Written on February 12, 2012
The National Audit Office has warned of a “real risk” that the government could exceed the £9.3bn public funding package for the Olympic Games due to rising costs, after it was announced that the security bill within venues had doubled to £553m.
Confirming venue security costs had soared from an original estimate of £282m as the personnel required to guard them increased from 10,000 to 23,700, the sports minister, Hugh Robertson, nevertheless insisted the £500m remaining in contingency funds would be enough to deliver the London 2012 Games within budget. He also announced that the government would provide the London organising committee with an additional £41m from public funds towards the opening and closing ceremonies “for the benefit of the country”.
In a report to be released on Tuesday, the NAO has warned the increased costs mean that “on current projections” the entire £9.298bn public funding package will be required with “little scope for further unforeseen costs to emerge in the eight months left”.
The NAO report concludes: “In our view the funding package of £9.298bn is currently so finely balanced there is the real risk that more money will be needed unless there is rigorous action to control costs in ways that represent value for money.”
The head of the public sector spending watchdog, Amyas Morse, said the project remained on track to be delivered on time but questioned the government’s assurances that there was plenty of room for manoeuvre within the overall budget, which had a £2bn contingency built in.
“The programme to deliver the venues and infrastructure for the 2012 Games remains on course, so it looks as if value for money will be achieved in this area,” he said. “However, not everything is rosy. The government is confident that there is money available to meet known risks but, in my view, the likelihood that the Games can still be funded within the existing £9.3bn public sector funding package is so finely balanced that there is a real risk more money will be needed.”
The NAO has also raised concerns about transport and security, warning that the reputation of the Games could be put at risk if they are not resolved.
Morse said: “Important issues relating to the cost and staffing of venue security and restrictions on transport in London are still unresolved. The experience of spectators, visitors and Londoners in general would be diminished and the reputation of the Games put at risk if these issues were not sorted out.”
The NAO report raises concerns that delays in finalising the detailed transport plan at local level and communicating it to the public could impact on the Games. Last week Transport for London warned that normal traffic at some stations would have to be reduced by up to 60% in order to avoid huge delays.
In addition to the extra £271m required for security, the NAO lists an additional £21m required for transport and an extra £41m made available to organisers by the government to help fund the opening and closing ceremonies. This has been partly mitigated by a further reduction of £112m in the amount it has cost the Olympic Delivery Authority to build the venues.
The increase from the original 10,000 guards, which were all to have been provided by security firm G4S, will have to be found from the military, 2012 volunteers and training scheme called “Bridging the Gap”.
“When I started being minister there was no Arab Spring. No one really knows whether that’s going to have a beneficial or adverse effect on our security. It is pretty fluid and has created some uncertainty,” said Robertson. “You can say this looks like a huge increase in the security budget or you can say this is what is needed to provide a safe and secure Games.”
Matthew Sinclair, director of the TaxPayers’ Alliance, said: “Taxpayers might enjoy watching the opening party for the Olympics but they won’t want to wake up to the hangover of another £40m on the bill. When London originally bid for the Games it was on the basis of a far smaller budget, and when resources weren’t nearly as scarce. Some costs like security are now unavoidable. But the government should be doing all they can to keep the cost down and need to control the budget more carefully.”
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