The Sketch: Let the accounting games begin

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The Independent Online

The rigorous, scrupulous cost control of the Olympics was making us laugh because they'd forgotten to add VAT to the budget. Foolish laughter, as it turns out. They hadn't forgotten to add it. They'd left it off deliberately. Why? Because, Tessa said, the Olympic Authority's tax status wasn't clear. How rigorous is that? Had that been included in the accountants' "probability assessment"?

It's not worth worrying about. Why? Are they paying the builders in cash? No, Gordon Brown has explained that VAT is "not part of the overall bill as far as the taxpayer is concerned".

Not since Harold Wilson devalued sterling saying the pound in our pockets wouldn't be affected have we had such a collectable duplicity. If VAT is neutral on government-funded projects - why is government ever charged VAT?

"What I am saying," Tessa told the committee, in that "absolutely clear way" politicians have, "is that the project is under control."

The American chairman of the £2.3bn project (or the £3.2bn project as it is now) resigned because he didn't want his reputation for delivering projects destroyed by Tessa Jowell. Costs are up 40 per cent in 18 months, John Whittingdale said, and there is no estimate for the cost of the stadium (now out for tender). The site has only been half-surveyed, so we don't know what's under the rest (Second World War ordnance, perhaps), and there's 17.5 per cent of the budget riding on whether Tessa speaks out against John Reid's bid to challenge Gordon Brown. Hmm, which way do you think she'll go?

These cost overruns are partly because Tessa has given a company £400m to make sure the project keeps within budget. "The rigour is a daily discipline," she explained (excluding not just VAT but Sundays). That rigour is why it's become an £8bn project since you started reading this article.

"We are taking every step to avoid contingency being turned into a cost," the minister said. It sounds professional in that vacuous way professionals now have, but it disregards the only iron law of capitalism: contractors will spend all government contingency budgets. They go to hell, otherwise, you see.

And think: for the cost overruns we could have had playing fields for every school in the country...

Floating above all the committees and commissions, the agencies and authorities, the legions of the regions, and the drongos of the quangos, the Secretary of State assures us that her (£10bn) project is under control. But she won't be the minister when the £20bn bill comes in. And the new ministers will smile and apologise and take full responsibility, but only on the strict understanding it isn't their fault.