Press Notice No. 8 of Session 2003-04, dated 10 February 2004
EIGHTH REPORT: THE ENGLISH NATIONAL STADIUM PROJECT
AT WEMBLEY (HC 254)
Mr Edward Leigh MP, Chairman of the Committee of Public Accounts, said today that the Wembley project has a chequered history with £120 million of public money committed without proper consideration of financing and viability, and that he expected DCMS and Sport England to keep a close watch on future progress.
Mr Leigh was speaking as the Committee published its 8th Report of this Session, which examined how the Department and Sport England are getting value from the public money now invested in the English national stadium project at Wembley, the handling of the original lottery grant, and provision in the stadium for athletics. The project to build the new stadium is expected to cost £757 million, of which £161 is being contributed by the public sector. Completion is scheduled for early in 2006.
The Committee found that, while the Football Association's request in 2001 for further public funding triggered a detailed review of the financing and viability of the project, and of the corporate governance and accountability arrangements, these matters should have been dealt with before any public money was committed. And, in handing over £120 million at the very beginning of the project without requiring the Football Association either to contribute funding itself or to provide a guarantee to underwrite the grant, Sport England left itself exposed. Had the project collapsed, it is doubtful that the lottery money would have been recovered. Sport England's position was further weakened by the closure of the old stadium - this should not have been allowed until the financing package for the project had been secured.
Now the decision has been made, after much toing and froing, to include athletics provision, it is not clear that the new stadium will ever actually be used to stage a major athletics event. It seems that the decision to restore provision for athletics was little more than a device to keep in the project the £20 million that the Football Association would otherwise have had to repay.
The cost increases on the project are being borne directly by the Football Association and not the public purse. But ultimately the value for money from the public sector contribution depends on a successful project and the cost increases can only serve to make the delivery of a financially viable stadium less certain. To protect the public interest, the Department and Sport England should obtain regular and comprehensive information on the progress of the project and be ready to act as soon as they become aware of concerns or difficulties.
In the event that the stadium is financially successful, the Football Association will receive all the profits even though the public sector is providing a fifth of the funding. The Department, in conjunction with the Treasury, should develop guidance for its sponsored bodies on providing for the public sector to share in the financial gains generated by ventures that have received public money.
The number of public access seats (which has already been reduced once to help make the project viable) and the restrictions on anchor tenancy and the sale of naming rights to the stadium are real public benefits. These benefits have been secured with public money and any proposal to diminish them as a way of providing further support for the project if it gets into financial difficulty should be considered as if it were a request for additional funding.
It is surprising that the Department and Sport England seemed unable to provide us with meaningful information comparing the costs of this project with those of new stadiums in other countries. Benchmarking of this kind would have been helpful in making an assessment of the value for money of the project.
Best procurement practice has not been followed on what is a high profile project with significant public sector financial support. Organisations responsible for managing projects which are supported with public money should be expected to set out a formal procurement process, which treats all bidders equally, and to adhere to it. Departments and their sponsored bodies should apply the lessons drawn from this project-including the need for straightforward management structures, strong corporate governance and trust with other stakeholders-in taking forward other large publicly funded ventures, including the forthcoming Olympic bid.
Mr Leigh said today:
"The Wembley project has a chequered history: £120 million of public money was committed without proper consideration of the financing and viability of the project and the old stadium was allowed to close further threatening recovery of the initial grant. An additional £41 million of public funds has had to be put in, whilst the number of public access seats has gone down. And the justification for retaining £20 million in the project for athletics is dubious, with the stadium likely to be used for this once or twice in 20 years, if at all.
I expect DCMS and Sport England to keep a close watch on the project, act quickly if there are difficulties, and treat any proposal to reduce further the public benefits of the project as if they were being asked for hard cash."
Note for Editors
The English national stadium project at Wembley is being led by the Football Association and will be delivered by its subsidiary, Wembley National Stadium Limited. The public sector's £161 million contribution towards the cost of the project comprises: £120 million of lottery money from Sport England, £20 million from the Department for Culture, Media and Sport (the Department) and £21 million from the London Development Agency.
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