Olympic Optimism In London Left Taxpayer Out Of Pocket
There "is a myth" that the 2012 London Olympics "were delivered within budget," according to John Kay of the FINANCIAL TIMES. The principal relevant facts "are these." The first detailed specification of what was needed for London to host the games "was drawn up" in '02 by engineering and planning consultancy Arup. The report put the cost at £1.8B, much of it "to be privately financed." The budget had by '07 increased to about £6.5B. At Treasury insistence, a contingency allowance, mostly unspecific, of £2.8B -- more than the total original projected cost -- was added. The costs of land acquisition and of the Olympic Village "were mostly excluded in the belief that they would be recovered from property sales after the event." The basis of the claim that the Games came in “within budget” seems to be that a small part -- currently £300M-£400M -- of that £2.8B contingency "remains unspent." That was achieved, however, by "excluding a number of additional unbudgeted expenditures from the calculation, as the National Audit Office has highlighted." There is "likely to be little, if any, net recovery of the further costs of land and housing, which were due to be recouped from property sales." The costs were "grossly and persistently underestimated, and the financial contributions anticipated from private sources overestimated by very large amounts." Every year, to the present day, the expected cost "rose and the likely revenues diminished." The cost of the games to public funds "has proved to be about 10 times the original estimate" (FT, 11/26).