Dome: Closer inspection

Not so. The National Audit Office, parliament’s powerful spending watchdog is in the midst of producing a value for money report which investigates financial management at the £758m Dome.

While the country’s most infamous attraction works on to meet its visitor targets, its managers will be waiting for that report. Once published it – is likely to be mulled over by – the notoriously tough Public Accounts Committee which will have the power to call in whoever it wants for robust questioning.

The troubles of the Dome, the NMEC and its managers are far from over.

For financial specialists however, the interesting questions will centre on what the auditors from the NAO will be looking for.

The action that triggered the NAO’s interest was the announcement of the latest in a long line of one of the multi-million pound grants from the Millennium Commission.

In January #60m was given to the Dome which was followed in the Spring by a further #29m on condition Bob Ayling, chairman of the NMEC, resigned.

Since then the Commission has also given the Dome’s managers a #43m advance on the purchase price paid by Nomura.

But it was that #29m that provided the proverbial straw that broke the camel’s back.

On granting the money Mike O’Connor, director and accounting officer at the Millennium Commission, sent a ‘letter of direction’ to Chris Smith, culture secretary, essentially saying he could no longer take personal responsibility for the payment.

By convention the NAO was then compelled to launch a full-scale value-for-money study. Only one or two of 50 NAO value-for-money reports a year are prompted by letters of direction.

The NAO’s report is not expected until the end of the year and while it is in progress its spokespeople will give no indication about exactly what its officers are looking for. It will talk in the most general terms and will brook no suggestion that it should disclose the terms of reference for the auditors. ‘In general terms a value-for-money report will look at whatever information is available to look at,’ says a spokesman.’It’s not going to question the initial decision to carry out the report, because that is political. But it will look at what the taxpayer is getting out of the project and whether the taxpayer’s interests have been protected.

‘The terms of reference are not in the public domain. It wouldn’t be fair to do so at this stage because that will be part of the report.’

However, it takes no more than a reading of previous NAO reports to gain a good idea of some of the things the auditors will be looking at.

At the NMEC there will be key questions to be answered. Auditors will need to identify the precise task and goals the company set itself. Any judgements about financial management and performance will be made against those aims.

At the centre of this particular investigation will be Neil Spence, finance director at NMEC, who is bound to face some tough questioning about his own monitoring procedures. Auditors will want to discuss progress made by managers towards the planned level of service and the problems met along the way. The business plan may also come under observation.

Visitor numbers, the crucial element in the Dome’s success, have been revised down from 12m to 7m, and auditors may want to know how the original predictions could be so wrong.

Estimates about visitor numbers and the likely resulting income could be subjected to some sort of benchmarking procedure to establish best practice. This may involve comparisons with other attractions of a similar scale in Europe and here in the UK.

Benchmarking is a common method used by the NAO to highlight any flaws in planning processes and will inevitably result in finger pointing.

Benchmarking could be tricky work because, according to Spence, the nature of the Dome’s financing – #399m from lottery funds, #150m from corporate sponsorship, #150m from gate receipts and the rest from catering and retail – means there are no appropriate performance measures.

However, auditors will also look carefully at the conduct of the Millennium Commission – the grant giving body that channelled National Lottery funds to the Dome.

The Commission has confirmed that NAO auditors have already been in and gone.

Certainly auditors will be looking at the terms and conditions attached to the grant, whether procedures were put in place to produce self-assessment progress reports and whether project-monitoring visits were made.

When the NAO looked at grants made by the National Lottery Charities Board, a questionnaire was sent containing 40 inquiries designed to discover the ‘extent to which their arrangements were operating as intended and identify possible areas for improvements.’

Among the other possible courses of action for the NAO is to go through a benchmarking procedure to produce comparisons against which the grant-giver’s monitoring might be judged. This will be used to identify best practice.

Whatever conclusions come out of the NAO they will put the Dome back in the headlines all over again.

Related reading