R2OK!

mark occomore · Joined: 07 Dec 2006 Posts: 9955 Location: UK

The budget for the 2012 London Olympics has risen to £9.35bn, Culture Secretary Tessa Jowell has told MPs.

The revised budget is nearly four times the £2.4bn estimate when London's bid succeeded less than two years ago.

Construction is now budgeted at £5.3bn, there is a £2.7bn "contingency fund", and tax and security costs have risen.

The Tories attacked her decision to "raid" an extra £675m of lottery funds - which means £1 in every £5 of good cause money now going to the Olympics.

The budget outlined by Ms Jowell on Thursday largely covers construction costs of the Olympic Park and venues.

The contingency fund will ensure the government cannot be "held to ransom" as it aims to hit deadlines, Ms Jowell said.

The budget for which the government is responsible has nearly trebled since the Olympic Bill left Parliament under a year ago
Hugh Robertson
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The government's contribution has risen to £6bn, she said, with £2.2bn coming from the National Lottery - including the additional £675m - and the rest from London's council tax payers.

London Mayor Ken Livingstone has pledged to contribute an extra £300m, she said - but the money would not be funded from London's council tax, nor higher transport fares.

The cost of staging the event itself - currently estimated at £2bn - will be met through selling television rights, corporate sponsorship and ticket sales.

The Department for Culture, Media and Sport later said the £2.4bn estimate from two years ago did not include costs for such items as regeneration and infrastructure - which the £9.3bn now does.

Responding to criticism of the decision to use more Lottery money, Ms Jowell said that in the "overall scheme of things" its contribution was relatively small.

She said the Lottery would benefit from profit sharing based on rises in land values in the Olympic park area.

"London 2012 will bring huge financial gain to the whole country ... and it is only fair that the Lottery good causes should share in any such windfall," she told MPs.

"I am determined to ensure that this temporary diversion from the existing good causes to the Olympic good cause is done with the least possible disruption."

BUDGET BREAKDOWN
£3.1bn: Site construction
£1.7bn: Regeneration and infrastructure
£2.7bn: Programme contingency
£840m: Olympic Delivery Authority tax bill
£600m: Extra security
£390m: Non-ODA provision

Winning the Olympics had brought an extra £7bn of private sector investment to one of the most deprived areas in Europe, Ms Jowell said.

"The announcement today means it's full steam ahead for 2012," she added.

But for the Conservatives, the shadow Olympics minister Hugh Robertson said: "If you add together all the separate parts, the budget for which the government is responsible has nearly trebled since the Olympic Bill left Parliament under a year ago.

"In raiding the Lottery for a further £675m to make up the shortfall the government will penalise precisely the clubs and small organisations, up and down the country, that were supposed to benefit from the Olympics."

Scottish Nationalist Party MP Pete Wishart accused the government of using the National Lottery as "their own personal piggy bank" and said Scottish causes would suffer, to pay for London's regeneration.

But Big Lottery Fund chairman Sir Clive Booth told the BBC he thought it could have been worse.

"When I go back to the beginning of February and the numbers we were looking at in terms of increasing costs and what that could have meant in terms of impact on us, this outcome is much, much better," he said.

Tory MP Mark Field suggested that the original budget was "a lot more slack than it might otherwise have been", because Ms Jowell had not expected London to win the bid.

She, in turn, accused the Conservatives of trying to undermine the Olympics and said they would have preferred it if London's bid had failed.

Liberal Democrat MP Don Foster said: "Properly managed, the 2012 Games will bring huge and lasting benefits to all parts of the country.

"But sadly today's statement and the chaos that has surrounded the last 12 months and more, calls into question the government's ability to provide that proper management."

Of the £5.3bn budget for the Olympic Delivery Authority announced on Thursday, £3.1bn will be allocated to build the Olympic Park and venues and £1.7bn for regeneration and infrastructure.

The ODA would also be given a £500m contingency allowance - but the rest of the overall £2.7bn contingency fund would be "locked away", Ms Jowell said.

Another £600m had been allocated for "wider security" outside the site, and £390m for other costs including the Paralympics and community sports coaches.

BBC Online

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It is a joke god knows how we got it? Blimey they need to get on with it as it should be ready a year before the olympics.

Toggy tea slurper · Guest

It's just crazy if you ask me, shall we tell Paris they can have the games if they still want them? Laughing

Cherskiy · Posted: Fri Mar 16, 2007 6:57 am Post subject:

Did anyone seriously think the cost wouldn't over-run by a huge margin?
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treasure · Joined: 27 Feb 2007 Posts: 133 Location: over the rainbow

and will the facilities be ready by 2014 Rolling Eyes

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Chatelaine · Joined: 22 Jan 2007 Posts: 66 Location: Staffordshire

I just hope that it doesn't turn into a disaster akin to Montreal 76.
The Canadian Games may have made money, but by all acounts the city is still paying for the Olympic stadium (originally named 'The Big O') and infrastructure nearly 30 years later, leading city inhabitants to re-christen it, "The Big Owe"

It's original bill was $310m but thanks to mismanagement, disputes, strikes and an added security bill, the total exceeded $1.5bn - which doesn't sound a lot if you say it quickly.
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Highlander · Joined: 12 Feb 2007 Posts: 348 Location: Scotland

The vital thing will be that they must put someone in charge of the purse strings who actually knows about major building projects. Thats what the problem was with the Scottish Parliment (original estimate £40m - final cost £400+m) it was left to the politicians and civil servants to manage and they did not have a clue how to manage the architect and builders.

I wonder if there is the slightest chance of that happening!
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iwarburton · Joined: 08 Dec 2006 Posts: 2133 Location: Northumberland

It was inevitable that on such a huge project the estimate wouldn't be spot on but there seem to have been some elementary errors, as with the exclusion of VAT.

But why is VAT being paid at all, when local authority work and the like are usually subject to VAT reclamation?

Ian.

Highlander · Joined: 12 Feb 2007 Posts: 348 Location: Scotland

Well VAT is always a tricky issue. I think it will be that it is EU rules that dictate that VAT must be charged. However, certain aspects of the project might be liable for VAT reclaimation if if can be shown in the future that the facilities end up used for non-commercial use. I'm sure the HMC&E will know!
Maybe we have a VAT expert amongst us?
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