Olympic Games run £2bn over budget

From £2.4bn to £11bn: report savages soaring costs as Olympian-scale overspend is laid bare

Tom Peck
Friday 09 March 2012 01:00 GMT
The Olympics Park in East London. The cost of staging the Olympics has risen to £11bn
The Olympics Park in East London. The cost of staging the Olympics has risen to £11bn

The London 2012 Olympics is almost £2bn over budget, says a scathing report by MPs who also criticise the organisers for poor security planning and failing to guarantee a clear legacy.

With almost five months to go until the opening ceremony, only about £100m of the £9.3bn budget remains in contingency. That £9.3bn does not include £788m spent buying land for the Olympic Park in Stratford, east London, and at least £826m on legacy projects – including increasing participation in sport, an endeavour the Government is no longer pursuing.

When this spending is taken into account, the true cost of the Games is now around £11bn, the Commons Public Accounts Committee reports today.

When the bid was won in 2007 the budget was £2.4bn but rose to more than £9bn within two years.

Margaret Hodge, the Labour chairman of the committee which scrutinises Olympics expenditure, condemned the decision taken in December to almost double the security budget from £282m to £553m. She was highly critical of the Home Office and the London 2012 Organising Committee (Locog), telling The Independent: "We've known about the security risks for years. We had the awful 7/7 bombings the day after they won the bid. It should have been top of their minds. Then they just double the numbers." The report by the Public Accounts Committee (PAC) points out that despite massive spending on "sporting legacy" only 109,000 people have begun participating regularly in sport.

The original target – of one million people by March 2013 – was dropped. The report says the Department for Culture, Media and Sport (DCMS), "has got poor value for money for the £450m spent through sporting National Governing Bodies", adding: "It is unclear what the sporting participation legacy of the Games is intended to be." The Home Office and the DCMS gave Locog money for security based on an initial estimate of personnel required. That total – and the security budget – was roughly doubled in December.

The Home Office maintains that bringing extra security so late in the day had no impact on value for money, but the PAC disputes that claim, stating: "Despite the assertions... we consider that Locog's estimates for venue security could have been better informed much earlier, and that Locog's late planning undermined its negotiating position and ability to drive down costs."

With more than £500m of public money spent on security by Locog – a private company which is not subject to Freedom of Information requests – Ms Hodge asked the Home Office to make clear "who is accountable to Parliament for the delivery of, and the value for money of public expenditure on, venue security".

The Home Office said it shared the PAC's determination "to secure best value for taxpayers". A spokesman said: "The Home Office is accountable for money spent on security. We have taken every opportunity to update Parliament as security plans have developed."

The DCMS disputes the £11bn figure, claiming that the £788m for buying the Olympic Park site will be recouped from a 20-year project to build 8,000 homes there, but Ms Hodge pointed out that "that money has not been seen yet".

"We were promised a strong Olympic legacy but the Government has chosen not to adopt the target of one million more people participating in sport by 2013, and plans for the stadium have fallen through. It must not become a white elephant," she said.

A spokesman for the DCMS said: "We do not recognise the figure of £11bn. We have always been transparent about what is included in the £9.3bn. The cost of purchasing the Olympic Park land will ultimately come back to the public purse through resale of the land after the Games, and was therefore not included.

"Funding for the legacy programmes the PAC refers to comes from existing business-as-usual budgets... These are for projects designed to capitalise on hosting London 2012, but are not an additional Olympic cost."

Don't panic! Dad's Army fire crews on standby

Don't panic! In the event ofa strike by the Fire Brigade Union during the Olympics, an army of retired firemen have been placed on standby.

London's Fire Services have asked 300 firefighters who have retired within the last two years, if they would be available for the task. They aim to recruit about 50.

Firefighters have been offered overtime to work six of their usual eight day shift rotas, instead of the usual four, but the Fire Brigade Union has asked members not to sign the contracts, as part of an ongoing industrial dispute.

The "Dads' Army" firefighters "will not be driving fire engines" and other such arduous tasks, but will respond to such matters as fires in dustbins and alarms going off. Many firefighters are accepting the overtime, but they must be quick. The contracts must be signed by today to get Olympic accreditation on time.

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