1 The public sector costs of the Games
and their legacy |
1. The 2012 Olympic and Paralympic Games will open
on July 27. The Government's preparations and management of the
£9.3 billion Public Sector Funding Package are led by the
Department for Culture, Media and Sport. The Department works
with a wide range of bodies including the Olympic Delivery Authority,
which is responsible for the construction of new venues and infrastructure
required for the Games, and LOCOG, which is responsible for staging
the Games. The Olympic
Delivery Authority's management of its construction programme
has been exemplary and it remains on track to deliver its venues
and infrastructure programme on time and within budget.
2. The Department remains committed to delivering
the Games within the £9.3 billion Public Sector Funding Package
(PSFP), but the Funding Package has had to absorb significant
additional costs, including a £271 million increase in the
cost of securing the Olympic venues during the Games, and £41
million for the opening and closing ceremonies.
Consequently, £528 million of contingency remains to cover
the potential impact of risks between now and the Games.
The Department estimates that the financial impact of remaining
cross-programme risks could be anything from £127 million
to £1 billion, but it has since made clear that it estimates
it will retain over £100 million
of headroom in the PSFP above assessed risks.
3. There are other significant public sector costs
which do not fall within the £9.3 billion Public Sector Funding
Package, but which take the total estimated cost to the public
purse of delivering the Games and their legacy to at least £11
billion. These costs include £766 million to purchase the
Olympic Park land, around £826 million for legacy projects
and expenditure on Games-related activities by Government Departments.
4. LOCOG is intended to be privately funded, through
sponsorship, merchandising, ticket sales and contributions from
the International Olympic Committee.
LOCOG has done well so far with generating revenue, particularly
by raising £700 million through sponsorship.
LOCOG has to raise a further £200 million to reach its revenue
target. LOCOG expects £130 million to come from the sale
of remaining tickets and told us that it is absolutely certain
that it will achieve this.
However, LOCOG's budget is very finely balanced: after taking
account of the cost of meeting expected risks, it has only £5
million of headroom remaining. The Government is obliged under
guarantee to meet any shortfall in LOCOG's budget. In addition
to its own £2.2 billion budget, LOCOG is spending £867
million from the Public Sector Funding Package - the majority
of which is for venue security - on behalf of the Department for
Culture, Media and Sport and the Home Office.
2 C&AG's report, paragraph 2 Back
Q1; C&AG's report, paragraph 5 Back
Qq23, 24, 37; C&AG's report, paragraph 9 Back
Qq4, 10 Back
Ev 28 Back
Qq18-23, 177; C&AG's report, paragraph 5.5 Back
Q128; C&AG's report, paragraph 5.8 Back
Qq139-140; C&AG's report, paragraph 5.9 Back
Qq130, 139 Back