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Tuesday, July 10, 2007

Government 'financially exposed' by London Olympics

Many of the fears expressed by opponents of London's Olympic bid, which were scorned by the bid's supporters in 2005 but based on the track-record of previous Games, have already proven to be accurate.

The costs of the London Olympics were seriously underestimated at the time of the bid and the private sector funding seriously overestimated, according to a report by the House of Commons Public Accounts Committee. The budget for the Games has spiralled to over £9 billion, an increase of around £6 billion on the position at the time of the bid, because whole categories of cost were omitted, including tax, contingencies and security. The Government also claimed it could raise £738 million of private sector funding, which would have covered a quarter of Olympic costs, but the Public Accounts Committee have said that "now there is little prospect of significant private sector funding being achieved" and that "as the ultimate guarantor of funding for the Games, the Government is financially exposed."

The report also highlights "a lack of clarity about how venues will be used after the Games, with the risk that designs fail to reconcile the needs of the Games in 2012 with those of subsequent users." The bid's opponents had pointed to exactly this position with mothballed and decaying stadia in both Sydney and Athens. However, as the report notes, "funding the Games means that there will be about £1.7 billion less money available for the other good causes supported by the National Lottery" - exactly the 'daylight robbery' of lottery funding that more sceptical observers of London's bid had warned of.

The House of Commons Public Accounts Committee report can be found here.

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