Funding the 2012 Games
It is not easy to estimate the cost of an event as huge as the London 2012 Olympic and Paralympic Games and it is fair to say that in the first instance the Government was nowhere near accurate with its prediction.
In May 2004, the London 2012 Olympic bid team announced that the government and the Mayor of London had agreed a package for £2.375billion of public funding. This was to comprise £1.5billion from the National Lottery and up to £625million from London Council Tax. The remaining £250 million, if needed, was to come from the London Development Agency. By the time London was confirmed as the 2012 host, the estimated cost had climbed to just over £4billion, to be met by public sector funding of £3.4billion and £738million from the private sector.
Then on 15 March 2007, 20 months after London was awarded the Games, the Department for Culture, Media and Sport announced a revised budget of £9.325billion for London 2012. The extra £5.906billion of public sector funding was made up as follows:
- Exchequer - £5.975billion (increase of £4.931billion)
- National Lottery - £2.175billion (increase of £675million)
- Greater London Authority - £925million (increase of £300million)
- London Development Agency - £250million (same)
- Total - £9.325billion (increase of £5.906billion)
Even the revised budget figures do not tell the whole story, however, as a report by the House of Commons Committee of Public Accounts revealed that the £9.325billion does not include the acquisition of land for the Olympic Park, the costs of government departments working on Games preparations and legacy planning, as well as the costs of improving wider transport links are all outside the budget.
Of course, it is not unusual for massive projects to go way over budget. The Montreal Games in 1976 had a suggested budget of 134million Canadian dollars, but eventually cost over 1.6billion Canadian dollars. It took 30 years for the city to pay off the costs of building the main stadium alone. The Sydney Opera House was 1,400 per cent over budget, but is now one of the world’s iconic buildings.
Budget LimitOlympics Minister Tessa Jowell has told Parliament that “£9.325billion is the absolute limit of public money, whether it comes from the lottery, the London council taxpayer or the Exchequer", but it has since been claimed that an extra £2.7billion of public spending on the Games and Games-specific projects has not been included in that figure. This money has gone to the London Development Agency, Transport for London, Network Rail, Whitehall departments, local councils, Homes and Communities Agency and a range of other public bodies, including Lea Valley Regional Park Authority, the Arts Council and the NHS.
Even those projections are tame according to Jack Lemley, a former chairman of the Olympic Delivery Authority, who claimed it was clear from very early on that London 2012 was working to a budget of “well over £12billion”. Mr Lemley, who left the ODA in October 2006, called the government’s £9.3billion budget “ridiculous” and was sure the final cost would top £20billion.