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Olympic cost estimate

THE government was rightly lambasted last week by a parliamentary committee for its mismanagement of the 2012 London Olympic finances since winning the games in July 2005. But the Eye has discovered that even as the crowds were erupting in Trafalgar Square two summers ago, the government knew the real costs bore no relation to those set out earlier that day in Lord Coe's decisive presentation to the International Olympic Committee.

According to the final cost review prepared for the government in July 2004 by consultants PricewaterhouseCoopers, marked "confidential" but obtained by the Eye under the Freedom of Information Act, the cost of preparing for the games would be £2.75bn Since deciding to bid in early 2003, however, culture and sport secretary Tessa Jowell had repeatedly promised a public funding package of no more than £2.375bn demanding a relatively limited national lottery contribution and politically manageable council tax rises. The more pessimistic 2004 cost estimate, itself based on some heroic assumptions and minimal contingencies despite "a number of significant risks", was simply sat on.

When London's "candidate file" was produced for IOC scrutiny a year later costs had magically shrunk from PwC's estimates in order to make the sums work within the declared £2.375bn. The all too inevitable prospect of the price increasing from Jowell's promised £2.375bn was thus safely ignored until the games were in the bag. In the process, however, London 2012 was sold to the public and the IOC on a financial lie even before overlooked expenses like VAT emerged last year.

But as Lord Coe grandly declared in his 2007 New Year message "It is not simply about cost. It is about value and ambition". So that's alright then.

P.S. The risibly low cost of London's bid was based on estimates for a "specimen" Olympic Games from consultants Arup in 2002. Having done so much to make the London Games possible by giving the impression of affordability, guess what happened to Arup? Yep - together with two other firms, last year it won the £59m contract to design the Olympic Park.

[Extract from Private Eye 1177, 2 - 15 February 2007]

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