MD1646 LLDC Queen Elizabeth Olympic Park Maintenance Obligations

In establishing the London Legacy Development Corporation (LLDC) in 2012, the Mayor of London stated that the purpose of the LLDC should be:

“To promote and deliver physical, social, economic and environmental regeneration in the Olympic Park and surrounding area, in particular by maximising the legacy of the Olympic and Paralympic Games, by securing high-quality sustainable development and investment, ensuring the long-term success of the facilities and assets within its direct control and supporting and promoting the aim of convergence."

To this end the LLDC is committed to maintaining and upkeeping the QEOP to a standard appropriate to its status and as part of its statutory objective under section 201 of the Localism Act 2011 to regenerate its area. It has granted a number of long leases, under which it, as freeholder, is obliged to maintain and upkeep the QEOP. These leases also oblige tenants to pay a Fixed Estate Charge, being a fixed rate per square foot of gross internal area occupied, the rate being dependent upon the category of tenant and also being subject to indexation.

The effect of a direction and delegation should be to provide clarity around the legal basis for both the maintenance and upkeep of QEOP and the collection of the Fixed Estate Charge.

The objective is to clarify the legal status of certain LLDC’s activities for the benefit of stakeholders and key partners. This will have the corollary of demonstrating that the LLDC can be regarded as acting as a public authority in the exercise of its duties to maintain and upkeep the QEOP. This is a test applied by HMRC when it considers whether the LLDC will be entitled under section 33 of the Value Added Taxes Act 1994 to a refund of VAT incurred on both QEOP maintenance and upkeep costs, and on the construction of the cultural elements of Olympicopolis.

As this decision seeks to provide clarity around the legal status of services and functions that the LLDC is already performing, it is not anticipated that this will have any impact on those with protected characteristics.

Links to strategies and Mayoral and corporate priorities
The Mayor’s London Plan states (at policy 2.4) that 'a viable and sustainable legacy for the Olympic and Paralympic Games to deliver fundamental economic, social and environmental change within east London, and to close the deprivation gap between the Olympic host boroughs and the rest of London ... will be London's single most important regeneration project for the next 25 years.' Given the purpose stated by the Mayor for the LLDC, the delegation proposed here - which enables the LLDC to contribute to the convergence ambition - is crucial to the Mayor's delivery of this policy.

Impact assessment and consultation
This delegation does not in itself propose any specific interventions or actions on behalf of either the Mayor or LLDC. It is considered, therefore, that no impact assessment relating to this particular decision is required.

The LLDC has been consulted about the proposed delegation and is content with it. It is not considered that any additional consultation is required in respect of this decision.

Risk
While the delegation could in theory create a slightly enhanced risk that the LLDC could take action beyond the purpose stated for it by the Mayor, it is considered that the conditions included in the delegation and the more general close working relationship between the GLA and LLDC at all levels, as well as the constrained resources available to LLDC, would make this very unlikely.

There is no cost associated with this direction and delegation as it provides a legal basis for the LLDC to perform activities that it is already performing under the auspices of pre-existing contracts and leases with tenants. It also does not impact on what cost recovery has been assumed in LLDC’s budget.

The Mayor may authorise LLDC to exercise his statutory functions under section 38(1) and (2) of the GLA Act 1999, and by s 38(7) they become functions exercisable by LLDC notwithstanding it doesn’t otherwise have the power to do so. Under s 220 of the Localism Act 2011 the Mayor may direct LLDC as to the exercise of any of its functions. By s 220(4) LLDC must comply with the direction. The proposed Direction and Delegation authorises LLDC to exercise the Mayor’s powers under s 30 of the GLA Act 1999 to do anything that furthers the promotion of the economic social and environmental improvement of that part of London within the QEOP and for that purpose empowers LLDC to impose a Fixed Estate Charge (FEC) to provide a funding stream to LLDC for the maintenance of the Park to a standard appropriate to a former Olympic and Paralympic venue. LLDC is additionally directed to impose the FEC on occupiers.

Potential VAT implications of the delegation and direction are described in section 2 of this report (Objectives and expected outcomes).

None

Appendix A: London Legacy Development Corporation (Queen Elizabeth Olympic Park Maintenance Obligations) Direction and Delegation 2016
Appendix B: Fixed estate plan