Newham Council ‘wasted £40m of taxpayers’ money on Olympic Stadium deal’
PUBLISHED: 11:13 17 July 2018 | UPDATED: 11:17 17 July 2018
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Newham Council threw £40 million of public money “down the drain” when it backed the flawed deal to turn the Olympic Stadium into West Ham’s new home, according to an independent report released today.
The borough’s newly elected mayor Rokhsana Fiaz said the council ignored specialist advice that a projected multi-million-pound return on the investment was not achievable, and failed to properly scrutinise the final decision.
Former mayor Sir Robin Wales promised a £3 million-a-year profit for the council from the 2013 agreement to grant a 99-year concession to the Hammers at the Stratford venue.
However, the financial returns never materialised and the independent review by Peter Oldham QC found that the council’s external financial advisers, Navigant, had warned that the stake “was not value for money”.
At last night’s full council meeting Ms Fiaz said: “The report helpfully tells us that concerns raised by financial advisers at the time — namely that a £3 million return on a £40 million investment wasn’t achievable — was ignored.
“So while the council had the legal power to invest in the stadium, the final decision to invest £40 million in March 2013 was flawed.
“The council wrongly decided that one of its own self-imposed conditions for investment — the condition of an annual financial return of £3 million per annum — was met, despite financial experts casting doubt on that. So ultimately that was £40 million of investment by Newham council down the drain.
“The vision for the stadium and the benefits it could provide was exciting. But frankly the enthusiasm for the stadium’s potential far outweighed the scrutiny that should have happened.”
The money was borrowed from the Treasury and was written off by the local authority in December.
In total Newham invested £52.2 million in the stadium, injecting a further £12.2 million in working capital between February 2015 and June 2017, in return for free event tickets and 10 community days a year.
Last year Mayor of London Sadiq Khan described a “catalogue of errors” that led to him having to take direct control of the stadium built for the 2012 Olympics.
In a report ordered by the Mayor, accountants Moore Stephens detailed a litany of misjudgments, including underestimating the cost of retractable seating that allows the 60,000-capacity venue — now the London Stadium — to be used for West Ham’s home matches during the football season, but other events such as athletics in the summer.
Newham Council said today that it had nothing to add to previous comments from Sir Robin who said in December: “It is regrettable that the finances of the stadium have not followed the expected course.
“It was vital for Newham, however, that the stadium remained a public asset in public ownership, to maximise its regeneration, community and other financial benefits.”