Govt 'seriously underestimated' Olympics cost

The Olympic budget risks spiralling while the project may not be ready for the 2012 Games, a committee of MPs has warned.

The Commons public accounts committee (PAC) said the government needs an "iron hand" to prevent the project overrunning its deadline or budget or falling below standard.

But it found no one person is responsible for delivering the 2012 Games and instead a large number of bodies are involved.

PAC calls on the Department of Culture, Media and Sport to agree a plan of "what needs to be decided, when and by whom".

MPs also found the government had underestimated the original Olympics budget and seriously overestimated the amount private sector partners would be willing to contribute.

The original budget in 2005 was estimated at £2.4 billion but this has since risen to £9.35 billion.

PAC chairman Edward Leigh concluded the government had "seriously underestimated" the cost of the games. The original budget did not include tax, security or the cost of a contingency fund.

MPs also warned of the problems associated with needing to complete the project for a fixed launch date. Contractors could demand higher costs or introduce lower standards to save time.

PAC recommends contractors are incentivised to deliver the project on time and to cost, and to sufficient quality standards.

Mr Leigh said: "If the London Olympic and Paralympic Games are to be the great success we all want them to be, then the risks to delivery will have to be managed with an iron hand.

"The Department for Culture, Media and Sport is ultimately responsible for coordinating the array of bodies involved. It is worrying, therefore, that strong arrangements for monitoring progress and managing risk are so far not in place. "

The Liberal Democrats argued the report highlights serious issues. Don Foster, culture, media and sport spokesman, said the government had failed to get its figures right to begin with and the budget had now risen to nearly four times its original estimate.

He expressed "major concerns" that proper monitoring and risk management are still not in place.

Mr Foster said: "With £1.7 billion pounds set to be raided from lottery good causes, the least we should expect is for the money to be well spent but, as this report makes clear, the legacy plans lack clarity and are still to be finalised.

"However, we do now have a clearer understanding of the challenges ahead and we mustn't forget that the International Olympic Committee believes that London is much further ahead than previous Games."

Conservative shadow Olympics minister Hugh Robertson questioned why Gordon Brown had chosen to separate the Olympics minister from the Olympic executive in his latest reshuffle.

"London 2012 needs simple and accountable government support structures to ensure successful delivery and these are not in place," he argued.


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