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£6.65bn


Rob.

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The budget for the 2012 London Olympics has risen to £9.35bn, Culture Secretary Tessa Jowell has told MPs.

Construction costs were now estimated at £5.3bn, she said - which compares with an initial £2.4bn budget. There is also now a £2.7bn "contingency fund".

The rest of the budget increase comes from extra security and tax costs. To help pay for the games £675m more will be taken from the National Lottery.

£3.1bn: Site construction

£1.7bn: Regeneration and infrastructure

£2.7bn: Programme contingency

£840m: ODA tax bill

£600m: Extra security

£390m: Non-ODA provision

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Well, a hell of a lot more than I was expecting when I heard the news that it'd be announced today. But so long as the long term benifits are as large as is being predicted, I'm still o.k. with it all. I hope this doesn't lead to a baacklash agains the project though, because although it looks like there's been either a cock-up or lies about the cost, I still think it's worthwhile overall.

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No rise for London council tax payers. They said on BBC London News the extra £300m from London is likely to come from a TfL contingency pot that normally covers cost overruns for London's transport infrastructure. Quite what that means for any transport improvements in London that go over budget I don't know!

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Remember though:

9.35 billion is worst case scenario with the entire 2.7 billion contingency fund being eaten up. They're hoping it will be 6.65 billion altogether. Of course, that's not how it'll be reported over the next few days; certainly not by the less reputable papers anyway.

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I hope this budget is going to prove more reliable than the original bid estimate!

I'm not sure I would trust Jowell with planning my budget.I think her estranged husband and his dodgy business dealings did ring a few alarm bells with me at the time! I'd like to see greater financial accountability from the government and London 2012 organizers regarding the finances and I think someone with more financial know-ho needs to be appointed to oversee this and make sure that we are not going to be faced with a steady stream of ever rising costs between now and 2012!

That said,there is always the potential long-term benefit to British sport and the re-generation of East London to justify the money now being invested into staging the Olympic Games!

Instead of constantly moaning about the cost of the Olympics,the media and the public should be far more concerned and angry about the £20 billion that Parliament has just agreed to fritter away to replace the bloody useless Trident missile system just so that pompous politicians like Blair and Cameron can strut about the world stage and pretend we are still a great power!!

20 BILLION,that's more than 3 times what has just been projected to hold the Olympics and rebuild a run down area of the nation's capital!! And what benefits and legacy can we expect for that? Zilch!!! :angry:

Any country than can casually allot such vast sums of money for a bunch of missiles that promise no benefit to any of us whatsoever,can easily afford to stage a project that promises to provide at least some of us with a real long term, lasting legacy!

Let's get our priorities right!! <_<

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I would have been disappointed if it had been less than that.

You're in a minority I think. Virtually everyoe on the BBC's 'Have Your Say' on the issue is anti-London 2012 at this moment.

Of course, this was bound to happen when the costs were announced. Better to get the bitter pill out of the way first and then show everyone what good it can do later, rather than the other way around. Hopefully after the inevitalbe outrage today and over the next few days, the commotion will die down and everything can get back on track.

I'm glad the final budget and contingecny was announced earlier rather than later even if it is more than I expected (an awful lot more if the contingency is needed).

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we are forgetting that london at the moment has woeful facilities for sports in general (football, cricket and rugby aside). the games were always going to cost a fortune because of this.

london won the right to host the olympics against some of the strongest competition ever - that in itself is celebration enough. these games will truely change the face of OUR amazing city and for the better.

today - tommorrow and for the next 5 years we are going to have to put up with negative spin from our beloved national press and also from opposition politicians as they use the event as a ploitical football.

COME OPENING DAY - ALL WILL BE FORGOTTEN AS ALL THE NAYSAYERS STAND AROUND CONGRATULATING EACH OTHER ON A JOB WELL DONE!

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This whole thing makes me laugh.

The original estimate was supposed to be a conservative one - and it was supposed to include a contingency fund. That the CURRENT budget is so different serves to only to underline how wholly flawed the entire bid process is - and should go towards the IOC being held as partially responsible.

Part of the big problem is the use of the Lottery fund to pay for this. The Olympic Games was already causing a central drain on Lottery resources and this is now going to increase further. Not that it will stop people buying tickets - any chance to win is better than none right? It might stop me though!

I'm very interested to see how

She said the Lottery would benefit from profit sharing based on rises in land values in the Olympic park area.

will work as well. Is this Lottery investing in the land or contributing to the Olympics? If there is money to be made who does it need bloody Lottery money anyway??

I think we should be hauling Seb Coe, Tessa Jowell and Jacque Rogge in front of a Public Parliamentary Select Committee and have them held responsible for this Budget mess!

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I think Mihir Bose makes a very good point, as ever, when he argues in his BBC column that this is the cost of certain members of the Cabinet being sceptical about the bid in the first place.

But, yet again, we're talking about the "costs of staging the Olympics", when it actually appears to be wider regeneration that is costing the money.

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This whole thing makes me laugh.

The original estimate was supposed to be a conservative one - and it was supposed to include a contingency fund. That the CURRENT budget is so different serves to only to underline how wholly flawed the entire bid process is - and should go towards the IOC being held as partially responsible.

Excuse me but why should the IOC being held responsible?

The IOC didn't beg London to bid. The bid was a joint decision between London, the BOA and the British Government. London bid budget was prepared by London bid team. I don't know whether the cost was underestimated on purpose or not but clearly the blame - should there be a blame (after all, London 2012 will leave a great legacy that I think is worth the money) - lies within London 2012 team.

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The IOC should be held partially responsible as they are the guardians of the Games. They own the bid process. Their members complete evaluation reports. They have a bid competition and their members decide who has the 'honour' of hosting.

We have seen in most all of the last Games that the costs submitted in the bid have no relationship to the final costs of hosting. As the guardians of the Games and the owners of the bid process the IOC have a responsibility to ensure that bids are fair and accurate and are not misleading. This includes budget estimates. I'm sure that any of the bids that were presented during the 2012 bid process would have been grossly underestimated - just as I'm sure that if the London bid had come in at 9.5 billion pounds it would not have won. The IOC need to take responsibility for this and ensure that future bids are more accurate.

On another point - the legacy of regeneration was always part of the bid, a good part of the benefit of the games and so should always have been factored in as part of the cost.

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Here's an interesting article by Evan Davis,the BBC Economics Editor which helps put all the negative hype over the Olympics budget into some perspective:

Real Cost of 2012?

by Evan Davis

Just after London was awarded the 2012 Games, there was a nice letter to the Today programme asking if we could allot a couple of hours a week to negative whingeing about the Olympics, so that we could at least enjoy the honour of having the games the rest of the time.

I find myself agreeing with that sentiment today, as I listen to the downbeat media commentary around today.

The truth about the budget of the London Games, is that it's nothing like as bad as it looks.

It is simply not correct to say the cost of the games has gone up "yet again".

It is not correct to say the costs of the games are "out of control".

It is not correct to say the cost of the games has quadrupled or tripled.

It is even incorrect to say the cost of £9.3bn is the cost of the Olympics at all.

So what is correct?

(I apologise if the next few paragraphs have more figures than you really want, but I think it is important to make clear where the costs were, and where they are.)

The costs everyone talks about are those for building the facilities and re-developing the games site. This is said to have quadrupled from 2.4 billion to 9.3 billion.

However, the 2.4 billion figure is wrong, as is the 9.3 billion figure.

Always added to that original 2.4 billion was an extra billion pounds of spending on local regeneration. So the 2.4 should be counted as 3.4.

And that original budget of 3.4 billion has now risen to 7.5 billion, not 9.3.

The 9.3 includes stuff - like security, VAT and some extra bits - that were always accounted for separately from the 3.4 billion.

So in other words, the original 3.4 billion has in fact risen by 120%. Or, a good journalistic way of saying a cost has risen by 120% would be to say it has "more than doubled".

That might sound like costs are "out of control", but when you take into account that 2.7 billion of that 7.5 billion is a contingency for unforeseen costs, you realise that we can't say costs are out of control yet. We don't know whether they'll go out of control, we are simply making sure we can cope if they do.

It is true that the full cost of the construction and security and some other aspects of the games is £9.3 bn, but that includes £840m of VAT payments which goes back to the government, and hence should be disregarded.

However, the real problem with the casual use of phrases like "the cost of the Olympics" is that it overlooks an important fact: these big numbers are not the cost of the Olympics at all, but cost of constructing of a town in a desolate East London site of 2.5 square kilometres; a town which will be temporarily used by the 2012 games.

To disregard the value of the site at the end of the two weeks sports festival is to disregard the whole point of having the games in London at all. If I buy a £100,000 house to host a party, I'd be a bit silly to say the party cost me a £100,000. Because I've got a house at the end of it.

The site will not be owned by the taxpayer. Developers will sell portions of the housing and the other facilities (the developers are spending several billion of their own on top of the 7.5 billion) but there should be some value to the taxpayer at the end of the process.

As it happens, the budget for running the games itself - the two week sports festival - is £2bn. That has not changed and is not included in the 9.3 billion. No-one really talks about this two billion as it will be financed by private sponsorship.

I am sorry if all this accounting is a little tedious. I'm sure we will have plenty to complain about as the games progress to 2012. it would be surprising if we didn't, given that it's such a large project.

(And there are already aspects to moan about - the new security budget of £600m in the 9.3 billion for example has risen from the original bid, and yet security was hardly an unforeseen need back in 2005.)

But let's not exaggerate how bad it is.

http://www.bbc.co.uk/blogs/thereporters/evandavis/

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If I buy a £100,000 house to host a party, I'd be a bit silly to say the party cost me a £100,000. Because I've got a house at the end of it.

Brilliant, I'm alsmost tempted to paste that in my signature so it appears in all my posts; but I'd probably only be preaching to the converted on here (and I quite like my clubs' badges anyway).

This is exactly the point the whingers on the BBC 'Have your Say' are missing. It's an investment and perhaps it's sad that it took the Olympics for the investment in East London to happen, but surely it's better than leaving it in the mess it's in now.

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Brilliant, I'm alsmost tempted to paste that in my signature so it appears in all my posts; but I'd probably only be preaching to the converted on here (and I quite like my clubs' badges anyway).

This is exactly the point the whingers on the BBC 'Have your Say' are missing. It's an investment and perhaps it's sad that it took the Olympics for the investment in East London to happen, but surely it's better than leaving it in the mess it's in now.

rob - couldn't agree more - evan davis has summed it all up - just doesn't sell newspapers that's all! much better to moan and gripe about it all - after all that's what us brits love doing the most!

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If you are going to have to buy the house to host the party then you should have that forecast in to your party plans.

If you expect to pay £100,000 for the house but it then costs £150,000 then you have to find another £50,000. If you then don’t include decorating the house and laying the lawn then you need to provide further cost to host your party. If you also forgot that you need to install all your services to the house then this is more cost. If you hadn’t even got a proper plan for the house or even considered that you might have to pay tax or take on a project manager to oversee the construction or party plan then you shouldn’t be surprised if people say that your planning was not good enough.

Its true that during the party everyone might have a good time with all your visitors not realising all the effort that was required and not seeing that behind the scenes you weren’t able to fund work elsewhere.

Its also true that you end up with the house at the end – but if you don’t live there and you struggle to find a tenant to rent it then its value is questionable.

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Dear Lizbeth,

Dear Tony,

Dear Ken,

as I read on many newspapers there have been many problems with London2012 budget (in particular it has been multiplied 3 times the amount you thought you would have spent), I do have the need to offer you one of our economist, in particular I suggest Tommaso (whose photo I add at the end). Please accept my offer in name of our great friendship. Hugs,

Romano

padoa1.jpg

:lol:

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Brilliant, I'm alsmost tempted to paste that in my signature so it appears in all my posts; but I'd probably only be preaching to the converted on here (and I quite like my clubs' badges anyway).

This is exactly the point the whingers on the BBC 'Have your Say' are missing. It's an investment and perhaps it's sad that it took the Olympics for the investment in East London to happen, but surely it's better than leaving it in the mess it's in now.

Of course it is, but whinging is our national sport.

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Of course it is, but whinging is our national sport.

BLOODY WELL STOP DOING IT!!!!!!

I've seen all this before when Sydney won in 1993. Unlike Homebush, the East End redevelopment will be lived in, AND GO ON FOREVER! London is a Mega City, it's one of the top four respected and recognisable in the world. Since when were budget blowouts NOT part of the hosting of the Olympics? - Gosh would that be London 1948? The city that ressurected the event because nobody else could?

This time London is hosting on it's own accord, let the city get on with it, there are ONLY four years left to go when the IOC does it's final inspection.

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  • 3 months later...

The Times just put out this article about "possible Olympic costs going 'out of control.'"

Link: The Times Online: Olympic Costs Could Spiral Out Of Control, Says Spending Watchdog

tol-logo.gif

Number Games

3: London will become the first city to host the modern Olympic Games three times, having done so in 1908 and 1948

26: Sports featured in the programme

£9.3bn: The total estimated cost for the Games and the regeneration of the East London area

£400,000: The cost of the London logo

8 million: Estimated number of tickets available for the Games

Source: London Assembly

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Tess Jowell, the Olympics minister, responds to that Times article in this Guardian Unlimited article.

Link: Guardian Unlimited: Jowell Vows To Keep Iron Grip On Olympic Spending

PAkirstywigglesworthJow1.jpg

Tessa Jowell: 'I will not hesitate to intervene to keep costs down.' Photograph: Kirsty Wigglesworth/PA.

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