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Olympic budget increase no surprise

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Mihir Bose | 11:30 UK time, Tuesday, 22 April 2008

Just over a year ago, when I first revealed the budget for London 2012 had gone up to £9.3 billion there was astonishment and almost total disbelief.

Soon after my story was broadcast I got a call from an insider who told me I had been spun a line. It was, he said, a game the Treasury was playing with the Department of Culture, Media and Sports.

Apparently, I should not have been fooled by such Whitehall inter-departmental machinations as the final figure would be nothing like what I had predicted.

A few weeks later the cost of the Olympics was announced by Parliament and turned out to be exactly as I had said they would be!

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I remember talking to people within the Olympic movement. One of them, always sympathetic to London, told me: "What matters is not how much it costs but that the figure should be agreed between the various government departments and finalized.

"Britain is a rich country, it can afford the Games. Why does the government not say how much it will cost instead of debating the figures behind closed doors for months and creating uncertainty and doubt?"

There was widespread concern even among those organizing the event that, almost two and half years after London had won the Games, the budget had still not been settled.

That anxiety still remains and is reflected in Tuesday's Public Accounts Committee report, which is as damming a Parliamentary report on the Olympics as there ever has been.

In essence, the report says the government has not been transparent and it cannot be sure if the £9.3 billion budget will turn out to be the final cost of the Games.

Reading the report, and in particular the scrutinizing of government officials by MPs, it is clear some feel prizing information from the government is almost like drawing teeth.

The exchange between the committee's chairman, Edward Leigh, and Jonathan Stephens, permanent secretary to the Department of Culture, Media and Sports, illustrates a remarkable level of distrust between the pair.

"What worries me is that judging by your record, I do not have any confidence in your ability to plan ahead," said Leigh, chairman of arguably one of the most powerful committees in Parliament, during the questioning of Stephens about the monitoring of Olympic costs.

"I think what is going to happen in the run-up to these Games in 2012 is that you are going to start panicking, things will be half finished and you will start throwing money at it."

Stephens defended himself saying the Games were on a sound financial footing.

And now the Government says criticism over a lack of transparency is unfair as not all the costs could have been anticipated when the bid was made.

Who, for example, could have predicted that on 7 July, the day after London had won the right to host the Games, the capital would be hit by a series of co-ordinated bombings on the public transport system, killing 52 commuters?

Security obviously had to be increased for the Games but the fact is that right from the moment, back in 2002, when the Government started looking at the possibility of hosting this sporting extravaganza, cost was a sensitive issue.

Tessa Jowell, Minister for the Olympics and London, led the Olympic bid when she was Culture Secretary and had to work hard to convince her ministerial colleagues of the merits of hosting the Olympics.

Agreement was reached after the now well-known meeting between Jowell and Mayor of London, Ken Livingstone, when the two MPs agreed a funding package of £2.375 billion. (The figure mentioned in the bid book.)

Indeed, when the legislation for London 2012 was being considered by Parliament the briefing note on cost given to MPs in January 2006 - six months after London had won the Games - still quoted £2.375 billion as the sum

The briefing note did talk about Lower Lea Valley Development, estimated at £800m, but said its costs "are not associated with the Olympics". There was also £650m for the Athletes Village but this, it said, "will be privately funded as part of the broader development of Stratford City."

Over time these figures have changed considerably, with the cost - and history - being constantly rewritten.

So now we are told the starting point of the London 2012 budget was not £2.375billion, as given in the bid book, but £4 billion. But, even at that figure, a £9.3 billion budget represents a massive £5.3 billion increase.

"So what?" I hear you say. "We have the Games, we have to make it a success - let's get on with it."

True, be it £2 billion, £4 billion or £9 billion, the cost of the Games, in a sense, is history. The show must go on. It will be the Government's ability to provide a lasting legacy for the nation that London 2012 will be truly judged.

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