Labour saves Millennium but sponsors may be less generous

Nick Higham is BBC TV’s media correspondent

Last week the Labour Party took its first real decision as the future government of Britain (always assuming, of course, that it wins the election). It decided to commit itself to the Millennium Exhibition in Greenwich.

That an historic shift was taking place in British politics was confirmed by Michael Heseltine, when he sought a personal meeting with the Labour leader, Tony Blair, last Thursday to keep the plans for the exhibition on track.

Perhaps the deputy Prime Minister was hoping that, by involving Blair, he could blame Labour intransigence should the plans for the exhibition collapse. But he was also tacitly acknowledging that the Labour leader was a potential Prime Minister without whose backing the exhibition wouldn’t happen.

Indeed, I understand that at one point he virtually said so during their meeting, when he told Blair it was time he started acting like the leader of the country.

By the end of last week, Labour had promised not to cancel the exhibition. That delighted the organisers, who said commercial confidence in the project was being undermined by uncertainty over its future.

In exchange, Labour won the right to a review, after the election, of what the agreed statement calls the “project delivery” (rather than the project itself) to “ensure it is cost effective and properly implemented so that it will come within the existing budget”.

The party also won the agreement of the Government and the exhibition’s organisers (the Millennium Commission and the company set up to run the event Millennium Central) to a form of words which implies that there will be no blank cheques for National Lottery money to bail out the project if it gets into difficulties.

The agreement came at the end of a week which saw some quite remarkably tortuous negotiations and brinkmanship, not to mention vigorous spin-doctoring and a positive blizzard of faxes between Labour and the exhibition organisers. At one point the whole project was within a couple of hours of complete collapse.

That was when Labour and the Government thought they had an agreement on Friday afternoon – only to find the Commission and Millennium Central were refusing to accept it. Blair himself had to be brought back into the negotiations to agree a final draft.

At issue was a budget for the event which started off at 700m before Christmas, and had already been shaved by 120m to 583m.

But even the revised budget horrified Gordon Brown when he was told of it at last Wednesday’s Shadow Cabinet, because it assumed a budgeted shortfall of 60m and a “contingency” of 195m plus inflation, on top of the 583m.

The budget assumes a 200m contribution from the Lottery. But Labour said that agreeing to the contingency would imply up to 280m of extra Lottery money would have to be found, and indeed the Government has extended the life of the Millennium Commission (which gets well over 200m a year) by 12 months to allow this to happen.

Brown thought agreeing to that would ruin Labour’s carefully-nurtured reputation for financial prudence.

But it proved extremely difficult to find a way to accommodate both Labour’s demand for a firm cap on spending and the need for a safety-net to reassure business sponsors that they won’t have to pick up the bill if income falls short of what is hoped for. In the event, the safety-net is still there, but a fudged form of words has been agreed which enables Labour to claim a victory.

Any bail-out cash will have to be formally applied for by the operating company. And a further grant will only be made for “contingencies and inflation which at present cannot be predicted”. Meanwhile, the organisers have promised to do all they can to stay within the budget.

What all of this will have done for the precious commercial confidence the organisers have been so keen to maintain, you are probably in the best position to judge.

The show has budgeted for 150m from business sponsors. It has 80m so far pledged, with varying degrees of firmness, so it’s looking for another 70m. The Greenwich fundraisers could soon be knocking on your door.

Leaving aside the question of whether it’s worth spending money to put your name in front of 10 million paying visitors down in Greenwich, you might, in weighing up whether to chip in, ask yourself what last week has done for your perception of the project.

It has certainly had a great deal of publicity. There can be few people in Britain who don’t now know that there’s going to be an exhibition at Greenwich, and that it features that dramatic dome.

But the sight of the organisers more than once last week warning anyone who’d listen that the project was on the brink of collapse (“12 hours away from cancellation” at one point) must have shaken a few potential sponsors.

You might be left with the impression that this is a decidedly rickety venture, whose final costs and (even more important) revenue remain unknown, and which has come perilously close to collapse several times already.

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