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Olympic bill could soar past £9.3bn, warn MPs
Last updated at 23:37pm on 09.07.07
Steepling costs: London 2012
The bill for the London Olympics, which has already more than tripled to £9.3billion, could spiral further, a spending watchdog has warned.
Preparations have been taking place without rigorous arrangements for 'monitoring progress' or 'managing risk', the Commons Public Accounts Committee found.
In an alarming report, the MPs say that if the huge project was hit by any delays, organisers would be forced to plough 'additional resources' into getting stadiums and other infrastructure projects finished in time for the Games in Summer 2012.
As the ultimate funding guarantor, the Government, and therefore the taxpayer, would be left 'financially exposed'.
To minimise risks, the committee says, builders should be offered 'incentives' to complete their work on time.
The report will be another blow for the Department for Culture, Media and Sport, which is responsible for the Games.
Olympics Minister Tessa Jowell has already been forced to increase the total cost, originally estimated at £3billion, to a staggering £9.3billion.
It includes a raid of more than £2billion on the National Lottery.
The report warns: "Any slippage in the delivery programme would bring the risk of having to pay more, or reduce quality, to be ready on time."
The MPs, who will produce a series of progress reports over the next five years, say ministers 'seriously underestimated' the costs of the Games in preparing their bid.
The revised budget was £6billion more than estimated at the time of the bid when 'whole categories of cost were omitted, including tax, contingency margin and security'.
The MPs add: "The department expected to raise £738million of private sector funding, which would have covered a quarter of Olympic costs, but now there is little prospect of significant private sector funding."
The all-party committee goes on to warn: "No one individual has overall responsibility for delivering the Games, however, and the large number of bodies involved presents significant risks, for example to timely decision-taking."
Chairman Edward Leigh said: "The risks to delivery will have to be managed with an iron hand.
"The Department for Culture, Media and Sport is ultimately responsible for co-ordinating the array of bodies involved.
"It is worrying, therefore, that strong arrangements for monitoring progress and managing risk are so far not in place."
Miss Jowell said 'much progress has been made' since the report was written, including 'a complete re-appraisal of all costs'. In addition, 'an outside expert with decades of experience in controlling costs' had been appointed to head the Government's Olympic executive.
Jeremy Beeton, senior vice-president of the U.S. construction firm Bechtel, is expected to start work next month.
Miss Jowell added: "I will continue to keep an iron grip on the budget and will not hesitate to intervene to keep costs down."
Reader views (6)
Here's a sample of the latest views published. You can click view all to read all views that readers have sent in.
It looks like my estimate of £15bn to stage the Olympics is already looking a bit on the low side.
- Lawrence, London
This report states "The revised budget was £6 billion more than estimated at the time of the bid." I bet that the true cost was known even at that time, but if they had told the truth there would have been a massive outcry at the cost. How can developed countries justify spending all this money when people are living in poverty even in the UK people are homeless and in desperate need.
- Paul Urban, London, UK
Shock, horror, who'd have thought it? Never mind, it's not as though Londoners will be charged through the nose for the incompetance of the people running it? On second thoughts....
- Trevor Roll, London
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