Q1 Chairman: Good afternoon, welcome to the Committee of Public Accounts. Before we start it is my great pleasure to congratulate our Treasury Officer of Accounts, Brian Glicksman, on his CB.
Mr Glicksman: Thank you very much, Chairman, that is kind of you.
Q2 Chairman: The whole Committee is very grateful for the recognition of all the work that you do for the Committee. Today we are looking at English Partnerships: Regeneration of the Millennium Dome and Associated Land, and we are joined by Dame Mavis McDonald, who is the Permanent Secretary at the Office of the Deputy Prime Minister, and Mr John Walker, who is Finance & Commercial Director of English Partnerships. You are both very welcome. This of course is a long-running saga and I hope it is the last time that the Committee has to look at the Dome, but there has been a great deal of public interest. Could I please ask you, Dame Mavis, to start by looking at paragraph 2.3, which you can find on page 20 of the Report of the Comptroller and Auditor General? Would it be fair to say that the poor handling and the unsatisfactory outcome of the first sale competition, which of course is history and we all know about, did lead very directly to the weak interest of major players in the second process?
Dame Mavis McDonald: I think the Report makes clear that that was the advice of Jones Lang LaSalle, who were English Partnerships' and the competition teams' advisers throughout the first and second competition, and they were taking soundings of people who were expressing interest through the period of the last part of the first competition and who were pretty authoritative in the view which they gave to us about the handling of the second competition.
Q3 Chairman: So the answer to that is yes, is it?
Dame Mavis McDonald: Yes.
Q4 Chairman: Thank you, that is very clear. Could you now please look at the actual sale process, and to start with if we could look at paragraphs 1.23 to 1.24 on page 15? Do you not think, Dame Mavis, you were a bit naïve in thinking that the Dome could be sold in isolation without a large dowry of development land?
Dame Mavis McDonald: It was very clear in both competitions that Ministers had set a goal of finding a sustainable use for the Dome as part of the competition. In both competitions English Partnerships and their advisers were focusing on that as a primary objective, with the secondary objective of achieving part of the regeneration of the Greenwich Peninsula. In all the very large number of inquiries and expressions of interest that were made in both competitions nobody was inhibited from expressing an interest in the wide amount of land, and indeed the material that was sent out by Jones Lang LaSalle made it clear which land was available around the Dome, and also what the extent of the English Partnerships and other owners' landholdings were on the remainder of the Peninsula. The key purpose was finding a sustainable use for the Dome and, as the Report itself points out, there was a lot of evidence that more people were interested in the land rather than the Dome and there was really no doubt about the extent of interest in the land. I think the extent to which the Report refers to the restrictions on the land were about not subsidising the total value of the deal by selling land at what we might describe as less than the best value to any prospective partnership or consortium that came forward.
Q5 Chairman: The original question is fair enough, is it not? It was hopeless to expect anybody to be interested in the Dome on its own?
Dame Mavis McDonald: I think Jones Lang LaSalle-may I say JLL?
Q6 Chairman: Yes, of course.
Dame Mavis McDonald: JLL did do some work about what potential uses were along with other private sector advisers, and we did have advice that there were types of leisure use for the Dome which could stand up on their own, and indeed I think John can probably give you more detail. English Partnerships did look into that particular question in more detail.
Mr Walker: If I may, Chairman?
Q7 Chairman: Yes.
Mr Walker: Yes, we examined that and we appointed consultants ERA to undertake some market testing of what type of leisure use could be sustained within the Dome.
Q8 Chairman: You will have to speak up a bit, I am afraid.
Mr Walker: Yes. We asked ERA to have a look at the various leisure groups that could be put to use in the Dome and they carried out a study and they came to the conclusion that it would probably need a capital injection of something like £100 million to make a leisure use stack up in the Dome.
Q9 Chairman: We now move on to land being offered with the Dome, and this is covered on page 21 between paragraphs 2.5 and 2.7. Do you think that you might have had more interest if you had been clear from the start exactly how much land was on offer?
Dame Mavis McDonald: Our view is no, for two reasons. One is because the total extent of market testing in the first competition and the second was very exhaustive; there was something like 1,400 initial expressions in the first competition, which very quickly got narrowed down to referring a small shortlist of six, which came down to two players. JLL went back and talked to another 150 potential consortium companies, partners, who might be interested in the second competition, and again there was a lot of interest in the land but very, very little interest in the Dome. So we were satisfied on that count that there was not an offer around the corner that we had not potentially tapped. The second point was that the actual deal put forward by the MDL consortium was very strong indeed. It had three very strong, well-established companies with a track record of delivery and success in the relative areas of their expertise; but it also uniquely brought to the table the land that Quintain's owned, which opened up the end of the Peninsula for development in a way that no other proposition is currently doing, and led to the opportunity for a wider regeneration plan for the north end of the Peninsula, which was something for which Greenwich Borough Council had always been pressing.
Q10 Chairman: It has taken five years to agree to this sale. Can you tell me, Dame Mavis, when the taxpayer will finally be rid of the burden of this white elephant?
Dame Mavis McDonald: On the present plans it is anticipated that the £30 million referred to in the Division of Proceeds document will be returned to the taxpayer during 2008 and the remaining cost return due to EP for the maintenance of the Dome will be available before the end of 2009.