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The Voice Of 40-Something Cynical Optimism!

Sunday, November 20, 2005

Britain gets gold in the 7 year Pork Barrel category

I thought it would take at least until 2006 until they got the accountants in on the London Olympic gravy train. It looks like the London public will have to fund the shortfall. Is the City of London going to chip in? (rhetorical question).

Olympic costs set to double
· Games bill to hit £6bn · DCMS calls in accountants to review the books· Londoners face huge tax rise
Nick Mathiason, The Observer,Sunday November 20, 2005

The cost of staging the London Olympic Games in 2012 is set to double. Senior officials organising the Games say construction costs have been seriously underestimated by Tessa Jowell's Department of Culture, Media and Sport.

A rise in costs could spell financial disaster for Londoners. The Observer has learnt that the government has in recent days appointed consultancy KPMG to begin a reappraisal of its Olympic costs. These have surged because original projections allowed for inflation at 3 per cent, but inflation in the construction sector is now over 7 per cent, as the price of raw materials, particularly oil and steel, has soared.

And wages in the construction sector are expected to rise substantially as London readies itself for a building boom. Improvements are being made to the underground system, and new Docklands Light Railway and East London lines are planned, as is a new Thames Gateway Bridge.

A senior figure involved in preparing for the London Olympics said: 'This has the makings of another [Millennium] Dome. Not factoring in construction inflation was a massive oversight.'

Another said: 'It's going to cost £6 billion ... KPMG have been appointed to look across the board at costs.' But Games insiders say cost overruns could be offset by land sales to the private sector once the Olympics are over.

Building the Olympic Park in east London was projected to cost £2.37bn. The city's mayor, Ken Livingstone, assured Tony Blair and Gordon Brown that any overruns would be met by Londoners. On these figures that amounts to an extra £1,000 per household. This means a steep rise in council tax is on the cards in London, as the Chancellor is unlikely to meet any shortfall.

In a statement, the DCMS last night said: 'We are committed to keeping a tight lid on costs, which is why we're involving professional advisors like KPMG now - not three or four years down the road. Our financial planning was praised by the International Olympic Committee and so far things have been running smoothly. This is not the first Olympic scare story in the run up to 2012 and it probably won't be the last.

'Inflation in the construction industry has been factored in and it is completely premature and total speculation to raise this as a concern.' But talk of how construction costs could lead to spiralling Olympic budgets is now widespread in Whitehall.

Last Friday, Jack Lemley, who was in charge of building the Channel Tunnel, was appointed to chair the Olympic Delivery Authority. Lemley will be responsible for ensuring all Olympic facilities and infrastructure is delivered on time and on budget. His chief executive will be appointed within 10 days.

· The battle over ownership over a key piece of land next to Stratford station took a new twist this weekend. The Reuben Brothers, Multiplex and Westfield jointly own a development site called Stratford City, which is where the Olympic village will be sited. It is understood that the Reuben Brothers and Westfield are engaged in a battle to seize overall control of the land. Multiplex, the Australian construction company building Wembley Stadium, is keen to sell out of Stratford.


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