Queen Elizabeth Olympic Park: The finances of London legacy

Queen Elizabeth Olympic Park: The finances of London legacy

In a recent piece for On London, Lyn Garner, chief executive of the London Legacy Development Corporation (LLDC), sang the praises of the Olympic Park’s emerging East Bank cultural and eduction hub and characterised it as key recovery project for east London and the country. Today, she and LLDC finance chief Gerry Murphy set out some of East Bank’s financial numbers for the London Assembly’s budget and performance committee. The session provided revealing insights into the large and still uncertain costs of Covid for the whole of the Park’s development, with Brexit tagging along behind.

The East Bank cluster as whole, now rising along a strand of the River Lea beside Zaha Hadid’s exotic aquatics centre, will contain new bits of the BBC, Sadler’s Wells, the Victoria and Albert Museum (V&A) and two London universities. The LLDC says it will complement other, long-established centres of knowledge and arts in south Kensington and Bloomsbury. Murphy said the current East Bank budget is £513.5 million but that the total cost projection is now £628 million, acknowledging “a substantial increase” which the Greater London Authority will have to meet.

What happened? Over half of it is down to Covid, the committee heard: the work has slowed down and making the site Covid-safe has meant extra costs. Plus prices have risen faster than expected and there are what Murphy, called “some design integration issues to resolve”, a point which prompted Liberal Democrat AM Caroline Pidgeon to ominously remark that similar concerns had been raised about Crossrail.

Pidgeon also asked if the East Bank partner organisations are in a solid financial state. Garner said the V&A and, in particular, Sadler’s Wells are in “the most precarious” positions as both are reliant on paying punters and on government support, but that Sadler’s Wells is “post-Covid feeling very robust about coming to the waterfront”. She also confirmed that all of the partners are “in contract – they’ve all signed their leases”. The universities are doing OK and the BBC will still be bringing its symphony orchestra from Maida Vale. Garner repeated her view that East Bank will send a big signal that “Britain is open for business, post-Brexit”. The LLDC is to seek “recovery cash” from the government – without it, getting the job finished and activity happening will take longer.

There was also an insight from Garner into the finances of the London Stadium, primarily used by West Ham United. The football club pays a “usage fee” to the LLDC – or, strictly speaking, a company set up by the LLDC to run the stadium – for playing its home games there. Garner said that in normal times it costs the LLDC around £280,000 to put on a match day event, representing a loss of around £84,000 a game after the usage fee is received. But with matches played behind closed doors under Covid restrictions (until the past week), that £280,000 cost dropped to around £50,000 per match. And with West Ham still paying its fee, it meant “an upside of around £100,000 per game” for the LLDC. The return of fans in larger numbers will mean more revenue for the football club, but a return to losses for the taxpayer.

Garner said the LLDC has been making progress with pushing down the stadium’s running costs, for example by replacing seating which will save £1 million a year and switching to LED lighting, which will save about £450,000. However, the long-running search for a London Stadium sponsor, which would bring in tidy sums – probably £2-£4 million a year – from “naming rights”, has still not been successful. Garner pointed out that when she joined the LLDC, relations with West Ham were not cordial, which didn’t help. Conservative committee chairman Susan Hall was not impressed. “We hear excuses every year,” she said, and made it plain that she wishes to hear no more.

Garner was also asked about the homes being built on the Park. Tory Tony Devenish wondered if she had any concerns about “the overall viability of any of your housing sites or, indeed, any of your development partners”, pointing out that a possible down turn in the market next year could prove problematic. “No,” Garner replied, with confidence. Some big players are involved – Taylor Wimpey, Balfour Beatty, L&Q. All are “robust financially,” Garner said, though she made the small qualification that delay might occur and slow the pace of what Devenish had called “cash in the door”.

Green AM Sian Berry, also her party’s mayoral candidate, asked about the “affordable” proportion of homes on the Park, pointing out that in terms of completions it has been a rather low 22%. What effect might the Mayor’s new affordable homes grant programme have? Garner said conversations about that are underway with City Hall and highlighted an emphasis on “family homes” – meaning three bedrooms and more – which is already apparent on Chobham Manor, the first of the Park’s housing neighbourhoods to be built out. She told Berry that the “pipeline” of affordable homes “is rising” and should eventually be “around mid-thirties per cent” overall.

There was a lot more detail on funds, uncertainties and the future of the Queen Elizabeth Olympic Park. Watch the full 90-minute session here.

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