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Olympic Games 2012: Costs

Volume 690: debated on Thursday 22 March 2007

asked Her Majesty’s Government:

What is their latest estimate of the cost of the 2012 Olympic Games in London; and how this differs from the original budget.

My Lords, the estimated cost at bid was just over £4 billion, including around £1.7 billion for infrastructure and regeneration. On 15 March the Secretary of State for Culture, Media and Sport announced a construction budget for the Olympic Delivery Authority of £5.3 billion, comprising £3.1 billion for the building of the Olympic Park and venues—the core Olympic costs—£1.7 billion for Olympic infrastructure and regeneration, linking the park to the rest of the Lower Lea Valley, and £500 million for programme contingency. Tax on this of around £840 million is to be met by government. There is also an unallocated programme contingency of £2.2 billion including tax, £390 million for non-ODA provision including sport, and £600 million for wider security costs.

My Lords, is the Minister aware that all of us want to see the London Olympics succeed but that there is now serious public concern, as those figures—they amount to over £9 billion—show, about the financial management and planning of these Games? One particular concern is of the bill being passed on to the National Lottery, which has now increased by £675 million to £2.2 billion. Surely that is going to have an impact on future grants to arts bodies, heritage organisations, charities and sporting organisations all around the country.

My Lords, the lottery was established to fund unique projects and aid regeneration, and there cannot be a more unique project—or, indeed, a more expensive one—than the Olympic Games.

Well, my Lords, clearly it is a unique opportunity for this country, not to be realised again in our lifetimes. The noble Lord is right that it will impact upon certain aspects of the heritage and arts budgets, although not the sports budget, which we are guaranteed will play its part with regard to the Olympics. We have entered into an agreement with the Mayor of London that part of the land development profits on the Olympic Park site will be redirected to the lottery so that we make up lost ground in terms of the resources available in future years.

My Lords, while it is right and proper to examine closely the cost of the London Olympics, it is also important to look at the value. Does my noble friend support the idea of making these the greenest of Games? We must ensure a green legacy, especially in the east side of London, so that once the Games have gone we still have something left. I declare an interest as chair of the Forestry Commission, which leads one of these consortiums.

My Lords, my noble friend is right that it is important that we attach due regard to the green legacy. One aspect is guaranteed—the Lea Valley will be transformed. It may be to the east, but it is only two miles from the centre of London. The Lea Valley will be the largest green urban park created for more than a century. It will be a spectacular legacy to our people, and I am grateful to my noble friend for emphasising this important part of the Olympic project.

My Lords, does the Minister agree that during the period between the initial funding of the Games and the return following the capital development and sale of the property later on, a number of very important charities that deal with the most vulnerable people in our society will be put seriously at risk?

My Lords, no existing projects will be affected adversely. However, certain parts of the lottery budget will be affected for the intervening years until we are able to realise the resources from the Games as part of the legacy. The lottery has always been envisaged as making a contribution to the Games, which is bound to mean some restrictions in other parts of the budget.

My Lords, does the Minister think that everyone involved in the project would benefit from looking at the experience of the Great Exhibition in the 19th century? It made a profit that was sufficient to pay for the building of the Albert Hall, and for the establishment of Imperial College and the forerunner of the V&A. The surplus that was invested has provided a fund of £50 million providing for scholarships for students in design and engineering. What was it about the 19th century that enabled people to do projects on a grand scale without having to look to the taxpayer to bail out the inefficiencies and losses which have not been anticipated?

My Lords, I am grateful to the noble Lord for drawing attention to one of the more spectacular achievements of the 19th century. It is important to view the Olympic Games in 2012 as a similar opportunity for the 21st century. That is why the Government, while having due regard to the costs, were very concerned that the project should be translated into a regeneration project in which the emphasis upon the legacy from the Games should be all pervasive. The noble Lord is absolutely right—the Games need to be, and will be, an outstanding success. Of at least equal importance is the legacy for the British people that this opportunity provides.

My Lords, does the Minister agree that there is a great deal of scaremongering by a lot of people based on a lack of information? Will the Government undertake to ensure that everybody involved lets us know exactly what the situation is on the financing and the control of the budget so that we do not go over this every six months until the Games start?

My Lords, I am sufficiently optimistic that we shall not be looking at the budget in the immediate run-in to the Games. However, for the next 18 months or so, until we are past the Beijing Olympic Games and the focus shifts to the enormous opportunity which is then afforded to London, we can all foresee that people will examine costs because they cannot see benefits. But in due course everyone will be on side for the benefits.

My Lords, is the Minister aware that it took 28 years to pay off the debts from the Montreal Olympics, and that Montreal was left with a lot of equipment which has become absolutely useless? Given that we seem to have serious problems with arithmetic, does he not think that the matter ought to be reconsidered?

My Lords, the Montreal Olympics is a dire example of things that have gone wrong in the past, but there are more recent illustrations. I do not think that the legacy of the Athens Olympics is looked upon with a great deal of pride either. In this Olympic concept and programme, the Games are the focal point of the development, but we have emphasised all along that attention to their legacy should be as positive as we can make it. That is why every aspect of the investment also relates to that dimension.