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 231.

    Where's your national pride everyone. This country is just full of whingers! Anywhere else and they would be proud of staging a sporting event as important as the Olympics. Put down the Daily Mail for a moment and celebrate something for once.

    I don't care how much it costs. We're getting the Olympics in our country and it's great. Pity we didn't get the World Cup too!

  • rate this

    Comment number 230.

    @ 227. Khrystalar

    I know - that's why I posted that comment. I have complete faith in all HYS posters.

  • rate this

    Comment number 229.

    Comment 72.

    Agreed. Intellectual pursuits seem to be overlooked here.

  • rate this

    Comment number 228.

    Why do people think that many of us want the olympics only a small few will be interested in it.Most of us will be worring about how to pay the bills and looking for work while its on london will prosper nobody else.Humbug grrr

  • rate this

    Comment number 227.

    @ #218, Tim;

    "Seems like everyone on here was not part of the 70% of UK people polled by the IOC in 2005 who were supportive of the Olympics coming to London."

    Well, no. Obviously not.

    The 30% of us who knew exactly how this was going to go are quite happy to post about how right we were. The other 70% are sitting quietly and hoping nobody notices them, right now.

  • rate this

    Comment number 226.

    What a load of killjoys. The Games will be a major event that I've been looking forward to for 6 years. I am disappointed though that £40M extra has been spent on the Opening Ceremony -I'm more interested in the sport!

    At a time when we and the government are being told to spend more to create jobs it sound like an ideal opportunity to invite the world to spend their's here too!

  • rate this

    Comment number 225.

    Even though the fact that the budget has been allocated sounds like it's going down the drain, it's not. The budget takes into account all the expenditures for the game, but it doesn't include ANY incomes that would come out of the game. The gain from the Olympics (which would be things such as revenue(TV rights, tickets, etc) plus all other foreign spending +infra should exceed the cost of invest

  • rate this

    Comment number 224.

    @219 I'm sure people said similar things when Tiger bay (cardiff) or the London Docklands were starting to be redeveloped into something completly different to what they were before and now they are both some of the nicest parts of each city. Anything is possible if money is invested into something new, as is happening in East London

  • rate this

    Comment number 223.

    "221. Tam The Ranter
    Now there's a surprise budget doubled for the ceremonies ! Cameron is just using it as a massive ego trip for himself and boris . What do you expect from somthing that has been organised by sycophantic little tory t*rd coe."

    Having been won under, and organised by, a profligate Labour Government.

  • rate this

    Comment number 222.

    Paul @ 220

    But nearly everyone on here says they're not surprised it's gone over budget so surely they would have known back in 2005 it was going to go over £2.4bn.

  • Comment number 221.

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

  • rate this

    Comment number 220.

    218. tim
    Seems like everyone on here was not part of the 70% of UK people polled by the IOC in 2005 who were supportive of the Olympics coming to London.

    P.S. It was only 68% for people who lived in London.
    The predicted cost for the games in 2005 was 2.4 billion.
    People have 7 billion reasons to be unhappy now!

  • rate this

    Comment number 219.

    "201. Dave
    What a bunch is miserable moaning codgers! The money has been spent on infrastructure that will last the next 25+ years"

    Yeah I've always thought that what was needed to resolve all the social and economic problems in East London was a velodrome!

  • rate this

    Comment number 218.

    Seems like everyone on here was not part of the 70% of UK people polled by the IOC in 2005 who were supportive of the Olympics coming to London.

    P.S. It was only 68% for people who lived in London.

  • rate this

    Comment number 217.

    People would do well to focus their attention on who are the major beneficiaries of the facilities after the games are finished. This brings to mind the major windfall for certain individuals and corporations after the millenium. psssssst... 'Fancy the dome for a quid its a bargain only slightly used.'

  • rate this

    Comment number 216.

    The Olympics over budget? The tax payer required to stump up more cash? How entirely unexpected. No one could have possibly predicted this.

  • rate this

    Comment number 215.

    Farcical and ridiculously expensive - over £1 million per athlete. This bears absolutely NO relation to sport. Deeply regrettable that we 'won' this poisoned chalice.

  • rate this

    Comment number 214.

    Any major project proposal running into billions should be subject to referendum. Governments are totally out of touch with reality & glibly talk of £9 billion as if it were a fiver. Olympics, HS2, NHS IT & other database projects - all costing untold amounts of money which, apparently, we do not have, and I am certain there are many, many others. WE, the people actually paying, should have a say

  • rate this

    Comment number 213.

    Same old story. You create a trough of money and the same self serving,duplicitous,opportunist and greedy types turn out in droves to gorge themselves until it's all gone. Do you see a pattern here?

  • rate this

    Comment number 212.

    @203: tell that the 10 000 of construction workers, engineers, managers etc around the country involved in building the stadia, the 1000's of people involded in transport upgrades, the people working for companies providing materials to construction companies. A project this size benfits far more than just the east end. Kept my dad in work in Wales and helped me land first job out of Uni


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