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2012 Olympic budget - Questions still remain

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David Bond | 07:42 UK time, Thursday, 15 December 2011

We learned two things about the 2012 Olympic budget from Wednesday's feisty session of parliament's Public Accounts Committee.

The first was that deciphering the intricacies of the £9.3bn public sector funding package for the London Games remains as daunting as trying to run the marathon.

The second was that, despite all the confusing jargon that comes with risk assessment and contingency planning, government officials have now pretty much conceded that all but £36m of that £9.3bn Olympic budget will be spent.

After several attempts by MPs to clarify the figures revealed by the National Audit Office last week, Jonathan Stephens, the civil servant ultimately responsible for ensuring the numbers add up, admitted the figure of £36m "was a prudent estimate".

In civil service speak, that is as close to a confirmation as you will get that there is unlikely to be any money left in the Olympic kitty by the time the Games get under way.

As things stand, there is £528m left of the £2.7bn Olympic contingency pot set aside when the revised budget was announced back in 2007.

Construction continues on the Olympic stadium and the Orbit sculpture. Photo: PA

Officials have tried to assess the risks they know are coming and to quantify what should be set aside for the unknowns. That is why the Government Olympic Executive has now admitted that the budget is very "finely balanced".

So, having spent much of the last year hinting that the Games may even come in under budget, ministers will start 2012 knowing there has to be a fair chance they will now overshoot the £9.3bn target.

With eight months to go, the Games are entering the most critical operational phase when unforeseen events can suddenly leave organisers with no alternative but to dig deep and plug the gap.

The major challenges are still transport and security. Even allowing for the revised venue security announcement last week, the task of keeping the city and the country safe during the Games is something the government cannot afford to cut any corners on.

But the amount of public money now being allocated to the London organising committee (Locog) is a growing cause for concern.

Paul Deighton, Locog's chief executive, told MPs that £867m had now been allocated from the taxpayer in addition to the £2bn of private funds they are aiming to raise.

He insists that is because Locog's role has changed over time and it has assumed a wider brief. The vast majority of that £867m - £536m to be precise - is for the venue security bill hammered out last week.

But Locog was always supposed to be self sustaining. Even though the host city contract with the International Olympic Committee states the government - and so us - are the final guarantor, it was not supposed to be a drain on the contingency.

This raises two issues. The first is whether Locog will need to go back to Government for any more money. Judging by Locog's handling of the original estimate of venue security requirements - the 10,000 staff forecast was likened by a Home Office official to sticking a "finger in the air" - there must be genuine concerns that, as the Games get closer, it will need more public money.

And if Locog does need to take more contingency, then where else might that leave the budget short if something else goes wrong?

To give Deighton and his team credit, they have delivered all but £200m of their £2bn private funding targets in the face of the worst economic slump since the Great Depression. Ticket sales have raised £527m, with only a further £130m required to hit the target of just over £650m. A further £50m is to be raised from merchandising.

These figures reflect Locog and Deighton's huge commercial achievements. But the last couple of weeks have seen a slight shift in the mood around the London Games.

The hope for organisers was always that the British economy would turn the corner in late 2011 and early 2012 and that the Olympics would deliver an extra shot in the arm, creating a feelgood factor to lift the gloom.

With the Euro crisis set to get worse, the Games now look set to be overshadowed by a worsening, not improving, economic climate.

In such times, with more and more people losing their jobs and with public sector cuts starting to bite, the idea that the Olympic budget could be busted will not go down well with the population - no matter how much people might be longing for an excuse to party.

Comments

  • Comment number 1.

    Why any informed citizen would want to host any major tournament is beyond me.

  • Comment number 2.

    The country is committed to hosting the event and all the costs that come with it. Once the olympic flame is extinguished there will no doubt be another enquiry. All we can do is enjoy the event for what it is enjoy the most expensive show on earth (since the millenium dome)!

    The idea that a better estimate could not be made of the security needs and costs is farcical. But the security firms always had the government over a barrel and the armed forces involvement is essential to the security profile.

  • Comment number 3.

    MPs and money, MPs and money... who cares? I certainly have zero confidence in both. MPs do little except perpetuate the financial crisis set upon us by banks. Over the last 61 years this has led us through a peak and trough cycle numerous times. Still we continue to support and look to these "leaders" instead of our own abilities and initiative to support ourselves.

    As for the Olympics, the numbers hold little real value. It will be nice to see some people running around a track though.

  • Comment number 4.

    David a good blog, thank you


    The Olympics, no matter how great the need, to stage them, have been a disaster and that is before we stage the event. One lie after another, the conflict within the groups involved, the interested parties have tarnished these games.

    There comes a time when sport cannot be justified, this is certainly one of those ocassions. A couple of weeks of competetive sport can it really be justified by a 7 year spending spree that the people of this country could ill afford.

  • Comment number 5.

    David the lack of responses to your good blog is indicative of the publics attitude to the Olympics now. We are now helpless in terms of the Olympic juggernaut.

    I hope it will be everything that sports fans want it to be.

    But after the event it will be about offloading venues, avoiding the Domesday scenario and regular updates on exactly how much the events & venues cost the tax payer. I hope the hangover will be a brief one but I'm not holding my breath!

  • Comment number 6.

    The original total costing for London staging the Olympics was £2.75 billion pounds. That figure now stands at £9.3 billion and will no doubt rise to over £10 billion. In any event the London Olympics will be a staggering £7 billion pounds over budget. It is clearly evident that the London bid and its real cost was built on blatant and manufactured deceit. You can rest assured that no one will be made accountable for that. Shameful.

  • Comment number 7.

    Maxmerit
    @ 6

    Seems we are all as one, when it comes to the organisational ability and costings of these games.

    Your 100% right regarding accountability for the disasters, after the games have been and gone, EXCEPT and this will not be of any use to anyone. History will show the who the real villains are in this fiasco.

 

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