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London Olympic Budget Is Unlikely to Rise Further, Spending Watchdog Says
20/07/2007 |
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London's 2012 Olympic budget is unlikely to rise further even amid ``significant uncertainty'' over some expenditure, the U.K.'s public spending watchdog said.
The cost of staging the event has almost tripled to 9.3 billion pounds ($19 billion) since the city was chosen in July 2005, the U.K. government announced in March. That revised figure is realistic, the National Audit Office reported today.
``The Olympic Games is now on a firmer financial footing thanks to the budget announced in March,'' John Bourn, head of the London-based NAO, said in a statement by e-mail. ``This should help all those involved in delivering the Games move forward with greater confidence.''
The Games will be Europe's largest public building project, and Mayor Ken Livingstone wants the Olympic Park to rejuvenate a rundown area in east London. Bob Blackman and Brian Coleman, London assembly members from the opposition Conservative Party, said in March that the final cost may be 15 billion pounds. Critics remain unconvinced by the NAO's endorsement.
``There's still no clear idea about keeping control of spending,'' Bob Neill, the Conservative Party's Olympic spokesman in the assembly, said in a telephone interview. ``I'm still not convinced the budget is robust enough.''
Today's report recommends that organizers produce a ``more robust'' estimate of a contingency fund that was set at 2.7 billion pounds. The size of that fund reflects ``significant areas of uncertainty,'' it said.
Question Over Sums
``The report is clear that the budget will only be enough if government officials have got their sums right,'' Richard Bacon, the Conservative member of parliament for South Norfolk, said in an e-mailed statement. ``Worryingly, there has been little sign of that so far.''
More detail should immediately be made public on what the 9 billion pounds will provide and on what assumptions those findings are based, the report said, adding that the basic assumptions for the March budget ``hold good.''
``I'm very concerned about the lack of progress on end- users,'' Neill said. ``The key thing to avoid having a white elephant is to identify a long time in advance exactly what the venues will be used for.''
The cost of the Games was originally estimated at 3.4 billion pounds and rose partly because of steel costs and higher management fees. The original bid also failed to include sales tax and underestimated security costs, Olympic Secretary Tessa Jowell said in March.
``What else has it forgotten?'' Bacon said. ``Taxpayers cannot afford any more expensive memory lapses.''
`Clear and Quick'
Organizers must make ``clear and quick'' decisions on funding, commercial arrangements and on completing plans for venue design and post-Games legacy to ensure that costs are kept to a minimum, Bourn said.
``A budget is just that -- a budget not a target,'' he said. ``The Department for Culture, Media and Sport must still work to contain funding and achieve value for money.''
The London organizing committee is planning to raise 2 billion pounds from sponsors to cover the cost of running the sporting showpiece. So far, it's signed up two companies -- Lloyds TSB Group Plc and Electricite de France.
The U.K.'s new Secretary for Culture Media and Sport, James Purnell, said last month he'd changed his mind since saying in 2003 that money for the Olympics would be better spent in other parts of the country and on other areas of sports funding.
Former U.K. railway executive John Armitt will take charge of the Olympic Delivery Authority in September. U.S. engineer Jack Lemley initially cited work pressures for his decision to stand down before saying later he was frustrated over the politics of the job.
Too many other positions are held by people with political backgrounds, Neill said without identifying them.
``I'm not sure there's enough hard-nosed, robust business expertise,'' he said.
(Source: Bloomberg.com)
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