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The Olympic Stadium Debacle

4 Dec

Cllr Conor McAuley

Councillor Conor McAuley has written to all members of the council about the Olympic stadium disaster.

Prior to 2014, Cllr McAuley sat in Sir Robin’s cabinet as Executive Member for Regeneration & Strategic Planning. He was also on the planning committee of the Olympic Delivery Authority and the planning decisions committee of the London Legacy Development Corporation.

Colleagues,

I cannot be the only Council member appalled at the loss of £52.2 million invested by this Council into the Olympic Stadium.

To make matters worse, the statements and press releases from Newham Council on the matter have only sought to mislead both elected members of the Council and the public.

Mayor Wales tells us that he is “angry that the deals and decisions made by the former Mayor of London and his administration have left the stadium finances in such a dreadful mess”. 

This is an outrageous attempt by Robin Wales to wash his hands of responsibility for his role in this mess. The E20 LLP company was established in 2012 as a joint vehicle for the London Legacy Development Corporation (LLDC) and Newham Legacy Investments to “deliver the post-Olympic Games transformation and operation of the Stadium.”

Newham Council were partners in this disaster with the LLDC. In the years since the incorporation of this partnership Newham members or officers have, as board members, jointly signed off the E20 LLP accounts. (Robin Wales in 2014, Kim Bromley-Derry in 2015 and Cllr Lester Hudson in 2016).

So, to try to pin all the blame on Boris Johnson, just doesn’t work.

Astonishingly, at the time of its launch Sir Robin was so proud of this partnership and certain of its future success that he told us “even on the most disastrous figures, even if everything goes wrong we still make a profit on this. The risk is really, really minimal.”

It is claimed that the Newham Vision for the stadium was a determination to avoid a post-Olympic “white elephant”. 

The definition of a “white elephant” is a possession which its owner cannot dispose of and whose cost, particularly that of maintenance, is out of proportion to its usefulness.

This is exactly what we now have, the only difference is that a wealthy Premiership football club is getting a subsidised use of the stadium and we have been picking up the bill.

We can’t even claim a success in creating stadium related employment for local residents.

When Newham made the initial investment, it was claimed that up to 75% of the jobs created at the Stadium would go to Newham residents. A recent Freedom of Information response tells us that the total number of jobs created at the stadium currently is 1,531. The number of Newham residents employed on full time contracts is 15 out of 70 jobs (21.4%) and the number of Newham residents employed on casual contracts is 469 out of 1,461 jobs (32.1%). Nothing like the promised figure of 75%.

Sir Robin tells us that we can retain our “community benefits” as part of his agreement with Mayor Khan.

We don’t need a stadium to organise community events like the Great Newham Run and a few free tickets to Guns ‘n Roses concerts are a poor return for our £52.2 million.

The regeneration of the Stratford Rail Lands was always based on the Westfield and Lend Lease developments. Not the Olympic Games. The permanent new jobs have come from Westfield and more recently from the new Lend Lease developments. New homes continue to be built on the site. 

The Olympic Games accelerated the delivery of new homes in what we now call the East Village. The games also gave us a great park and world class sporting facilities in the Velodome, the Aquatic Centre and the Copper Box. The Games also focussed attention on Newham and East London generally and we benefitted from new and improved transport links and increased visitor numbers.

Some seek to defend the £52.2 million investment by attributing these regeneration benefits to the stadium, which really is nonsense.

If West Ham United had wanted a new stadium with a 60,000 capacity, they should have been asked to pay the appropriate price. Newham and London tax payers should not be picking up any of the bill. 

Over the years Sir Robin has been a regular recipient of hospitality at West Ham matches, perhaps he can convey that message back to Messrs Gold and Sullivan and Baroness Brady when he next attends a West Ham home game.

Sir Robin claims that the stadium deal unlocked the Boleyn site and enabled the Council to buy 211 of the new homes being developed at that location. The Council could have used its money to buy a similar number of new homes on one of the many other sites being developed in the borough. 

If Sir Robin had really been interested in providing affordable homes for Newham residents, he could of course have spent the £52.5million on the Carpenters estate in Stratford bringing the empty homes there back into use for social housing and helping Newham to reduce its growing list of homeless people.

There remains one thing I don’t quite understand. Why was it ever Newham’s responsibility to sort out the future of the Olympic Stadium?

I expect in the months running up to the election in May, more and more of our voters will be asking that question when we knock on their doors asking for their votes. Newham borrowed the money to invest in the stadium, so our Council taxpayers will be paying this particular bill for years to come.

How exactly can we reassure them that the Labour Party can be trusted with their money?

Yours in frustration,

Conor McAuley

Then and now

4 Dec

Then (January 2011):

“Even on the most disastrous figures, even if everything goes wrong, we still make a profit on this.

“The risk is really, really minimal.

“The debt, which costs our residents nothing, will be repaid and then we start to share in the profit.“

Now:

“…as a result of the widely reported difficulties with onerous stadium contracts, stewarding costs and the massively underestimated costs of retractable seating to support non-footballing activity, the council received a business plan from E20 in October 2016 which indicated there was likely to be an ongoing deficit including material risks to the business plan which could make it financially unsustainable in the long term.

“As co-owners of the stadium, the council had exposure to these potential future losses.”

Then (8 September 2017):

“The loan is shown, for accounting purposes, as currently ‘impaired’, or damaged, due to the current financial performance of the Stadium. It is not a write off of the loan.”

Now:

“As part of the deal, the council accepts that its original £40 million investment will not be repaid.”

Gullible

4 Dec

Clown

Newham council on why it decided to invest in the Olympic stadium:

“Our decision to invest was based on the entirely reasonable assumption that [Boris Johnson’s] administration carried out its contract negotiations for E20 with due diligence. 

Allow me to translate: £40 million got pissed up the wall because we trusted that a man who is widely known to be lazy, and who has – at best – a casual relationship with the truth, did his job properly.

In other news, did you know that the word ‘gullible’ has been removed from the dictionary?

Taupe Friday

30 Nov

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Taupe Friday – like Black Friday but more sophisticated!

For four days from Friday 1st December, Tax Return by Jim Pollard is available on pre Xmas offer.

A tongue in cheek detective novel that’s not at all taxing, the paperback will be £7.99 (reduced from £10) and the ebook will be FREE. It’s the ideal Christmas gift for yourself and a friend (because you’ll need to buy two of the paperbacks if you want free postage!).

Offer runs Friday 1st to Monday 4th December 2017.

Topical note: the book also furnishes, courtesy of Detective Sergeant Caton’s eccentric French mother, an explanation of the most popular forms of corporate tax avoidance in terms even HMRC could understand – the Paradise papers have never made more sense.

Link: http://tinyurl.com/taxreturn-amazon

Trigger action

20 Nov

On Saturday afternoon the crowdfunding campaign to challenge the result of last year’s mayoral trigger ballot hit its initial £10,000 target.

As Dave Hill reports:

Labour Party members in Newham seeking to overturn the re-selection of Sir Robin Wales as their mayoral candidate next year have hit an initial target of £10,000 to pursue a legal case against their party’s governing body

In January, Labour’s National Executive Committee (NEC) declined a request to investigate the affirmative nomination process or “trigger ballot” held last autumn, which saw Sir Robin endorsed to seek a fifth term as mayor despite claims that a number of “irregularities” had “made a material difference to the result”.

They are now in a financial position to issue a statement of claim, setting out the grounds which they content that their party has “behaved improperly” over the trigger ballot, both at local level and in failing at a national level to conduct an inquiry into how the process was run.

With the news coming out of Zimbabwe at almost exactly the same time, Sir Robin must be starting to feel a little nervous. This is not a good time for longstanding dictators with a penchant for gold chains.

Unlocking votes

6 Nov

D Lee Newham Mag

A nice bit of promotion in the latest issue of the Newham Mag for local locksmith Daniel Lee.

Especially nice, as Daniel Lee is a local Labour party member who’s just passed the interview panel to be a candidate at next year’s council elections. And local branches will be holding their selection meetings in the next few weeks.

No doubt this is a complete and utter coincidence.

An Olympic-sized black hole

17 Oct

The London Stadium

Tomorrow (Wednesday 18 October) the Budget Monitoring Sub-Committee of the London Assembly will question the London Legacy Development Corporation (LLDC) and GLA representatives on the long-term financial sustainability of the London Stadium.

They will ask if it Is fundamentally un-profitable and try to find out what has happened to Sadiq Khan’s investigation into the Stadium.

The discussion will include the Stadium itself, the cultural and education district, affordable housing and overall financial sustainability.

The meeting starts at 2.30pm in The Chamber at City Hall (The Queen’s Walk, London SE1) and is open to the public and media. It will also be streamed live via webcast and YouTube.

Papers for the meeting are available online.

Less than zero

9 Oct

Not paying a penny

West Ham United has yet to hand over a penny in business rates for its London Stadium home, according to a report in London freesheet City AM.

Some 16 months after settling into what was called Olympic Stadium, the body responsible for setting UK business rates is yet to decide whether the Premier League club must pay anything, the Press Association first reported.

Earlier this year it was revealed that West Ham only had to pay rates on retail and office space it lets, rather than the entire stadium. This left landlord E20 Stadium to foot the remainder of annual £2.3m business rate bill. (emphasis added)

West Ham’s annual rent for the stadium is £2.5 million a year (halved if the club is relegated from the Premier League).

Newham loaned £40 million to the stadium partnership to help meet the cost of turning it into a football ground. The hope was that future profits would repay the loan and more. That loan has since been ‘impaired’ and the council’s finance director estimates its current value as zero. It will almost certainly never be repaid.

Adding insult to injury, a multi-millionaire owned football club, playing in the world’s richest league, is having its business rates paid by taxpayers too.

UPDATE

One of the supposed benefits of Newham ‘investing’ in the stadium was the prospect of jobs for local residents. ‘Up to 75%’ of new jobs created would go to local people, they mayor claimed.

A recent FOI response shows what a dismal failure this has been (percentages added):

The total number of jobs created at the stadium currently is 1,531 jobs. The number of Newham residents employed on full time contracts is 15 out of 70 jobs (21.4%) and the number of Newham residents employed on casual contracts is 469 out of 1,461 jobs (32.1%).

15 full-time jobs and 469 casual jobs. For £40 million.

Resigning matters

25 Sep

Forest Gate North councillor Rachel Tripp has resigned from cabinet.

Speaking to the Newham Recorder, she said:

“As Robin knows, I have been unhappy for some time about our direction of travel as a council on specific issues. Despite the fact that I have hugely enjoyed my cabinet work in both equalities and the small business programme, I have decided to stand down.

“I remain fully committed to working as a local councillor in the very best interests of the residents and everyone else in the wonderful place that is Forest Gate North as well as wider Newham.”

Resigning on a matter of principle: I can’t remember anyone doing this before in Newham, at least not in the Wales era.

It would have been so much easier for Cllr Tripp to sit back, shut up and collect the cash, as others have done (and many still do). This is a brave and principled decision.

Spot the Difference (part 94)

25 Sep

The draft Statement of Accounts originally published in July, which set off a furore once people spotted the words ‘written-off’ in the section dealing with the Olympic Stadium loan:

DSoA Original

The version being considered by the Audit Board/Investment and Accounts committee meeting on Wednesday :

DSoA audit board

Did they think no-one would notice?

Long-serving councillor Conor McAuley (Custom House) has devoted his September ward report to the Stadium loan write-off. The report is worth reading in full. But here is the conclusion:

The Mayor and one or two other councillors are arguing that an ‘impairment’ is not a ‘write off’ but they are contradicted by the very next line in the accounts which states that these charges are subsequently written off.

I am appalled not only by the loss itself but by the fact that we had to study the annual accounts to find this information.

Such a fanfare was made about the original investment, one might think that the Council was seeking to bury the loss

It tends to remind me of the £4.3+ million lost in the Council’s investment in 2012 in the London Pleasure Gardens project that was supposed to animate the Silvertown Quays area south of the Royal Docks. The Council lost every penny of this investment and it even had to pay the winding up costs of the company.

As I understand it, Newham’s Overiew & Scrutiny Committee has never looked at this loss, so I doubt their commitment to look at the Stadium debacle.

The Council’s draft accounts will be discussed further at the Council’s Audit Board on 27 September. It could be a difficult meeting.

That final sentence is a masterpiece of understatement.