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LOCOG and Public Sector Funding

Volume 566: debated on Tuesday 16 July 2013

In our final quarterly report on the games, published in October 2012, I said that the funds from the Olympic budget are still necessary in the transformation phase so we cannot provide an absolutely final cost, but it remains highly likely that the public sector funding package for London 2012 will come in under £9 billion.

The transformation phase is still in progress but with the voluntary liquidation of the London Organising Committee of the London 2012 Olympic and Paralympic games (LOCOG) in train from 30 May 2013 now is a good time to update you on the latest position on the public sector funding package.

I am pleased to report that the anticipated forecast cost (AFC) of the Olympic and Paralympic programme has reduced from £8,921 million to £8,770 million, taking the total projected savings against the £9,298 million public sector funding package for the games (PSFP) from the £377 million that I reported in October 2012 to £528 million at end May 2013—an increase in savings of £151 million. The £528 million includes the handover to Government of a £20 million closing balance of non-grant income from LOCOG, effectively a repayment of grant.

The main reason for the increase in savings since end September 2012 is lower security costs :

a) A reduction in venue security costs from £514 million to £429 million, saving £85 million.

b) A reduction in policing and wider security costs from £455 million to £423 million, saving £32 million.

Taken together with spending on security for park construction by the Olympic Delivery Authority of £220 million, the cost of security met from the PFSP was £1,072 million. After taking full account of spending on venue security by LOCOG, this is a saving of £120 million compared to the provision and contingency announced in 2007 for the Olympic Delivery Authority and for policing and wider security.

The reduction in venues security costs follows LOCOG’s settlement with G4S.

LOCOG’s post-games risks were well managed, saving £30 million.

Details of the movements in funding requirement between 30 September 2012 and 31 May 2013 are set out in the following table :

Movements in the PSFP Requirement – 30 September 2012 – 31 May 2013

30 September 2012

31 May 2013





Olympic Delivery Authority




Park Transformation




Policing and Wider Security




Venue Security




Elite and Community Sports




Paralympic Games




LOCOG Park Operations




Funding available to LOCOG




Contingency held against LOCOG post-Games risks




Operational Provisions




Look of London and wider UK




City Operations




Domestic and International tourism campaigns




GLA Olympic and Paralympic programmes




PSFP contingency and other savings remaining








The transformation of the Olympic park venues and infrastructure, apart from the Olympic village, is being undertaken by the London Legacy Development Corporation, a Mayoral Development Corporation, chaired by the Mayor of London and accountable to the GLA, rather than by the Olympic Delivery Authority (ODA). The LLDC receives funding from the PSFP through DCLG and the GLA, to deliver the transformation programme (the £296 million for park transformation referred to in the table above).

The Olympic Delivery Authority remains responsible for the conversion of the Olympic village for residential use and for completion of the health centre and academy. This project involves the removal of temporary games-time elements and the installation of kitchens and other infrastructure to 2,818 apartments and the completion of sale of 1,379 of the properties to a social landlord, triathlon, for affordable housing and of the completion of sale of the remainder to a private landlord for rent. Good progress is being made and the first of the village blocks is due to be completed in time for occupation in summer 2013. The entire project will be completed in 2014, and when all remaining contracts have been closed out, the ODA will be dissolved. The LLDC’s programme is well under way. Key legacy users have been secured for all the venues on the new Queen Elizabeth Olympic park and the north section of the park is due to open in July 2013. The rest of the Queen Elizabeth Olympic park will open in spring 2014.

On completion of sale in 2014, the sale of the Olympic village private housing and associated land will yield over £550 million in receipts, as planned, keeping the costs within the £9,298 million PSFP. This includes returns to the Olympic Lottery Distribution Fund (circa £71million) and to the GLA (circa £30 million).

Any residual lottery funding held by ODA at the date of its dissolution will be returned to the Olympic Lottery Distribution Fund (OLDF) and when the OLDF is wound up in 2014 will be passed to the National Lottery Distribution Fund (NLDF).

The distribution of the net proceeds from the subsequent sale of land on the Olympic park is subject to a legal agreement between the Government and the GLA. It provides that after the first £223 million of net proceeds has gone to the GLA to pay off residual land debt, the next £900 million of net proceeds will be divided 75% to the national lottery distributors, and 25% to the GLA. Any further net proceeds will be divided 50% between Government and the GLA or LLDC. The first receipts to the lottery distributors from land sales on the Olympic park are expected to arrive in the mid-2020s.

On 19 July the Government and the Mayor of London will be publishing “Inspired by 2012”. This report will detail what has been achieved a year on from London 2012 across the areas of sport and healthy living, east London regeneration, economic benefits and growth, and bringing communities together.