Jowell: cost of Olympics has tripled to £9bn
Friday, 16 March 2007
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The budget for the London Olympics has tripled in a year to more than £9bn and a raid on National Lottery money will now be necessary, the Government announced yesterday.
Rising costs in construction and security, an unforeseen VAT bill, and a massive contingency allowance has seen the total soar beyond the most recent government forecast of £3.3bn.
The Olympics minister, Tessa Jowell, announced to Parliament that most of the shortfall will be funded through a further £675m from the National Lottery, taking its contribution to the 2012 Games to £2.2bn.
Ken Livingstone, the London Mayor, who has resisted hitting council tax-payers again for the Games ahead of next year's election, will stump up an extra £300m. The London Development Agency, which handles the Mayor's property deals, will in effect remortgage against the rising value of land it owns on the Games site in Stratford.
The Lottery raid will see millions diverted in the coming years away from beneficiaries of the Big Lottery Fund, the arts, heritage, and grassroots sport - causes which the architects of the 2012 project claimed would be boosted by a London Olympics.
Lottery good causes, including the arts and film councils, will suffer an 11 per cent cut in their annual funding for the next five years. Hugh Robertson, the shadow Olympics minister, said: "This is an example of government financial mismanagement on an epic scale ... The tragedy is that in raiding the Lottery to make up the shortfall, the Government will penalise the very activities such as sport that are meant to benefit from 2012."
Don Foster, the Olympics spokesman for the Liberal Democrats, claimed that Whitehall accountants had now dropped all aspiration to raise £728m towards Olympic building costs from the private sector, as pledged in the bid document. Derek Mapp, the chairman of Sport England, complained of a "real blow" to community sport. "The decision to divert a further £55.9m of [our] share of Lottery income ... is a cut too far and seriously endangers the creation of a sporting legacy from the 2012 Games."
Liz Forgan, chairman of the Heritage Lottery Fund, said it was "bad news" and would cost the fund £90m.
Peter Hewitt, chief executive of Arts Council England, said it would affect smaller arts organisations, local projects and individual artists. David Barrie, director of the Art Fund charity said the raid "makes the Prime Minister's celebration of a 'golden age' for the arts ring very hollow".
The Chancellor, Gordon Brown, is expected to reveal in next week's Budget which Whitehall departments will foot the Government's contribution to the new bill of £6bn.
The Treasury, the Department of Culture, Media and Sport, Ruth Kelly's Department for Local Government and the Communities, and the Home Office are expected to contribute.
The revised budget at a glance
What it costs...
£1.7bn Regeneration fund partly to build thousands of homes in the Lower Lea Valley, currently an industrial area. Games organisers argue this should not count toward their costs. Previous cost: £1bn.
£3.1 bn Cost of building the Olympic Park, which includes sports venues and infrastructure. The most expensive projects will be the athletes' village, the Olympic stadium, the aquatic centre (£80m) and the Velopark. Previous cost: £2.4bn
£2.7bn Contingency fund which optimists claim may never be spent, although £500m has already been allocated. Not included in bid document.
£840m VAT, previously not included in the budget, will not affect the taxpayer as the Government is in effect billing itself.
£600m Cost of security, up from the £220m estimate made before the London bombings.
£390m Cost of community sports coaches and the Paralympics
Total: £9.325bn
Who will pay?
Government: £6bn
Majority from the Treasury
Mayor of London: £1.175bn
Includes £625m from council tax-payers and a total £550m from the London Development Agency
National Lottery: £2.2bn
Includes £750m existing contribution to sport, £750m though scratchcard schemes, and a further £675m to be taken from the arts, heritage, sports and Big Lottery Fund, announced yesterday.
