London 2012 organizers are facing more controversy after it’s been revealed by the UK Treasury that they failed to take into account at least one billion pounds in VAT costs for construction of infrastructure projects in their bid for the Games.
There are reports that VAT costs for the 2.36 billion pound construction of Olympic facilities and other costs were not included by London bid organizers in their 2012 bid documents submitted to the International Olympic Committee (IOC).
The Olympic Delivery Authority (ODA) has asked for the VAT costs to be waived but the Treasury is refusing to back down and has warned the ODA and culture ministers that such a move risks “falling foul” of European Union rules on state aid.
The culture department says that in the case of the Olympics, which is backed by and partly funded by the government, VAT amounts to an internal transaction of government.
A source in the culture department said that, under terms agreed by the Treasury and at the insistence of the IOC, the government is the lender of last resort on the Games budget, but the source admitted VAT costs never appeared in the original bid file because “at that stage we were negotiating against major competition worldwide”.
Meanwhile Culture Secretary Tessa Jowell has denied a serious rift with her deputy Sports Minister Richard Caborn after ruling the Olympic Stadium will not be used by a Premiership football club.
Jowell said she had been at odds with Caborn. She said, “have we had a different view about this? Yes, I think it is fair to say that Dick was keener on a football legacy than I was, but the idea that we have fallen out is just not true”.
The stadium’s architect, HOK Sport, is now likely to go ahead with a design for an 80,000-seat venue that will be scaled down to a capacity of 25,000 after 2012.
