Skip to main content

Olympic Games 2012: Costs

Volume 687: debated on Monday 18 December 2006

asked Her Majesty’s Government:

What is the current estimate of the costs of the building programme for the 2012 London Olympic Games.

My Lords, we can break down the costs into three distinct budgets: for the London Organising Committee to stage and run the Olympic Games £2 billion, paid for from private funds; for the development of the Olympic Park— the core Olympic costs—£3.3 billion, an increase of £900 million that the Secretary of State announced on 21 November; and what the Government decide to invest in regenerating the area.

My Lords, I thank the Minister for that reply. As he knows, there has been great cross-party support for the Olympic project, but with the squabbles between the Mayor of London and the Secretary of State about who pays for any overruns, and whether there are any, and the allegations made by the former chairman of the ODA, there is a great risk that the public will lose confidence in the cost control of this project and be concerned about who will finally bear the cost of the Olympics. When will the Government demonstrate that they are clearly in control of the budget and that it is transparent? When will they start to sell the regeneration benefits of the Olympics?

My Lords, there has been bad publicity, much of it caused by Jack Lemley, who went back to America and made a series of announcements that, to put it politely, were completely erroneous. At no time did he say that he was worried about mushrooming costs. He chaired the committee meeting in September at which engineers said that there was nothing in the soil on the Olympic site that they had not anticipated. I believe that a lot of the press comment is centred on the interview that Mr Lemley gave in America. We are now ready to present to the world that the fact that we are having the Olympics here is one of the greatest achievements in recent sporting history.

My Lords, can my noble friend explain why Mr Lemley left? Was it related to the fact that Mr Rumsfeld’s company, Bechtel, did not get the contract for the development of the Olympic site?

My Lords, I cannot comment on that. However, at the time of his resignation, Mr Lemley said:

“I am keen to return to the helm of my international construction consulting firm in America … I have every confidence that London will stage a superb Olympic and Paralympic Games in 2012 and leave a legacy that the country can be proud of”.

Coming from somebody who subsequently said what he did, that statement is extraordinary.

My Lords, how much of the total cost is now attributable to improvements in transport in London?

My Lords, the final cost on transport has not yet been settled, but it will be a very significant amount—possibly in the region of £17 billion—which will of course be a legacy for a very, very long time.

My Lords, the noble Lord said that this will be a great achievement to show the world. The people of this country are going to be paying for it—whether or not they wanted it or whether or not they think that it is a grand achievement—and it has certain odours of the Dome about it. Will he make a presentation about it to the people of this country, rather than just the world?

My Lords, many of your Lordships will have heard the noble Lord, Lord Coe, on BBC radio on Friday saying that we are well ahead of any other country that has recently held the Olympics in the way that we have developed things. We are at a very early stage and a lot of groundwork is being done. When the final budgets are announced early next year, we hope, that will be the time when we have a five-year run-in to excite the British public about this great event.

My Lords, can the Minister clarify the position with regard to VAT and how that affects the budgeting process?

My Lords, I hope that I can. The London Organising Committee is registered for VAT in the normal way, so it may reclaim VAT. When the bid was submitted, the tax status of the proposed Olympic Delivery Authority was unknown and the necessary legislation was yet to be introduced in Parliament, so the cost estimates included in the file excluded VAT. The problem arises because the ODA is not a trading body, but the Government are currently considering tax costs as part of their wider consideration of the overall budget.

My Lords, the noble Lord will know that we on this side support this great project, but can he give us more confidence on how the expenditure is going? He said that the budget will be ready next year. The board is still waiting for the budget and I would like to know something more precise. Although we believe in the legacy, can he assure the House that expenditure on legacy and regeneration will not be at the expense of the facilities for the world’s athletes?

My Lords, I can give the noble Lord that assurance. It would be pointless if the Government allowed the legacy of the Olympic Games to be imperilled by movement of money, one way or the other. The legacy has a separate heading; there are great, interesting and exciting plans to make that part of London absolutely terrific, including a park that will be the largest new park to have been built in Europe for 150 years. As I said, a great deal of work is being done on the final budget, which we hope will be ready for presentation to Parliament in the first part of next year.

My Lords, following the question put by the noble Baroness, Lady Oppenheim-Barnes, will my noble friend remind the House who commissioned the Dome? Would he also agree with me that building the Dome is on rather a different scale from staging the Olympics, which is a significantly greater achievement and potentially will leave a significantly greater legacy?

My Lords, I am grateful to my noble friend for making that point, with which I agree. It may reassure those who are concerned about this venture that we now have a delivery partner. There are three companies in the consortium, all of which have worked on five previous Olympic Games, both summer and winter, and are working on two forthcoming Games. They have also played a key role in the huge construction programme for Terminal 5, which, as noble Lords may have read in the papers yesterday, will be delivered a year ahead of schedule.