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National Audit Office report

The NAO report concludes:

Our overall conclusion is that the key relationships and working arrangements to deliver the Olympic programme are still being developed. There are a number of areas of risk that will need to be managed but a major risk is the lack of final agreed cost estimates and an accompanying funding package, and this will inevitably have a detrimental impact on the programme if it is allowed to continue.

The budget for the Games – key areas of uncertainty at December 2006

Contingency provision. The cost estimates in the Candidate File included a contingency provision to cover unanticipated costs on individual projects. The Department is currently considering with the Treasury whether it would be desirable to increase the existing provision for contingency and to provide for an overall programme level contingency.

Tax. Treasury guidance states that tax costs should be included in cost estimates. At the time of the bid the tax status of the proposed Olympic Delivery Authority was undecided and the cost estimates in the Candidate File excluded provision for value added tax. The Government is currently considering tax costs as part of its wider consideration of the overall budget.

Security. The cost estimates at the time of the bid included £190 million for security, including the cost of security at the Olympic venues. However, in the light of global events, including the terrorist attacks in London on 7 July 2005, the Department expects the original provision will need to increase substantially, although the costs of the wider security measures that will be needed in London and across the UK are not included in the cost estimates for the Games.

Private sector investment. At the time of the bid it was assumed that some Olympic infrastructure and regeneration costs would be met by private sector investment or financing of around £750 million, thereby reducing the cost of the Games to the public sector. However, in the light of advice following the bid, the Department concluded there was little prospect of securing significant private sector funding to deliver the Olympic Park in view of the tight timescale for delivering the Park and the lack of an identifiable revenue stream. Private sector funding is still envisaged for the Olympic Village.

PDF downloadable from: Culture, Media and Sport (To search their site enter '2006-2007' into the session box then 'Culture Media and Sport' into the subject box)


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