CBC News today:
LONDON - The British government's financial watchdog has criticized the budget for the 2012 London Olympics and warned that costs could rise further.
The Committee of Public Accounts released a report on the Olympic budget on Monday - its first since Olympic Minister Tessa Jowell announced in March 2007 that the overall cost of staging the games had risen to 9.325 billion pounds (US$18.5 billion).
During the bidding process in 2004, the budget was forecast at 4.036 billion pounds (US$8 billion).
Committee chairman Edward Leigh said the huge budget increase and subsequent lack of specific information on how the money would be spent meant the public would find it "hard to be confident" that costs would not increase further.
"It is now clear that the estimated cost at the time of the bid ... was entirely unrealistic," Leigh said. "It ignored foreseeable major factors such as contingency provision, tax obligations and policing and wider security requirements.
"At the same time, the estimate of the extent to which the private sector would contribute funding towards the games has proved little more than wishful thinking."
The Committee of Public Accounts is made up of lawmakers and appointed by the House of Commons to examine public spending.
The Olympic Delivery Authority denied it had budgeted poorly.
"We believe we have a realistic budget and adequate contingency and are confident that we can deliver within it," ODA chief executive David Higgins said in response to the report. "We will allocate contingency to manage risks as we go forward as is common for any project of this scale and complexity."
Contingency has added 2.7 billion pounds (US$5.3 billion) to the Olympic bill - with 500 million pounds (US$993 million) used already. Tax and security costs are estimated to have added 1.4 billion pounds (US$2.7 billion).
The committee was also concerned that the extra 5.3 billion pounds (US$10.5 billion) added to the overall budget had not been itemized.
"The department has not specified what will be delivered in return for this expenditure and the current budget cannot be reconciled to the commitments in the original bid," the report said.
The committee said the revised 9.325 billion pound (US$18.5 billion) budget didn't include the cost of the acquisition of land for the Olympic Park or the cost to government departments working on games preparations. It also didn't include upgrading transport links.
"Any assessment of the costs and benefits of the games should reflect all the additional costs occurred," the report said.
Private funding to help build the venues and infrastructure had increased to 738 million pounds (US$1.4 billion) from the 165 million pounds (US$327.6 million) stated in the bid book.
The Olympic village, which had expected to be fully funded by private business, has now been given a 175 million pound (US$347.5 million) boost from the Olympic budget.
And few firms are bidding to build the venues.
"The Olympic Delivery Authority has had difficulty in achieving competition between bidders for contracts to deliver the main venues, with only one bidder emerging for the main stadium," the report said.
The ODA said it was three months ahead of schedule and would begin construction within the Olympic Park in May - three months early.
The committee was also critical of specific details on how venues would be used after the games.
"Seventy-five pence of every pound (US$1.48 of every US$1.90) we are spending is for long-term regeneration, so there is a very clear legacy for this project - world-class sporting facilities, thousands of new homes, schools, communities and health facilities, new transport links and utility infrastructure, all in a brand new urban park," Higgins said.
The ODA also said that more than one in 10 workers on the Olympic Park project had been unemployed before their current jobs, and that more than a third of those lived locally.
London's free newspaper, Metro, yesterday:
'Wishful thinking' ministers concocted an 'entirely unrealistic' budget for the London Olympics, a panel of MPs said on Monday.
Their original £2.7billion estimate has more then trebled to £9.3billion and could rise still further, warned the public accounts committee.
'The bid ignored foreseeable major factors such as contingency provision, tax obligations and policing,' said chairman Edward Leigh.
Blame for the increase, announced in March 2007, rested with Olympics minister Tessa Jowell, mayor Ken Livingstone and Gordon Brown, said shadow Olympics minister Hugh Robertson.
Mrs Jowell claimed much had changed since the first estimate.
Meanwhile, a report by the New Economics Foundation found only 11 per cent of the £1billion of Games contracts had been won by companies in the five Olympic boroughs.'
London Today - today:
Ministers' claims to have the £9.3 billion costs of the London Olympics under control were dealt a blow today.
They were castigated by an influential group of MPs for hugely underestimating the bill for the Games, now £5billion higher than originally forecast.
The all-party Commons public accounts committee warned that the public should rightly have little confidence about government guarantees that the bill will not rise even higher.
The committee chairman, Tory MP Edward Leigh, said the original budget was "entirely unrealistic".
The committee believed the overall bill for the Games would top £12 billion once the costs of buying the land for the Olympics and staging them were taken into account - and yet its legacy for future generations remained unclear.
The final bill will be partially offset because the £2 billion cost of staging the Games is expected to be met from ticket sales, merchandising and broadcast revenue. The bill for buying up the land is expected to be covered by selling it afterwards.
The MPs, though, ripped into how the original estimate of just over £4billion in 2005 could have reached £9.3billion by March last year.
Ministers were criticised for not initially including the £2.7billion contingency provision in the estimate.
Some £600 million of funding for policing and wider security was also left out, as was the £836million in tax payable on construction and other activities. The predicted private sector contribution of £738 million tumbled to £165 million. The Olympic Delivery Authority's programme delivery budget has risen to £570 million, from £16 million after it had difficulty drumming up competitionfor contracts, with only one bidder for the main stadium.
Olympics Minister Tessa Jowell said the report focused mainly on early stages of budget planning.
Construction of the stadium would start later in the spring, three months earlier than planned, the site for the athletes' village had been cleared and digging of tunnels to carry underground power lines had been completed on time and on budget. She added: "We are heartened by progress so far and the International Olympic Committee's view that we are ' operationally and financially' on track."
ODA chief executive David Higgins said: "We believe we have a realistic budget and adequate contingency." He added: " Seventyfive pence of every pound we are spending is for long-term regeneration, so there is a clear legacy for the project - world class sporting facilitiesthousands of new homes, schools, community and health facilities, new transport links and utility infrastructure, all in a brand new urban park."
Shadow Olympics minister Hugh Robertson said much of the promised legacy, such as ensuring more young people were playing sport after 2012, remained "uncosted and unplanned".
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ITV also announced that the Mayor of London has agreed that they looked in the sky and plucked a figure out of the air and they would have to work it out later - and then showed a film of him agreeing this! Tessa Jowell, of course, said that this was Ken "having a joke".
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