2012 Olympics report calls on Newham to improve investment decision-making
0London Borough of Newham’s decision to invest in the venue for the 2012 Olympic Games in its borough was reasonable, but improvements are needed in decision-making and scrutiny processes, according to a report released this week.
The authority acquired a 35% shareholding in the London Stadium in 2011, which it decided to withdraw from in 2017 because it had become clear that the stadium, operating under the name of E20 Stadium LLP, would be loss-making over the long term and “presented a risk of insolvency” unless the shareholders underwrote the losses.
Newham was not repaid its initial investment made through a £40m loan.
The council set up the Newham Legacy Investments (London Stadium) Scrutiny Commission to investigate the history of the council’s involvement and to identify any lessons that could be learned.
The report of the commission recommends that in future the council should be cautious about taking minority stakes in organisations whose operations could have serious financial consequences for the council.
It says that the final decision on ‘significant investments’ should not be left to officers of the council, and that tolerances need to be established to define a ‘significant investment.’
The council should introduce a training programme for members of its audit board, its investment and accounts committee, and its budget working party.
It should make sure members are briefed for all significant decisions, that leading officers make available clearly defined time slots for members to contact them regarding those decisions, that the risks of the investments are clearly identified to members, and that a risk management strategy is drawn up.
The council should develop a report template for its decision-making bodies that highlights risks under a separate heading.
Urgency procedures should only be used where there is a genuine risk to the legal, financial interest or reputation of the council, and then only endorsed as a last resort.
The report’s last recommendation is that its overview and scrutiny function needs to be fully engaged with by the administration.
