One-in-five chance Olympics bill will rise
The government is confident the final costs of hosting the 2012 Olympics will not rise above government estimates, despite an official report warning of a 20 per cent chance of spiralling costs.
Announcing a detailed budget to MPs, Olympics minister Tessa Jowell insisted the project was on track.
However, with many anticipating the costs associated with hosting the 2012 games will inevitably rise, opposition politicians have warned the government against approving any further handouts.
In March, the government said the total budget for the 2012 Olympics would be £9.35 billion – more than £4 billion over the original cost.
The Olympics Delivery Authority has spent the summer conducting a “predictability study” on the final cost of the games and concluded there was a one-in-five chance it would increase.
Today, Ms Jowell, who has retained responsibility for delivering the Olympic projects despite the summer reshuffle, insisted any unforeseen costs had been built into a £2 billion contingency fund.
This is “sufficient to cover the risks at both project and general programme levels,” she said.
In a statement to MPs, Ms Jowell said: “This statement shows that after a thorough assessment of all the potential risks associated with a development of this scale, the budget is consistent with the funding package I outlined in March this year.
“Months of careful scrutiny have confirmed that the Olympic Delivery Authority has the money it needs to deliver the venues and infrastructure for a terrific summer of sport, as well as leaving a long-term legacy for one of the most deprived parts of the country.
“Now we look ahead to what will be a dramatic 2008, with the first building work starting on the Olympic Park site, the Beijing Games and the start of the four-year countdown to London 2012. The project has high levels of public support and is on track.’
The Conservatives welcomed Ms Jowell’s announcement as a baseline statement but said the overall Olympic budget still lacked transparency.
Shadow Olympics minister Hugh Robertson said: “The obvious omission is any mention of the mass participation sports legacy which was the key commitment in the London 2012 bid but, as yet, remains uncosted and unfulfilled.
“Monthly cash-flows and a breakdown of the contingency are also needed if we are to ensure the budget doesn’t increase further.’
The Liberal Democrats said it was a “relief” the budget had not breached the £9.3 billion benchmark but said the government must prevent any future rises.
Lib Dem Olympic spokesman Tom Brake: “This has to mark the end of handouts from lottery good causes being used to pay for cost overruns.
“From now on, both the Olympic Delivery Authority and their contractors will have to cut their cloth to keep within this budget.”
One thinktank today went as far as to argue the “obscenely expensive” 2012 Olympics should be abandoned
Mark Littlewood, communications direction with Progressive Vision, said: “We should inform the International Olympic Committee today that London does not now intend to host the 2012 Olympics.
“The financial mismanagement of the Olympic bid is breathtaking. The government should save itself any further embarrassment – and the taxpayer any further expense – by cancelling the games forthwith.”
