London 2012 at risk of exceeding budget, watchdog warns

The Olympic stadium from the air The National Audit Office said there was a "real risk" more taxpayer funding would be needed

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The 2012 Olympic Games could overshoot its £9.3bn budget unless "rigorous action" is taken to curb costs, the Whitehall spending watchdog has warned.

The National Audit Office said a doubling in estimated security costs meant there was a "real risk" more taxpayer funding would be needed.

On Monday the government said an extra £271m was needed for security guards.

Shadow Olympics Minister Tessa Jowell said despite it being a risky project she believes it will come in on budget.

Ministers insist more than £500m remains in unallocated funds for dealing with any further contingencies.

The National Audit Office (NAO) said the Olympic Delivery Authority (ODA) remained on course to complete its work on the Olympic Park on time and on budget.


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However, on current projections, the spending watchdog said almost all the £9.3bn public sector funding package was likely to be required, with little margin for any further unforeseen costs emerging in the final eight months.

Sports minister Hugh Robertson said he had faith the financial targets would be met.

"Clearly any big infrastructure project is always going to be quite finely balanced but, as at today, we will be 95% complete in terms of build by Christmas and we still have half a billion pounds left in the contingency to cover all known risks. So I'm as confident as I can be as the minister that we're going to deliver on time and within budget."

But the head of the NAO, Amyas Morse, said "not everything is rosy" and the government had little room left for manoeuvre.

'Wafer thin'

"The government is confident that there is money available to meet known risks but, in my view, the likelihood that the Games can still be funded within the existing £9.3bn public sector funding package is so finely balanced that there is a real risk more money will be needed," he said.

Ms Jowell said: "It has always been a risky project: its scale, its complexity, and the fact that there is absolutely no leeway on the time by which everything has got to be complete, ready for next year in 234 days' time - and it will be.

"Hugh Robertson has said that he is confident that this will come in within the £9.235bn allocated when I was secretary of state, from public funds, for the Olympics and I believe that is still the case," she added.

At the time of the bid in 2005, the estimated total public cost of staging the Games was £2.4bn.

London 2012 - Begin your journey here

London view

This was increased to £9.325bn in 2007 and then cut slightly to £9.298bn by the new government in May 2010.

The contingency fund stood at £2.75bn in 2007, but in May 2010 the ODA said this had fallen to £1.27bn and by February this year a NAO report revealed the fund was down to £974m.

Now the NAO has said, after the government's own estimate of meeting "assessed risks" was taken into account, there is £36m left in contingency funding.

The chairman of the Commons Public Accounts Committee, Margaret Hodge, said it was a very small amount for such a large project.

"What is left in the budget for contingency is wafer thin, at only £36m. For a project of this size with unknown risks and eight months remaining, that is a tiny amount of money," she said.

"Locog [The London Organising Committee of the Olympic and Paralympic Games] is likely to use all of its contingency funding and would also have to call on further government support if there are further cost increases."

Mr Robertson said the increase in security costs was due to a change in the international security situation and not being able to complete final planning until the competition schedule and design of the venues was known.

"When I started being minister there was no Arab Spring. No one really knows whether that's going to have a beneficial or adverse effect on our security."

Reputation 'at risk'

The NAO also raised its concern that the Olympic Delivery Authority's transport plan for the Games was behind schedule.

It said the 109 miles of London roads being used for the Olympic Route Network - including 35 miles of special lanes primarily for the use of athletes and officials - had still not been integrated with local transport plans.

Until the arrangements have been finalised, Locog and Transport for London will not be able to inform the public and businesses of the likely impact of the Games on the road network.

The spending watchdog also said issues related to cutting journeys on buses and the London Underground by non-Games users by an average of 13% a day - rising to 30% on peak days - still had to be resolved.

How 2012 budget has changed

  • 2003: Consultants Arup put total cost of building and staging the Games at £1.796bn
  • 2003: Tessa Jowell launches bid in May telling MPs it will cost £2.375bn - including a 50% contingency
  • 2005: Bid succeeds in July with "prudent" estimate of preparing for games of £2.4bn
  • 2007: Total budget, including a £2.75bn contingency, reaches £9.325bn
  • 2010: In May the new government cuts the budget to £9.298bn and the contingency falls to £1.27bn
  • 2011: In December the NAO says after the government's "assessed risks" are met £36m is left in contingency money

"The experience of spectators, visitors and Londoners in general would be diminished and the reputation of the Games put at risk if these issues were not sorted out," Mr Morse said.

The NAO added the need to find so many additional guards represented a "significant recruitment challenge" and the Home Office was now in discussion with the Ministry of Defence about using military personnel.

On Monday, the government said an estimated 23,700 security staff would be needed during the 2012 Games, which was more than double the initial estimate of 10,000 security personnel for venues.

It said the venue security budget was likely to rise from £282m to £553m, while the budget for ceremonies has also doubled, with an extra £41m allocation.

The Department for Culture, Media and Sport said the money for both increases would come from within the £9.3bn public funding budget for the Olympic and Paralympic Games after money was re-allocated from savings.

The budget is additional to the private funding budget raised by the Games organisers Locog.

The Olympics is set to be one of the UK's biggest security tests - a 64-day operation, from when the Olympic village opens on 13 July to the time the Paralympic village closes on 12 September, covering 34 venues across Britain.


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  • rate this

    Comment number 71.

    "54.BBC iD

    Q1. Who are "the rich"?
    Q2. Who are "the poor"?
    Q3. How much more do you want "the rich" to pay?"

    Perhaps you should address that to Lord Rothschild, since he says "the rich are going to have to pay more". And he's not the only one.

  • rate this

    Comment number 70.

    History will judge a nation which professes not to be able to keep its elderly and infirm warm one winter and spends this amount of money on a series of running races the following summer.I would guess that judgement will contain words such as 'insane','uncaring' and possibly 'criminal'.

  • rate this

    Comment number 69.

    What do debt advisors keep telling us?

    Face reality - realise you're spending beyond your means - stop paying for things you cannot afford.

  • rate this

    Comment number 68.

    Well it was never at risk of ever being under-budget was it?

    Good ol' Britain.

  • rate this

    Comment number 67.

    The cost could be the first world record set in the 2012 Olympics...

  • rate this

    Comment number 66.

    lol at Lemong, bite bite bite

  • rate this

    Comment number 65.

    The only ones who want this farcical event in London are the sell-aggrandising buffoons who mumble and bumble on and on, (yes, Lord Coe, I am thinking of you among others).

    No Olympics in recent history has ever been profitable for the host nation, with acres of unwanted neglected facilitates left after the glory seekers have left. Think Athens, think Sydney.

    Think of the UK taxpayers.

  • rate this

    Comment number 64.

    Could not get all my comments in at one go:

    Where did Camloon get the extra £41M for the opening/closing parade?

  • rate this

    Comment number 63.

    54 and 49 the rich are the top 10 % who earned 12 times more than the bottom 10 % report by OCED

  • rate this

    Comment number 62.

    No. 27 - No, London is the centre of the Universe.

    No. 39 - Neil, civil servants may have estimated but it's the private sector who do the ripping off.

    We're stuck with it. We can't get our money back. Just lobby your MP to stop any other big events coming to this country. And vote for people who put the people who live and work in this country first.

  • rate this

    Comment number 61.

    Despite all the predictable moans and groans on here, I think the Olympic delivery has been a triumph. Most such 'budgets' are vastly overspent long before now, and we have the whole Olympic park ready nearly a year early. The investment is a huge boost for east London- if you don't believe that, just visit the totaly transformed Stratford.

  • rate this

    Comment number 60.

    re 48 Neo Realist :

    1. London is paying! My Council Tax has been surcharged to finance this useless waste of public money ever since it was awarded to London
    2. What makes you think many Londoners want all the inconvenience and disruption anyway? I'd much rather it was in Paris, or somewhere miles away from where I live

  • rate this

    Comment number 59.

    And this is a surprise !

    If Athens (2004) is anything to go by, you will have lots of very expensive derelict buildings left behind in 2013, which no one has the slightest idea of what to do with. (Despite all the silly promises)

  • rate this

    Comment number 58.

    To late for us now, but surely the best thing would be for all those that want to play to build a site at or near Olympia (the original, not London) and have the games there every 4 years. This pointless waste could be pretty much eradicated after an initial start-up cost.

  • rate this

    Comment number 57.

    Well who'd have guessed!
    Does this mean I'll need to dig even deeper into my decreasing pocket?
    Doesn't concern me, either in interest or at that particular site, but I'll be paying even more no doubt.

  • rate this

    Comment number 56.

    All these must have cuts are a lie and a joke people are suffering but when it comes to roads and other not very important things the government can find the money .Dont this government understand that People come first the poor end of society are finding life nearlly impossible to live

  • rate this

    Comment number 55.

    GUARANTEED TO GO OVER BUDGET what new???????

  • rate this

    Comment number 54.

    49. Bibi

    Any chance of making the rich pay the deficit, instead of the poor? No? I thought not!


    Q1. Who are "the rich"?
    Q2. Who are "the poor"?
    Q3. How much more do you want "the rich" to pay?

  • rate this

    Comment number 53.

    Its not just london these cuts are to unrealistic .To cut some things by half is just not possible.Three people were I live have comitted suicide as I think people cannot live within their means.Lifehas got so unbearable.People are freezing to death they just cant afford to put their heating on

  • rate this

    Comment number 52.

    Hmmn. Nothing new there. However what I can't understand is why budgets for important things such as the health service have to be cut and we can't seem to afford to spend money on adequate care for our elderly and vulnerable people yet the country can afford to blow an extra several million on a few over-hyped weeks of running and jumping. Grrr!


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