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Ignore the money watchdog at your peril

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Adrian Warner | 12:53 UK time, Wednesday, 31 March 2010

This blog carries a warning. I'm going to use a few words which usually have most people racing away from this page and clicking on something more appetising. But can you just stick with me for a few paragraphs, please?

The parliamentary Public Accounts Committee (I did warn you!) has today published a report which points out that the £9.3 billion budget for the 2012 Olympics is "worryingly tight".

Now it's the job of the PAC to play the role of a paranoid accountant, weighed down with gloom and doom. But all successful companies have one of those sitting on the board and I understand one of the reasons the London Development Agency (LDA) got into trouble over its financing of the Olympic Park site was that it didn't have somebody warning about the worst case scenario.

The PAC says the Olympic Delivery Authority, which is building the facilities, has only £194 million left in its contingency for unforeseen problems. Given that most of the facilities should be ready in the next year, the ODA might just get away with this to build the Olympic Park.

But, since security costs are almost certain to be higher than expected (they have been at most Olympics I have covered), some experts think the Government is probably going to need to secure more cash from other Departments (ie the Home Office budget) to pay for the Games.

Ministers will defend this, I'm sure, by saying the cash is coming from funds already earmarked for anti-terrorism and you could argue the Olympics is part of that. But there is warning there for whichever Government is in charge after the election -- take another look at the budget and make sure you can handle any surprises.

But what's also interesting in the PAC report, is a warning about the the budget for the organising committee (LOCOG). Its £2 billion budget, which pays for the actual staging of the Games, is made up of private cash -- from ticket sales, sponsors and cash from TV rights and international sponsorship deals sealed by the International Olympic Committee.

PAC says it's important that LOCOG puts a contingency in place because, if it fails to break even, the Government -and indeed the taxpayer - is exposed. I recently heard one expert saying that LOCOG's costs could rise because of all the technological aspects of staging the Games (for example, tickets and transport) and because of 2012's promise to provide "affordable tickets".

London 2012 chiefs always talk confidently about their marketing programme, sponsors and budget but they still have challenges there.

The PAC also says the targets for employing local residents and providing training and apprenticeships have not been challenging enough. I've already blogged about this before and it's true that unions don't think the ODA have used the Games to train enough people.

So don't switch off the next time you hear about the PAC in action. They are doing a job which might just keep these Games on time and on budget.

Comments

  • Comment number 1.

    Mr Warner, Thank you for entering the debate fray on your other listing "Boris Johnson's Vision..." It's good to know we're not ranting into the BBC's cyberspace to no avail.

    Well done for pointing out these financial issues, please continue to highlight what is a financial disgrace, poorly thought through, poorly controlled and surprise, surprise yet again for a government backed initiative heading towards the financially embarrassing buffers. The total ineptitude of these people is staggering. The NHS Computer system is a financial disaster, the Air traffic control computer system was a joke, it just seems that every single thing this Government gets its mucky little fingers into it mucks up on a scale it could hardly have imagined itself. And as for Gordon Brown yet again caught napping today (31/3) by the statistics regulator for the second time (first was the Iraq enquiry when he couldn't even remember ho ho ho - how much he as chancellor had granted out of the kindness of his heart for the defence budget) - If the guys at the top don't know what's going on have we really any chance? Ultimately the buck stops with the leader of the Labour Party, our Prime Minister, he can't blame the Tories, he can't blame some spurious inheritance, it's his fault. The Captain has lost control of the ship, make him walk the plank.

    An idea to save some money that might appease the PAC, I've just seen the report on the News at Ten about that glorious "Commission of a life time" for Anish Kapoor as he has been announced as the winner of the competition to design a "thing" to stick in the middle of the Olympic Park. Comparisons were made between "Paris having the Eiffel Tower, and we have this thing" said Boris and how right he was. Compared to the Statue of liberty in the States and to the Eiffel Tower, this confused mess will do little to convince the visitor that we couldn't afford to finish it.The Statue of Liberty represents freedom and Justice to the States, the Eiffel Tower, a graceful engineered monument, and then this "thing". It will only convince the visitor that the average Brit had a go at recycling and then gave up or that some enormous fairground attraction collapsed a couple of decades ago.

    Why do we let these so called artists get away with littering our environment with this expensive junk? Particularly in the name of art, or should it be in the name of their bank manager? Fancy pseudo intellectual clap trap to justify its existence such as a flowing form of intricate shapes - give me a break that describes a scrap yard, which it effectively is.

    Scrap it LOCOG, ODA, PAC and Boris. Boris didn't looked impressed unveiling the "thing" - or as its called "Orbit" and I bet he's fuming behind closed doors that the equivalent of a massive metal doggy is about to do a metal poopie all over the Olympic Park.

    Save some money and get rid of the claptrap or build something worth having.

  • Comment number 2.

    Well now Sonic's got that off his chest... I think what's been surprising is that up to now, delivery of the olympic project has been pretty slick and up against the bank bailouts this sort of money seems so small fry.

    The question is do the British public want better public infrastruture and facilities? The Evening Standard seems to think its outrageous that even more money is being spent on "Games-specific" rail and Tube upgrades. Most of our European cousins would wonder why on earth you wouldn't want this sort of investment in any civilised city?

  • Comment number 3.

    I'm with you Euloroo. Yes, the Games require (and have as far as I can see) tight financial regulation, but let's not lose sight of the improvements being put in place in one of the most run down areas of the country - a direct result of hosting the Games. Oh, and then there's the event itself (nearly forgot about that!) - what a fantastic opportunity for everyone to see some British history in the making.

  • Comment number 4.

    The PAC have been looking at the Games for years so why have you only started taking an interest now Adrian?

    Also the PAC is not a 'paronide accountant' as it at looks at more than ££ spent but what value the ££ has added and to spread good practice.

    Indeed some of the lessons from the Olympic project have been implemented elsewhere.

    I have read the report and it is a measured look at what is happening re the Games and other related issues. Yes they have some issues but they are not major in the scheme of things.

    Can I also point out that the PAC is also looking at the project as it progresses along rather than just reviewing it at the end (whihc is what normally happens) and pronouncing on it afterwards. This reviewing alongside is a novel approach and I think that LOCOG and the ODA have found it valuable to have the PAC doing this.

    In response to Sonic - the vast £ for the Orbit is coming from a private donor. He is giving the money specifically for this project and nothing else. I think it is a rather interesting concept myself and will attract people to visit the park long after the Games.

    The NHS IT system (well systems as its a multitude of seperate projects) is working well but with some problems in some specific areas. BTW the suppliers only get paid when they have completed the work and delivered a workign system - there are no payments for failure.

    Euroloo - I agree with your points re infrastructure but there are no specific games transport projects i.e. only needed because of the games. All the projects would have happened at some point but the Games have provided an impetus for them to proceed. I am surprised about the view the Evening Standard as I would have thought it would have welcomed any improvements to the Tube and trans etc but they do seam to have two views - the 'the system is awful' view but then (sometimes in the same edition) the 'waste of money / too slow to progress' view.

    Akabarrington - yes the games are an impetus for developing the east end. Thats what attracted the IOC to holding the games in London. The GAmes arrn;t the end of the developments - just the start,


  • Comment number 5.

    The Standard has to be one of the most negative papers around. http://www.thisislondon.co.uk/standard/article-23766515-2012-budget-now-pound-12bn.do

  • Comment number 6.

    the value for money thing is an interesting concept. some might say hosting the Olympic Games is priceless, others that it's an appauling waste. This has to be one of the hardest projects to keep on budget, a) because there's and immovable deadline and b) because there are so many vested interests who are looking for "value" - the IOC, sports federations, British public, London ratepayers and local communities...

  • Comment number 7.

    The Standard's positioning could be something to do with the paper's art loving (rather than sports loving) owner and Editor!

  • Comment number 8.

    It really is disappointing in the extreme that people are unable to distinguish between one-off costs and those which are a public sector contribution to long-term regeneration.

    Stratford will become a nicer place to exist in future. No, that doesn't mean forcing current residents out, it means a place for aspiring young people to purchase their first flat or rent their first place after Uni. They will spend their money at local businesses which will help those already there. The accommodation for the games will become affordable housing and much needed new capacity. That is not a 'sunk cost' it is a cost which will be recouped in time.

    Communications to and from Stratford will be permanently better. Do the folks of Stratford object to that? Businesses will consider the ability to get to St Pancras in 7 minutes, City Airport in not long, Paris and Brussels in under two hours and the City/Canary Wharf in under 30 minutes. Is that something to describe as a 'national disgrace'? I don't think so. So the train, tube, Network Rail upgrades are stimuli to business growth in future, aren't they?

    Would the people of Stratford prefer a large contaminated site or a new eco-friendly park on their doorstep? Apparently, the whole site is going to be mothballed if you trust the ex-Editor of the Telegraph this weekend. No doubt to allow business interests to acquire the sites for a song. Typical business in Britain, demand regeneration spend, trash it happening, then take the site on for nothing. Any distinguishing that from the actions of Al Capone is hard to discern. I trust it won't happen........and I exhort the Tory party to make quite clear, prior to the election, their opinions about this matter, since if they are mafioso hoods, it is important for us to know that, with all their talk of 'big Society' and all that........

    I still await a nation capable of talking sensibly about the post-games legacy. We enjoyed to date 5 years of 'we shouldn't be doing this at all' slagging off, 'the budget is a disgrace' spoutings, now 'the legacy isn't happening and it will all be mothballed'. I'd like all who print that to document the proof of their musings, allied to the public sector officials who think that is the best way to proceed. It is important that the taxpayer see who is saying it and draw their own conclusions....

    I trust that it will not be a bunch of Muslims demanding building the biggest Mosque in the world on the site after demolishing all the sporting facilities. That was not part of the package sold to the British people in 2005 and I don't expect it to be sold now. Ditto any other religious sect claiming ownership of a sporting project.....this statement is not bashing religious people, it is stating harsh realities of public utterances by senior officials. If they are too immature to realise that, that is their responsibility, not mine........and if any Muslim billionaire would like to start making threats as a result of this, I am sure that their religion will be seen in the light that they would wish it to be see in, won't it??

    Let us get on with thinking about the future, not the past. Let us seek to be engaging, not back-biting. And let us stop tearing our nation's soul apart with this interminable bile, hatred and back-stabbing.

    You want to know why this country is where it is? British bile, hatred and back-stabbing.

    No other reason.

    Our societal failings.

    Think about it.

    And change.

    Please.

  • Comment number 9.

    Magnifentpolarbear, I'm not sure why you suggest I have only found out about the PAC's work on the Olympics now. Of course I have been following the previous work of the committee on the Games. I can often be found at Westminster, sitting in on the sessions of parliamentary committees on the Games -- DCMS, transport, home affairs etc too. Don't worry, magnificentpolarbear, I study all the detail.

  • Comment number 10.

    Adrian

    Because I can't recall you commenting on it before.

    BTW if you are such a follower of the PAC you could have done a far better job of explaining what it does than the simplistic

    'Now it's the job of the PAC to play the role of a paranoid accountant, weighed down with gloom and doom'.

    You didn't even include a hyperlink to its page on the Parliament website

    http://www.parliament.uk/parliamentary_committees/committee_of_public_accounts/pachist.cfm






  • Comment number 11.

    Of course its good to scrunitise major public projects (although London 2012 has had it much harder that others projects of similar magnitude) but I don't think the real public test will be on exact budgetting, percentage of local people employed, kilos of carbon saved or even numbers of young people inspired to take up sport.

    Vancouver showed that even with lots of stuff-ups, if ordinary people enjoy the event you're on to a winner. By contrast, as I've posted several times before, even though the Millenium Dome was on time and construction budget the content was crap, people didn't enjoy and others didn't go.

  • Comment number 12.

    Magnificentpolarbear,

    As the PAC is not established purely to contain the largess of the ODA alone and is a body contained within wider government, it is a bit rich to attack Mr Warner for not explaining the rituals and management of the PAC, where should he stop? The treasury, perhaps, the workings of MI5 since they will surely have an input into the security procedures? Thank you for your link to the site, I will no doubt be better off for following it, but I do not believe that Mr Warner or the BBC have an obligation to lead us everywhere, can we not trust the well known archivist, Mr Google?

    Anyway, Polar Bears can't read, magnificent or not.

 

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