Afternoon:
8°c
Comment: overspend on Olympic scale
Evening Standard20 Jun 2008
The £9.3 billion budget for the London Olympics was already a substantial increase on the £2.4 billion that ministers initially promised as the cost of 2012.
But even that sizeable sum will be stretched to its limit with the prospect that the taxpayer will have to fund the entire cost of the Olympics athletes' village. Lend Lease, the construction company preferred as the developer, has admitted that it is struggling to raise capital for the project.
The Olympic Development Authority was due to provide £550 million of public money with the remaining £450 million coming from Lend Lease and private sector funding. But the difficulties in the housing market put the money from the resale of the 4,000 athletes' houses in doubt. The credit crunch has also undermined the banks' willingness to lend sizeable sums. So, as the chairman of the ODA Mr Armitt admits, it will be the Government - or rather, the taxpayer - which will have to pay.
If half-a-billion pounds extra has to be found, it will come from a raid on the contingency funds of £2.7 billion. With another four years to go, what prospect that the remainder will meet further rising costs? The National Audit Office has already warned that unsigned construction contracts and doubts about the after-Games legacy of the venues could mean that the existing budget will be insufficient. The projected cost of the main venues has risen by £106 million since last November. It is impossible to sustain further rises on this scale. The onus is on Boris Johnson, his Olympics cost adviser, David Ross, and John Armitt to focus on keeping the project within budget. At this rate, it will be a formidable challenge. Londoners' worries about the galloping cost of the Games can only be heightened.
Reader views (1)
Looks like the honeymoon is over!
- Mark, Chislehurst, UK, 20/06/2008 18:23
Report abuse
