25 April 2008
Assurances by Olympics minister Tessa Jowell have failed to ease fears that the cost of staging the 2012 Games in London will continue to escalate.
In a scathing report this week, the Commons Public Accounts Committee castigated the Department for Culture, Media and Sport for misleading the public with 'unrealistic' budget estimates, which excluded foreseeable costs such as security and a contingency fund.
Jowell insisted progress had been made since the early planning stages picked over in the PAC's April 22 report. She said the financial position confirmed in March 2007 remained unchanged and robust.
'There is no room for complacency and we remain vigilant about costs, but we are heartened by progress so far and the International Olympic Committee's view that we are “operationally and financially” on track,' Jowell said.
In March last year, the minister admitted that the projected costs of hosting the Games had more than doubled to £9.3bn – up from £4bn at the time of London's bid. The government has pledged that public spending on the Games will not rise above £9.3bn.
PAC chair Edward Leigh said that the committee would hold the government to account for this promise but warned that the DCMS was still failing to specify what would be delivered with this money.
'Without this essential information, the public find it hard to be confident in the department's ability to deliver the Olympics programme within the new higher budget,' he said.
The government had hoped that almost a fifth of the original estimated costs would be met by private sector contributions, but has since had to significantly lower this expectation.
Leigh added: 'It is now clear that the estimated cost at the time of the bid… was entirely unrealistic. It ignored foreseeable major factors such as contingency provision, tax obligations, and policing and wider security requirements.
'At the same time, the estimate of the extent to which the private sector would contribute funding towards the Games has proved little more than wishful thinking.'
The London Olympics also came under fire from the New Economics Foundation think-tank. A report published on April 21 warned that the Games could fail to leave the promised regeneration legacy, as consultants, developers and large companies cream off the commercial opportunities while local and community organisations are prevented from competing.
Report author Josh Ryan-Collins said: 'Urgent action must be taken to prevent the communities of east London being trampled in the Olympic gold rush. Promises and undertakings were made in the bid on behalf of the city and the nation and these must be achieved.'
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