2012 Olympic Games
I think Paris is thanking their lucky stars they didn’t win the 2012 olympic bid. £9 billion is a hell of a lot of money to spent on a sporting event.
London Times, March 15 2007
The bill for the 2012 Olympics could exceed £9 billion, the Government admitted today, three times what it originally estimated.
In a much-delayed announcement because of disagreements in Whitehall over which departments will foot the rising costs, the Culture Secretary and Olympics Minister, Tessa Jowell, told the House of Commons that the complete cost of preparing London for the games could reach £9.3 billion.
To contend with the increasing costs, the National Lottery, which is already providing £1.5 billion towards the event, will be raided for a further £675 million. Central Government provision will rise to £6 billion.
The budget includes £3.1 billion for the building of the Olympic park and relevant infrastructure in Stratford, East London — up £800 million from the Government’s early estimates — £1.7 billion in regeneration costs and a £2.7 billion contingency fund, which will be made available if costs increase further.
The overall building budget that will placed in the hands of the Olympic Delivery Authority (ODA), responsible for the preparation of the Games, will be £5.3 billion.
Within this is a trebling of the original security budget for the Games. Ms Jowell has set aside an extra £600 million in general policing costs that will be incurred during the 16-day event, which will include such high-profile competitions as beach volleyball at Horse Guards parade and the triathlon in Hyde Park.
Unofficial estimates have put security costs closer to £1 billion and Ms Jowell admitted that the bill, borne reluctantly by the Home Office, will be reviewed as the event approaches.
Ms Jowell said that today’s budget meant that preparations for the Olympics, which were won by London to great popular acclaim in July 2005, were now running “full steam ahead”. But her description of the rising costs were greeted by calls of “scandalous” from the Opposition benches.
The Government has been under pressure to explain the cost of the Games since it was reported, within months of the successful bid, that the Culture of Ministry and Sport had not allowed for VAT costs within its original proposals.
Last November, Ms Jowell admitted that the Olympic park bill had risen by £900 million because of the inflation in construction costs and management. The Government is paying CLM, a consortium described as its “delivery partner”, £400 million to keep costs in check.
Ms Jowell said today that the £840 million tax bill would be ploughed back into the Games and that the Government had always intended to revise its budget forecast in the event of winning the Olympics. “Every venue, every bridge and every facility,” had now been included in the plan, she said.
The Olympics Minister added that Londoners will not be expected to contribute any more of their council tax — a total of £625 million — than they are already paying towards the cost of the Games and that transport fares would not be increased to meet the bill. But she said that the Mayor of London would contribute a further £300 million over the “lifetime of the Games.”
The hardest hit will be projects funded by the National Lottery, which will now contribute a total of £2.2 billion towards the Olympics. In the Government’s original plans, the lottery was intended to contribute only £750 million towards the building of the Olympic park.
Ms Jowell attempted to play down those fears today, saying: “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,” and said that she intended to share some the expected profits of the Government’s purchase of land in east London among Britain’s charities.
But the Shadow Olympics Minister, Hugh Robertson, said the Government’s plans would “penalise precisely the clubs and small organisations, up and down the country, that were supposed to benefit from the Olympics”.
Today’s budget does not include the expected £2 billion cost of staging the event, which will be funded privately by the International Olympics Committee, the sale of television rights and merchandising. This week the London Organising Committee announced its first major sponsor of the Games, Lloyds TSB, which will contribute £80 million.