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Bill for Olympic Village work doubles to £500m
Vikki Thomas21.04.08
The bill for the athletes' village at the 2012 Olympics has soared.
In the latest blow to the spiralling Games budget, the cost of infrastructure for the village is said to have more than doubled amid concern over transport links.
According to a source the Government has committed to underwrite £200 million for improvements such as new roads, but developer Lend Lease has put the cost at least £500 million.
The increase is said to have soured relations between the developer and the Olympic Delivery Authority.
Negotiations have already been hit by the credit crunch, as Lend Lease has struggled to raise debt finance for the 3,300 flats planned for the athletes' village in the Olympic Park in Stratford.
Insiders say the Australian developer is also seeking assurances from the ODA that it will underwrite the projected profit on the sale of the flats after the Games. This would reduce banks' fears over a property market fall. An ODA spokesman insisted the work remained "on programme", with the site now cleared and main building expected to start later this year.
The row comes as MPs prepare to criticise ministers and Olympic officials over the rising costs of the games and concerns over a lasting legacy for sport, business and tourism.
Tomorrow a report by the Commons public accounts committee will attack the "overcomplicated" structure of Games organisations, warning that this could increase costs even further.
Committee chairman Edward Leigh is expected to state that MPs will hold the Department of Culture, Media and Sport to account for its promise that the cost of the Games will not exceed £9.3billion.
And he is expected to raise concerns at an admission by the department that the entire £2.7billion contingency fund will be spent. Previously, the ODA had insisted that costs were not higher once VAT and inflation up to 2012 were included.
The original bill for the Olympics, announced during the bid, was £2.375 billion - comprised of £1.5 billion from the National Lottery, £250 million for the London Development Agency and £625 million from London tax payers.
Mayor Ken Livingstone vowed from the outset that the average household would pay just £20 a year for up to 12 years - 38p a week - to help pay for the Games. He promised there would be no extra cost to Londoners.
Early estimates included £971 million towards building the athletes' village and park and £89 million for converting the Olympic Park into legacy mode after the Games.
In November 2006, Olympics minister Tessa Jowell admitted that the bill expected for the Olympic park had soared by 40 per cent to £3.3billion. Last year, ministers admitted the total cost of the Games had increased to £9.3billion.
• Only one in 10 Olympic contracts have been given to east London firms, a think tank said today. The New Economics Foundation warned that there was a danger the Games would fail to leave a legacy of regeneration. Its research found that only 11 per cent of 500 contracts - worth a total of £1 billion - have been given to firms in the five Olympic boroughs. The rest have gone to national and international firms in what the foundation describes as an "Olympic gold rush".
• Military "spy in the sky" planes used to track the Taliban and al Qaeda could be employed to secure the 2012 Olympics. BAE Systems hopes to be able to use unmanned aerial vehicles to thwart potential terror attacks. The technology is similar to that utilised by the British military in Afghanistan to direct bombing raids. UAVs are more efficient than helicopter surveillance because they can remain airborne for almost 24-hours at a time and are smaller and quieter.
Reader views (9)
£600 million will be spent on security alone - dear God! I think I shall watch Spike Milligan's Running, Jumping and Standing Still film. Makes more sense
- Fiona Cameron, Bedford
I know someone who's going to have a big laugh in reading these lines. Do you know who is he? Pierre Delanoe, the Mayor of Paris.
Some years ago he led the campaign against London to organize the 2012 Olympic games. Since his failure he can't stop shouting as loudly as possible London got the games because its cost was lower than Paris's one. It even becomes a gimmick on a French tv program in which his puppet is always angry and upset since his failure.
- Anne-Laure, Geneva Switzerland
I asked the ODA how I could track the cost of the Olympics. They replied by referring me to a list of contracts awarded. This is my response to them for which I await an answer
#Thank you for the reply to my email.
Nothing published answers my question.
What I want (as a person living in London and therefore contributing much more than I wish to, to a games I do not want) is as follows:
• A bar chart showing how the work will be finished in advance of the opening date thus avoiding the Terminal 5 mess.
• Each bar to have a cost attached to it
• No bar to be cost at more than £100,000
• A monthly update showing progress on the time line
• A account money spent during that month(This is a value to the contractor)
In this way Londoners will be able see in advance when the £6.09 bn forecast starts to move up and how quickly it will reach the anticipated £10. Then we may be able adjust the scope of work before the cost get out of hand.
Your Contractors will have no problem in providing this information from their contractual program clause 14 or equivalent.#
I wonder if other Londoners would like transparency to the way their money is being spent, especially in the difficult times to come.
- Peter, London UK
Another Labour Dome in the offing!
- John Bush, London,E147LE
dear/sir/madam/with the country been in such a mess at the moment don't you think they should be spending the above amount on better things? yours sincerely.
- Graham John Gomersall Freeman, Hull Yorkshire
Ah but Red Ken says "it will be worth it"?!
- Jacqueline, Hampstead, London
We were assured by Lord Coe and various Labour politicians that the cost of the Games was carefully costed at £2.4 billion. So how can anyone ever believe anything they say now that the cost has risen to £9.3 billion. Tessa Jowell recently replied when asked a question on the cost of the Games "do you think we are stupid" Answers on a postcard to ...
- Clarky, London
We're doomed!
- Peter Seekings-Foster, Muildenhall, Suffolk
Now there's a surprise - not! Who will end up footing this bill, the taxpayer. Yes, all of you who didn't want the Olympics in the first place. There will be more to come between now and 2012!
- P. Wegener, London
