Although the official budget for the London 2012 Summer Olympic Games won’t be released until next month, British newspapers are citing a leaked document that says the Games will more than double the price quoted in the bid document submitted to the International Olympic Committee and will now cost 5.1 billion pounds.
The Sunday Times reports that it has obtained figures showing that the public cost of building the Olympic Park has been finalized at 2.72 billion pounds above the initial projection of 2.38 billion pounds in the bid document.
The Olympic Delivery Authority (ODA), in consultation with Culture Secretary Tessa Jowell and Ken Livingstone, Mayor of London, has drawn up the finalized figures.
The Times reports the government is also holding discussions on the size of the “contingency” fund that will be needed to cover any further unforeseen rises in costs, saying it will be between one billion and three billion pounds.
Also the ODA figures don’t include VAT, which could add another one billion pounds to the project.
The current expectation, sources told the Guardian, was for an overall funding shortfall of at least 1.5 billion. The question now, sources said, was whether the Games might be exempted from VAT and how any eventual funding gap would be filled.
According to the Times it was hoped that private finance initiatives could cover some of these costs but it is now considered unlikely. It is thought inevitable that more funds will be raised from the lottery. London 2012 has been promised 1.5 billion pounds from the lottery, comprising 750 million pounds from an Olympic lottery games and 750 million pounds from money otherwise earmarked for good causes.
The Times reports that the ODA wants to proceed with its revised budget. A source said, “other cities have torn up their budgets when they won the Games and just started again. Costs have risen, but this is now a realistic budget that people can stick to”.
In several media interviews Sunday Jowell denied reports that the costs of staging the Games is set to double.
She described the story in the Sunday Times as “nonsense” and said there was “nothing new” in the newspaper’s report, stressing that several of the costs were investments in the capital’s infrastructure rather than purely for the Olympics itself.
She told the BBC’s Sunday AM program that improving transport links and regenerating the east of the city would be “brilliant” for London as a whole and that re-adjusted costings were still being worked on by her department and subject to negotiations within government.
Jowell said the budget for the 2012 Games need not be finalized for three more years but admitted the government did not know precisely how the London Games would be funded, adding that the budget for the Sydney Games was only settled two years before it took place.
When asked by the BBC whether the Games would cost 5.1 billion pounds Jowell said, “that is not the case at this point, because we are still, within government, negotiating both the likely cost of the Olympics and the funding requirement”.
