2012 Olympic bill tops £9 billion
Updated on 15 March 2007
Culture Secretary Tessa Jowell tells MPs the budget for the 2012 is now £9.3 billion - nearly a fourfold increase on the original £2.4 billion.
It's all worth it, the culture secretary insisted today, as she revealed the total funding package for the 2012 Olympic Games has soared to more than £9 billion.
Tessa Jowell said the actual cost of the games would be more like £5 billion, and insisted a massive sum earmarked for contingencies would be unlikely to get used.
Opposition MPs said the Olympic budget had already gone up threefold, blaming "massive financial incompetence" by the government.
And other sporting organisations are worried they'll lose out as extra lottery funding makes up the Olympic funding shortfall.
Olympic site diggers were clearing the site today. At the time of the original bid, core Olympic and regeneration costs were estimated at around £4 billion. That's now risen to £5.3bn, tagged with a VAT bill of £840million.
There's £390 million more for community sport projects. Security costs have gone up by £600m, and the contingency fund by £2.2 billion. The grand total is £9.3 billion.
The Conservatives have responded by asking why some of the additional costs weren't included. How on earth could £2.7 billion be spirited out of nowhere?
What's the new budget?
Culture secretary Tessa Jowell today announced the budget is now £9.325bn. This sum, which has almost trebled in less than a year, is made up of the following -
- contingency fund: £2.7bn
- security: £600m
- ODA tax bill: £840m
- construction costs: 5.3 billion
Where will the money come from?
- central government: £6 billion
- lottery: £2.2bn - Ms Jowell says that after 2009 she plans to "transfer" £425 million from the Big Lottery Fund and £250 million from other good causes to the Olympics>/li>
- London: Mayor Ken Livingstone has pledged £300 million without increasing council tax or transport cost
Why the big increase?
Unforeseen or overlooked issues have led to the snowballing budget -
- security - the 7/7 London bombings - which came the day after London won the 2012 Olympics - led to a revision of the original security budget
- regeneration - the rapidly rising cost to the London Development Agency of buying land in the East End means building work looks set to cost over £1bn more than originally planned
- VAT - building costs were estimated on the assumption that London, like Sydney, wouldn't have to pay VAT. So, the VAT on construction work - to the tune of around £250 million - didn't appear in the original budget submitted to the IOC. But EU rules mean this amount will, in fact, be due
- contingency fund - Ken Livingstone only wanted 20 per cent, but the Treasury demanded a fund of 60 per cent of the total budget
