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
    +3

    Comment number 91.

    @ 82.

    Yes you're right to a degree. Positivism can only get you so far however. As a minimum wage PhD student with little or nothing to spare, I would much prefer the additonal money in my pocket over hype and (seemingly) false promises over budget allocations...Let's hope we win lots of gold, if nothing else but to smelt it down, lol

  • rate this
    +4

    Comment number 90.

    We all KNEW it would go overbudget - the Labout lot, Tessa Jowel knew well enough but knew this bad news would come after the inevitable labour defeat, letting her off the hook.

    I mean, let's face it, she's no accountant nor project leader. How the heck would she know if she was being told truth about mounting costs?

  • rate this
    +4

    Comment number 89.

    This comes as no surprise. Is there anything these days that is completed within budget and on time?

    Contracts appear to consist of those wipe-clean sketching boards, where anything can be erased and replaced with something different. Why, oh why, aren't contractors pinned down to their original quotations?

  • rate this
    +1

    Comment number 88.

    Cynical_Alan at 65 says that "No Olympics in recent history has ever been profitable for the host nation".

    Yet less than 10 seconds of research tells a different story:
    http://en.wikipedia.org/wiki/Cost_of_the_Olympic_Games

    Typical attitude of HYS, if you don't know - make it up.

  • Comment number 87.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    0

    Comment number 86.

    This is what happens when you get politicians and not Engineers to design a games, £9 billion i would love to see the reciept for these games, I know that there where 7 people employed to the tune of £100k+ to ensure that equally oppunities for all worker foriegn and domestic was applied to the site? Think of what you could of built, a wider M6 for a start!

  • rate this
    +3

    Comment number 85.

    I think it's an absolute disgrace that so much money is being pumped into London when the north south divide is at crisis point. I think that London will eventually break off along with the independent canton of 'the city', giving the rest of us the finger as they float off in the direction of the Bahamas.

  • rate this
    -1

    Comment number 84.

    I wonder if all you miserable little Englanders would REALLY be happy if we did nothing and had nothing happening in our country. The irony is that the same people would be the first to complian!

  • rate this
    -1

    Comment number 83.

    It must be too many jam tarts for Bill and Kate on their chocolate helicopter. PS . Any seats left for people outside of MPs ? I'm off now to the post office to become a roaming ambassador for Eon.

  • rate this
    -1

    Comment number 82.

    @77.Fidel_Castronaut

    I also am not saying it's perfect, but it's a damned sight better than it's made out to be. Any country still able to host an olympics and pay it's bankers so much bonus and apparently its civil servants lavish pensions can't be in that much trouble can it.
    Cameron should put his £41m where his mouth is and stop talking the country down aswell, along with his cabinet.

  • rate this
    +2

    Comment number 81.

    If all are to fund this then why was it not built in a place accessible to all?
    Surely that site also attracts that cost - London excesses.

  • rate this
    +17

    Comment number 80.

    The problem is that spending more tax payers money on this rather discredits the Government's claim that it has no money.

    Since it's mainly Coe's chums who are getting all the tickets then Coe's cronies should be footing the bill.

  • rate this
    +3

    Comment number 79.

    "The 2012 Olympic Games could overshoot its £9.3bn budget . . ."
    Ooo: you don't say.
    It's like Crufts really: if like me you're not the doggie type you'll just never get it why people would dress a dog up and make it do a few tricks. The only difference is that we the general public don't pay for Crufts.

  • rate this
    +15

    Comment number 78.

    I'm sorry, from £2.4bn to £9.3bn?!

    Can you imagine if that happened in the real world? That's an increase of nearly 400% - everybody involved would be fired on the spot!

    Britain must not take on any more frivolous spending like this, ever. It's an absolute joke that £9.3bn has been earned and collected, and then thrown at this mess. The politicians do not live in the same world as you and I.

  • rate this
    +7

    Comment number 77.

    @FrankandTomsDad

    Don't get me wrong, I love big events like the Olympics et al, I just don't like taking out billions in de facto loans to pay for it.

    The only running most of us see at the moment is the running joke that is the UK...I wouldnt be surprised if the hurdles were cancelled due to un-safe practices. High vis jackets for marathon runners? CRB checks for Swimmers?We can dream...

  • rate this
    +2

    Comment number 76.

    Surely it is not too late to cancel this junket and hold it in a(nother) third world country that would welcome the intrusion and corruption.

  • rate this
    +2

    Comment number 75.

    All in a days work, looks like the back handers have stepped up the anti!

  • rate this
    -9

    Comment number 74.

    The majority of comments here are absolutely symptomatic of the belief in failure that courses through the viens of this country and the reason why we fail. We talk ourselve into it, we talk ourselves down. We used to be modest about our acheivements, now we give up at the first hurdle.
    Get up Britian, get behind yourselves!

  • rate this
    +5

    Comment number 73.

    I was about to ask: So how does an unemployed person go about getting one of these security jobs?
    But then I re-read the article and, lo and behold!,
    "...the need to find so many additional guards represented a "significant recruitment challenge" but the Home Office was "now in discussion with the Ministry of Defence about using military personnel."
    So they will cost nothing extra then?

  • rate this
    +28

    Comment number 72.

    Quelle surprise! These games were forced on the UK by the last government. They appeal to the minority of taxpayers despite the best efforts of the BBC to get us "excited" about them. It's strange how elitism in running and jumping is to be admired, but berated when it comes to intellectual pursuits. The people who want to watch sport (I think they are called spectators), should pay for it!

 

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