London 2012 Olympics: officials to be questioned by Parliament over collapse of stadium deal

The news came on the day that the West Ham deal collapsed, leaving a black hole of £100 million that may have to be funded by the taxpayer.

Andrew Altman, chief executive of the Olympic Park Legacy Company responsible for negotiations with West Ham, is among the officials who will be called before the influential Public Accounts Committee on Dec 14.

Details of the inquiry can be disclosed as it emerged that the collapse of West Ham’s deal to take over the Olympic Stadium has left a shortfall in the public funding package.

Margaret Hodge MP, the committee’s chairman, said the cost of reconfiguring the stadium was certain to be raised by MPs. She said that the officials in charge “appear to be oblivious to the constraints that the rest of the public sector are experiencing.”

Dennis Hone, chief executive of the Olympic Development Authority, Paul Deighton, chief executive of the London Organising Committee of the Olympic Games, and Jonathan Stephens, the most senior civil servant at the Department for Culture, Media and Sport, will also be questioned.

Newham and the Government blamed “legal paralysis” caused by Tottenham and Leyton Orient, who have demanded a judicial review scheduled to be heard next Tuesday.

Newham were also facing an anonymous complaint to the European Commission, arguing that their loan constituted illegal state aid.

There was also the possibility that Newham-West Ham could lose the case if it went to a full hearing. Leyton Orient were increasingly confident about the strength of their case.

The hearing will come after the National Audit Office, the public spending watchdog, publishes a value-for-money review of the Olympics in the next few weeks.

The OPLC confirmed on Tuesday that it had ended negotiations with West Ham and funding partner Newham Council because legal challenges meant they could no longer guarantee to have the stadium open for the start of the 2014-15 football season.

The OPLC said it would issue new tender documents for a 60,000-seat stadium retaining the running track by early next month and is seeking expression of interest by January. The intention is for the stadium to remain in public ownership with the successful bidder paying an annual rent of around £2 million.

Under the new proposal, however, the cost of converting the stadium from its 85,000 Olympic capacity to a 60,000-seat arena with the facilities required by a Premier League football club will fall to the taxpayer.

Sports minister Hugh Robertson said on Tuesday that the cost was estimated at £95 million.

Some £35 million of that has already been allocated by the OPLC to a conversion fund, but the remaining £60million is likely to be met from public funds unless a tenant can be persuaded to contribute.

Estimates on Tuesday night suggested the costs could exceed £100 million.

The OPLC and Government would hope to recover the investment in rent over the lifetime of the stadium. They will also hope to attract other sports and concert promoters to show an interest.

Robertson suggested that Newham might be persuaded to provide £40 million to the conversion costs as under the initial deal with West Ham, but conceded that there was no requirement for them to do so.

West Ham immediately said they would bid to move to the stadium. Boris Johnson, the Mayor of London, said the new tenants would “almost certainly be West Ham”. This drew an angry response and the threat of further legal action from Leyton Orient, who are also intent on bidding for the stadium, which is less than a mile from Brisbane Road.

“It appears from the mayor’s comments that he has not grasped the reality of an impartial tender process unless he knows something that we don’t,” club chairman Barry Hearn said.

“One would have thought that if there have been any lessons from this debacle of a bid process that they have not been learnt. We will be watching carefully.”

Chelsea and QPR, both exploring new stadium options, last night said they were not interested. Tottenham will examine the tender documents but if the track is non-negotiable they will concentrate on securing additional public sector funding for their new ground in Haringey.

Leyton Orient will go to the High Court on Thursday seeking to recover their full costs.

Andrew Boff, Olympic spokesman for the Conservative Group on the London Assembly, branded the collapse “a catastrophe” and blamed London 2012 chairman Lord Coe for insisting the running track be kept.

The announcement was welcomed by Johnson and UK Athletics, who believe the commitment to retain the track will enhance their bid for the 2017 World Athletics Championships.

What the OPLC decision means for the key players in stadium drama

UK ATHLETICS
The decision represents a welcome boost to UKA, as it guarantees the retention of a running track – crucial for London’s bid to host the 2017 World Championships. Athletics is the major beneficiary without contributing any funding.

What they say: UKA chairman Ed Warner: "The legacy company has acted swiftly and smartly. They’re going to get a positive result.”

OLYMPIC PARK LEGACY COMPANY
A serious embarrassment. They had been confident the deal with West Ham would survive legal challenges. They will now have to spend up to £100 million of public money on transforming the stadium.

What they say: Sports Minister Hugh Robertson: "This is not a white elephant. The action we have taken today is about removing uncertainty.”

WEST HAM
West Ham appear to remain the OPLC’s preferred bidder for the £2 million-a-year tenancy. This new scenario could be a better deal for the club, who could not have afforded to move into the stadium without the £40 million of state aid promised by Newham Council. That money was under threat if Tottenham and Leyton Orient had won their High Court case against the West Ham-Newham bid.

What they say: Karren Brady, vice-chairman: "Our bid is the only one that will secure the sporting and community legacy promise.”

TOTTENHAM
The club welcomed the decision and will look at the OPLC’s tenancy terms. But if a running track is non-negotiable, they have already stated they are not interested. Instead they will focus on securing public funding for a new stadium in Haringey.

What they say: Club statement: "The bid we put forward was a realistic solution.”

LEYTON ORIENT
A major victory for the League One club in the short term. The decision does not banish their big fear – West Ham moving in – but they will now bid to become the stadium’s tenant.

What they say: Chairman Barry Hearn: "If it’s not us moving in, we will continue to object.”