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Bill for London 2012 Games could rise to £12billion, warn MPs
Nicholas Cecil, Political Correspondent22.04.08
Ministers' claims to have the £9.3 billion costs of the London Olympics under control were dealt a blow today.
They were castigated by an influential group of MPs for hugely underestimating the bill for the Games, now £5billion higher than originally forecast.
The all-party Commons public accounts committee warned that the public should rightly have little confidence about government guarantees that the bill will not rise even higher.
The committee chairman, Tory MP Edward Leigh, said the original budget was "entirely unrealistic".
The committee believed the overall bill for the Games would top £12 billion once the costs of buying the land for the Olympics and staging them were taken into account - and yet its legacy for future generations remained unclear.
The final bill will be partially offset because the £2 billion cost of staging the Games is expected to be met from ticket sales, merchandising and broadcast revenue. The bill for buying up the land is expected to be covered by selling it afterwards.
The MPs, though, ripped into how the original estimate of just over £4billion in 2005 could have reached £9.3billion by March last year.
Ministers were criticised for not initially including the £2.7billion contingency provision in the estimate.
Some £600 million of funding for policing and wider security was also left out, as was the £836million in tax payable on construction and other activities. The predicted private sector contribution of £738 million tumbled to £165 million. The Olympic Delivery Authority's programme delivery budget has risen to £570 million, from £16 million after it had difficulty drumming up competitionfor contracts, with only one bidder for the main stadium.
Olympics Minister Tessa Jowell said the report focused mainly on early stages of budget planning.
Construction of the stadium would start later in the spring, three months earlier than planned, the site for the athletes' village had been cleared and digging of tunnels to carry underground power lines had been completed on time and on budget. She added: "We are heartened by progress so far and the International Olympic Committee's view that we are ' operationally and financially' on track."
ODA chief executive David Higgins said: "We believe we have a realistic budget and adequate contingency." He added: " Seventyfive pence of every pound we are spending is for long-term regeneration, so there is a clear legacy for the project - world class sporting facilitiesthousands of new homes, schools, community and health facilities, new transport links and utility infrastructure, all in a brand new urban park."
Shadow Olympics minister Hugh Robertson said much of the promised legacy, such as ensuring more young people were playing sport after 2012, remained "uncosted and unplanned".
Reader views (8)
When is somebody in authority going to "confirm to the public" exactly "who", "how" and "when" this massive shortfall is going to made up in respect of the incompetent budgeting shortfall for these multi-billions of pounds (£'s) that were not accounted for previously but apparently now have "no option" but to be paid?!
I believe that the public have a "Right to Know" these precise details prior to the forthcoming "Greater London Authority Elections on May 1st 2008".
- Fraser, Telford Park
Sounds an expensive regeneration project for Stretford? London does not want these I think. Nu Labor should go to the Olympic Committee and admit they cannot organise these games here.
- Jacqueline, Hampstead, London
It's very simple guys. Make those politicians responsible for agreeing the budget liable for an escalating personal penalty charge for overruns. That'll improve their management skills at a stroke.
- With Smoke Coming Out Of My Ears, London NW11
Well, there's a surprise! But we'll have that wonderful 'Olympic Legacy'. Gives you a nice warm feeling doesn't it? The present estimated cost is equivalent to £680 per household. Will we all get free tickets to go?
- John Problem, winchester uk
When my party at the London Assembly stood up in early 2005, before the bid had even been successful, we stated clearly the cost would be £10 billion at a time when the Mayor, Government and Tories like Lord Coe were all saying just over £2 billion. We were ridiculed for saying this by all others, including Tories who had to follow their national party line and cheerlead the Olympics. We challenged everyone to a) insist upon us being presented the real budget; b) have it properly analysed; c) then have a Londonwide vote on whether we should stage the Games once the true figure was known. All others failed to support, again becauase of the party lines dictated from on high. If a small political party at the London Assembly can arrive at a figure nearer the likely final spend, what is wrong with our political system that no-one else can? Make sure you vote for small parties at London Assembly elections - only we can stop the big ones railroading things through and letting the Mayor (whoever he is) get away with everything.
- Damian Hockney A.M., London
I'm with Jimbob, these games are going to come in at around £20 million. Hurrah for us people of London for spending all our hard earned cash for it, especially as we'll have nothing to show for our money except more congestion and a complete lack of money to actually buy tickets. You'd think that seeing as we'll all end up coughing up about £5k each in the long run we might actually get at least 1 free ticket to an event of our choice?
- I M Fleeced, Vauxhall
I reckon Jimbob's got that about right. Apart from the whole thing ending up being 2 to 3 times more expensive than it should be because builders will hold the government to ransom to finish on time, the London Olympics will, despite claims to the contrary, be far and away the most unsustainable Olympics ever... I mean who else would spend £500M plus on an 80, 000 seat stadium only for it to be knocked down after just 17 days use?
- Edward, London
I can guarantee that this will cost nearer to £20b by the time it is finished. I'm a chartered builder and I know how how these things work. I for one shall have my snout in the trough for what is essentially a "sit on" job where everyone will be going as slowly as possible until the last minute in order to generate acceleration costs (costs a fortune achieves very little).
Montreal held the Olympic games in 1976, I believe they finished paying for it about two years ago. Enjoy.
- Jimbob, Kensington
