in which ministers rubber stamp the interference of civil servants.

Bob Neill (AM): Again, I am probably very much with you. I think it is important that the Government learns to recognise the reality of devolved governance structures here and elsewhere. It comes back to the point, does it not, that we were making earlier, there are still some key issues to be unblocked. If the Secretary of State cannot do it, the only person you have got to go to is the incoming Prime Minister, is it not?

Mayor (Ken Livingstone): Eventually all such decisions in our dreadfully centralised system of government effectively come back to the Prime Minister at the end of the day. I suspect he has got a few things distracting him this week, but if these are not resolved shortly I shall clearly wish to discuss it with him or Ed Balls [Economic Secretary to the Treasury].

Bob Neill (AM): Did you take the opportunity, out of interest, to discuss it with the various would-be runners and riders for the Deputy Leadership of the Labour Party who might not be unhelpful in this regard?

Mayor (Ken Livingstone): As I do not believe the position is really worth having, I did not bother. In so far as we have to have a Deputy Leader, as you know I voted for Jon Cruddas and made Harriet Harman my second choice, but if I was running the Labour Party I would abolish the post.

Bob Neill (AM): On that note, thank you.