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AMs criticise Mayor over Visit London collapse

July 26, 2011 by Martin Hoscik

Ams have criticised the handling of Visit London's collapse . Photo: MayorWatch
The decision to merge the capital’s promotional agencies, leading to the collapse of Visit London and endangering the pensions of staff, “was not sufficiently robust” according a new report by the London Assembly.

Earlier this year City Hall took the decision to merge the responsibilities of Visit London, Think London and Study London into a new limited liability company called London & Partners.

The decision to withdraw funding from Visit London Limited in favour of London & Partners forced VLL into administration when it became clear the company could not honour its obligations to the pension fund and creditors.

Pension scheme members faced the prospect of becoming reliant on the Pension Protection Fund for assistance while business creditors were at risk of receiving only a proportion of the sums owed.

In some cases services and assets which creditors were owed money for had been transferred to London & Partners without payment.

Two businesses who appeared before a meeting of the London Assembly complained that London & Partners was “operating from Visit London’s offices, using Visit London’s staff and resources and doing Visit London’s job” while leaving them unpaid.

AUDIO: Pensioner and creditor representatives address AMs
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The decision to establish L&P and withdraw funding was approved by Mayor of London Boris Johnson who subsequently accepted “things weren’t necessarily carried out with all the thought that they could have been”.

In June a rescue package was agreed between the Greater London Authority, the pension scheme trustees and the Pension Protection Fund which saw the GLA pay £6m into the pension fund and receive all outstanding assets of Visit London.

These assets have been used to pay creditors who are owed around £2.5m plus administration and professional costs.

Today’s report by the London Assembly’s Economy, Culture and Sport Committee says that “unforeseen extra costs” have left taxpayers with a bill of around £5m comprising £3m for the pension rescue and £2m in start up costs for L&P.

Assembly Members say any future transfer of staff between bodies involving the GLA should include “a targeted and proportionate assessment of the pension implications” and that more needs to be done to “challenge assumptions” during the decision process.

Despite being the “sole founding Member of London & Partners” the Greater London Authority has no Mayoral representative on the company’s board.

Although the GLA “has a right to send to board meetings an observer who will receive papers in advance and have the right to speak” they do not have a vote in board decisions.

The report challenges the Mayor to ensure the governance arrangements for London and Partners is “re-examined”.

AMs say this is necessary “to ensure that there are appropriate checks and balances to protect the interests of the GLA while allowing London and Partners sufficient freedom to operate efficiently and effectively.”

The committee also wants “London and Partners, and any other companies or external bodies set up and funded by the Mayor from GLA resources [to] sign the GLA Group Corporate Governance Framework”.

It has called for the Mayor to respond to these recommendations by the end of October 2011.

Committee Chair Dee Doocey said: “While the Mayor did the right thing in eventually agreeing to bail-out the Visit London pension scheme, it should never have come to that.

“Our report highlights lessons which should be learnt from the way decisions were made and implemented and the costs involved. It is vital that we ensure similar mistakes are not repeated in the future.”

Labour’s Len Duvall branded the situation “entirely avoidable” and said it had “cost London taxpayers millions and put pensioners and staff through needless anxiety.”

Duvall said he expected the Mayor to “reflect on these mistakes and provide the Assembly with further details of the absurd and wasteful situation of London taxpayers paying twice over as London & Partners scramble to buy up the assets that have been frozen by Visit London’s administrators.”

A spokesperson for the Mayor of London said: “The Assembly’s report makes clear that the Mayor has resolved the issues caused by Visit London going in to administration, resulting in the protection of benefits for members of the British Tourist Board pension scheme and ensuring that Visit London’s creditors will be paid in full.

“In doing so the Mayor has had to balance the interests of these groups with his fiduciary duties and strong commitment to the taxpayers of London to get value for money. We have done exactly that.

“Establishing London and Partners means that despite these tough times, when public funds are scarce, we are promoting the capital more coherently and compellingly around the world than ever before. We are also spending less money on the ‘back office’ functions that supported three separate organisations”

A copy of the report can be downloaded from london.gov.uk

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