Public Accounts CommitteeWritten evidence from the Permanent Secretary, Department of Culture, Media and Sport

We are publishing the latest Quarterly Report on preparations for the Olympic and Paralympic Games, covering the period to 31 December 2011. Given recent interest from the Committee around the Public Sector Funding Package (PSFP), I thought it might be helpful to update you on our most recent findings. The level of uncommitted contingency in the PSFP remains at over £500 million, and we now have over £100 million of headroom above assessed risks.

As I set out in our recent hearing, and in subsequent correspondence, our previous Quarterly Report confirmed that there remained £528 million of uncommitted contingency within the £9.3 billion PSFP, including £174 million available to the ODA, and £354 million held by Government as programme-wide contingency. This position was consistent with that put forward in the NAO’s most recent report.

The report published tomorrow shows that £527 million remains uncommitted in the PSFP, a reduction of just £1 million in the quarter. The breakdown of uncommitted funding has also changed, as indicated in the table below:

Uncommitted funding
remaining in PSFP

30 September 2011—
as per NAO Report (£m)

31 December 2011—
latest figures (£m)

ODA programme contingency

174

102

Government-held programme-wide contingency

354

425

Total

528

527

With the programme three months further on, the ODA’s requirement for contingency to cover assessed risk has reduced to £102 million. The ODA’s Anticipated Final Cost has reduced accordingly. As a result of this, and other movements in PSFP forecasts, the level of Government-held programme-wide contingency has increased to £425 million.

As you know, my Department is focused on managing risks to the PSFP. As I confirmed in the December 2011 hearing, the quantification of risk at that time stood at £318 million. Set against the level of programme-wide contingency at that time of £354 million, this indicated £36 million of headroom in the PSFP above assessed risks.

As we approach the Games and programmes of work reach completion, risks will either be realised, or diminish. We are now nearly three months further on from the hearing and our assessment of risk remaining to the PSFP has reduced. Taken in combination with the increase in programme-wide contingency, we now have over £100 million of headroom in the PSFP above assessed risks.

These developments support my continued confidence that we will deliver the Olympic and Paralympic programme within the £9.3 billion PSFP.

I have enclosed a copy of our Quarterly Report, embargoed until 10.00am on 28 February, which provides further background on the PSFP movements in the quarter.

27 February 2012

Prepared 8th March 2012