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Talking Point

The £140,000 London Stadium investigation

At the end of February, the Mayor of London quietly announced that accountancy firm Moore Stephens had been appointed to write a £140,000 report about the mistakes made in the London Stadium transformation and what lessons could be learnt.

The purpose of the investigation is listed by the Mayor’s office as:

• To provide a narrative explanation of the history of the London Stadium, including all relevant construction, financial and operational arrangements, with a particular focus on the stadium’s conversion into a multi-use arena and the subsequent negotiations and arrangements

• To confirm the key decision points and contractual commitments made, including the financial and operational projections that informed the significant investment of public money into transformation works and who was responsible for them

• To assess whether the work leading to the decisions and commitments made was sufficiently robust and subject to appropriate levels of due diligence and negotiation to ensure that value for money was achieved for the taxpayer after taking into account the legacy objectives and expected benefits

• To report on the stadium’s financial viability in terms of an assessment of the ongoing and future operating costs and income of the current working arrangements

• To identify any lessons that can be learnt

• To work with all relevant organisations to obtain evidence for this work, reporting any lack of co-operation to the Mayor’s office

• To produce a report for publication.

The investigation and its resulting report will cover three distinct phases in the genesis and life of the Stadium:

1. The Olympic bodies’ original decision making in determining the design and nature of the Stadium built for the Games and what thought was given to how the Stadium would be used post-Games

2. The decision making of LLDC and its forebears in the tendering for and delivery of the Stadium transformation in light of the original design and its legacy objectives

3. Decisions pertaining to the current operational arrangement for the Stadium, including those made by LLDC, LB Newham and E20 Stadium LLP, and those taken by Her Majesty’s Government and the GLA such as hosting the 2015 Rugby World Cup and the 2017 World Athletics.

Moore Stephen’s project plan is for a draft report to be presented to the GLA in June 2017. The report will then be finalised and a public report made available to the public later in the summer.

Whether £140,000 is a good use of taxpayers money to tell us what we already know is a valid question but Moore Stephens seems an odd choice as they have been regular auditors for the LLDC and were involved in the stadium transformation itself.

In 2013 they audited the LLDC for change control, project management and business cases in relation to the Queen Elizabeth Olympic Park and these reports are still in the public domain. In 2015 they were involved with the Mayor’s office to audit the London Stadium transformation project. They gave a green light to the project in
April 2015 in another public document which is still online.

It all seems rather strange but then again it is politics at the heart of this investigation.

The Stadium operators budget and business case has been shot to pieces, they under estimated the number of stewards, the cost of policing and extra security costs. The lack of a Stadium naming rights partner for the first season has cost them big also. Budget projections from the LLDC suggest they will lose £8.4m in operating costs in the stadium 2017/2018 with a loss of £5.4m in operating costs in 2018/2019. They are predicted to lose £35m this year.

Gone are the days of a business plan which suggested a £250,000 profit each year to the taxpayer. At the time there was an outcry it was only £250,000!

As a side note, the stadium owners are thought to be on the brink of announcing paying London Living Wage for all sub contractors working the London stadium which increase running costs yet again by at least another £250,000 per year.

We shall wait and see the outcome of the report but I could have saved them the money as I can almost guarantee what the report will say.

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