Public Accounts Committee Slams Olympic Budget

The budget for the 2012 Olympic Games has been slammed by a government spending watchdog.A report by the government’s public accounts committee (PAC) also said that the ODA should not shy away from getting rid of unruly contractors. The report said the government’s original estimates for the Games were too low, and that it failed to take into account the extent of public-sector spending.

The original budget for the games was set at £4bn, but the bill has jumped to £9.3bn in the three years since then. The PAC's report describes the original estimate as unrealistic, and yesterday its chairman, Edward Leigh, said ministers and officials had underestimated the true cost in order to win government and public support for the bid.

"It is now clear that the estimated cost at the time of the bid, just over £4bn, was entirely unrealistic," said Leigh. "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.

"We don't know whether it was deliberate or not but it seems extraordinary that foreseeable costs were left out of the budget," he said. "I believe that at the very best they were economical with the actualité, as a minister once put it, in order to win support for the bid. Parliament and the public were undoubtedly misled over the true costs of the Olympic project."

The committee's verdict is an embarrassment to Olympics minister Tessa Jowell and Ken Livingstone, the London mayor, the two most senior figures responsible for drafting the original budget who remain in office.

Jowell last night denied that the government had intended to mislead parliament. "I utterly refute any suggestion that there was an intention to mislead and I hope that the country, parliament and the PAC would accept that was not the aim. There was categorically no motive to put in a bid that was anything other than based on the most accurate forecasts and the best intentions."

She said Olympic bidding rules had required bids to be submitted at 2004 dollar prices, and that the security budget had been substantially affected by the July 7 2005 London bombings, which took place the day after London won the games.

She added that 75p in every £1 spent on the site was aiding regeneration in east London, and that significant private-sector funding had been attracted by the Olympics.