Q11 Chairman: This is a very large and complex deal. If you look at figures 11 and 16 on pages 23 and 33, we are looking at a complex profit sharing deal. Are you satisfied that you have sufficiently robust management procedures in place to ensure that the taxpayer's interest is protected over the next 20 years?
Dame Mavis McDonald: Yes. John can talk to you more about the detail, but from the point of view of my responsibility for taxpayers' money there are several factors that give us some reassurance. One is, as I said previously, all the parties are experienced players, including English Partnerships itself. Secondly, we have set up a series of arrangements for the oversight and management and monitoring of the deal and the return of the proceeds, which involves the NAO assisting us to ensure that we are on top of what we should expect. Thirdly, there are fallback clauses in the deal itself which allow both MDL in the place of Anschutz and EP in the event of MDL going too slowly to step in and retrieve the contract for the public sector and invite somebody else to do the development. So we feel we have structures in place designed to oversee what I agree is a very long period, to stay very much on top of the roll out of the whole of the project, and indeed it has been set up to be managed like a project with a special project team, sharing office in the Thames Gateway with the Urban Development Corporation and the ODPM's Thames Gateway team.
Q12 Chairman: But just one thing can go wrong. What happens if the office development fails to take off, for instance? You are in trouble, are you not?
Dame Mavis McDonald: Again, I will ask John to follow me on the detail but the office development will not take place unless the developers feel that the market is right and they will be monitoring what is going on in the Eastern London market. I think the whole of the deal of course relies on the return from the housing as well as the office, so there are trade-offs to be made about the rate and speed of the development of the land over time, depending on variations in the market. As I say, I do not know if you would like John to say something more on that?
Q13 Chairman: I think we can probably leave that. I just want to keep with you, if I may, Dame Mavis, and to sum it up this way. You have created a contract that is very complex and certainly is an interesting intellectual achievement, I recognise that, but you were clearly desperate to offload this and we have a scheme now where the companies get the profits upfront where we, the taxpayers, have to wait to the end of this process. Do you not accept that such a complex contract may raise more questions than it answers?
Dame Mavis McDonald: I think it is complex but it is not my sense that it is any more complex than any other joint venture partnership might be, which requires a return over time. So, for example, the contract we are working on as part of the Gateway Development in Barking Reach is going to be of a similar kind of nature, and I think throughout EP and Ministers were advised by professional advisers who have lots of experience in how to draw up such a contract and make it work.
Chairman: We will hope for the best. Mr Trickett.
Q14 Jon Trickett: Thank you, Chairman. I want to focus on the issue of the additional 100 acres. I think that the original site was 62 acres and eventually a deal was done over 170 acres roughly; is that right?
Mr Walker: That is right.
Q15 Jon Trickett: Accepting that the decision simply not to demolish the Dome and develop all the land was a question of public policy determined by the local authority and the Government, so it is not within our remit, the question is did you dispose of the Dome in the most cost effective way? Did you maximise the return to the public purse? Why did you not simply decouple the land which is available to be sold for development from the sale of the Dome-just answer that question first-and simply sell the land in order to maximise the value from the land and then use that as a clear and transparent cross-subsidy to the Dome, which clearly was not going to bring in huge amounts of money?
Dame Mavis McDonald: To repeat what I said earlier, because another ministerial decision was that a priority should be to find a sustainable use for the Dome itself, so that was the framework in which we were running the competitions basically-
Q16 Jon Trickett: In terms of value for money to the public purse and also in terms of transparency the right thing to do would have been to sell the land separately, to put it out to tender, to decouple the development of the land and the land value from the cross-subsidy, which went into the Dome itself, would it not? What you have achieved is a lack of transparency and also a failure to demonstrate that you have achieved value for money, for the land?
Dame Mavis McDonald: I do not think I share your premise because the Report itself and the work that was done for us, where we were testing the value with and without the Dome at various points in the competition, showed that there was a greater return with the Dome for a whole variety of reasons.
Chairman: Forgive my interruption. Our experienced colleague, Mr Williams, reminds us that you cannot question the policy but you can question the opportunity costs involved. So if a decision was taken not to demolish, say, you could question what is the result of that.
Q17 Jon Trickett: I might come back to that in a second. Thank you for your help, but I want to try to understand who wrote paragraph 2.11 because paragraph 2.11 says: "In our view"-and I do not know who the authors are and whether you have agreed to this or not-"public sector vendors are normally most likely to maximise the value they receive if they inform all potential bidders of the exact parameters of what is on offer." Is that your view or is that the NAO's view?
Dame Mavis McDonald: That is the NAO's view.
Q18 Jon Trickett: From which you dissent?
Dame Mavis McDonald: What we have said is that we do not think in this instance-and we did a market test under Treasury rules that were agreed- that we would have got a better deal by going down that particular route.
Q19 Jon Trickett: At the end of the day, though, we rely on the NAO for advice as much as any response which you might have, and I understand you to be saying that you dissent from that point of view?
Dame Mavis McDonald: As a matter of general principle, no, I do not, but in relation to this particular competition it remains our view and that of English Partnerships that this was as good a deal as we were going to get from anybody, for some of the reasons I addressed to the Chairman.
Q20 Jon Trickett: Can I ask the C&AG, this paragraph 2.11, it is obviously the NAO's view and presumably yours, Sir John? Also I notice in paragraph 2.12 that there is a sentence which says, "The National Audit Office takes the view that it is unclear whether such an offer would have produced additional strong bids." That is an extremely polite way of expressing, I think, a feeling that actually there might have been an alternative way of tendering for this land and that that might have been the more normal practice for the public sector. Am I right in interpreting these words in that way?
Sir John Bourn: It is right to say that would have been the normal practice and certainly the value of informing and making clear what it is you are selling is both the best way of selling things and the fairest way of selling things. So that is our general view and indeed the view that Dame Mavis takes.