Jowell Confident 2012 Olympics Budget Under Control

Olympics minister Tessa Jowell today insisted the cost of staging the 2012 games is on track despite speculation of further cost overruns.

Last March, the government announced a budget for the event of £9.35bn - more than double the £4bn originally planned when London won the Olympic bid in 2005.

The minister today confirmed the base cost for the games, excluding "general programme contingency", is £6.090bn - in line with the Olympic Delivery Authority budget announced as part of the total government funding package last spring.

The minister's statement said the contingency available, worth £2b, "has been confirmed as sufficient to cover the risks at both project and general program levels".

"This statement shows that, after a thorough assessment of all the potential risks associated with a development of this scale, the budget is consistent with the funding package I outlined in March this year", Jowell said.

"Months of careful scrutiny have confirmed that the Olympic Delivery Authority has the money it needs to deliver the venues and infrastructure for a terrific summer of sport, as well as leaving a long-term legacy for one of the most deprived parts of the country."

The House of Commons public accounts committee last month attacked ministers over planning for the event, saying that foreseeable costs had been "grossly underestimated".

The Olympics Delivery Authority conducted a "predictability study" over the summer to establish the final possible cost of staging the games and concluded that there was a one in five chance this would increase further.

But the government insisted today the 20% probability of a costs overrun was covered by the £2, 247m contingency built into the existing budget.

A DCMs spokeswoman said: "Their assessment suggests an 80% chance of the total £8.3bn being sufficient and not being exceeded. There is a remaining £1bn contingency as cover against this happening."

Today's budget breakdown failed to appease the Conservatives.

Hugh Robertson, Shadow Olympics Minister, said MPs needed monthly cash flows and a breakdown of the contingency to ensure costs do not breach the budget. He said: "Today's statement establishes a welcome initial baseline but falls far short of the full and open budget we had been seeking.

The obvious omission is any mention of the mass participation sports legacy which was the key commitment in the London 2012 bid but, as yet, remains uncosted and unfulfilled."

Liberal Democrat Shadow Minister for the Olympics, Tom Brake, said it was a "relief" that the budget has not breached the benchmark of £9.3bn.

But he warned: "This has to mark the end of handouts from lottery good causes being used to pay for cost overruns. From now on, both the Olympic Delivery Authority and their contractors will have to cut their cloth to keep within this budget."

Just a week ago, London 2012 organizers confirmed they were considering scrapping the construction of the planned 8,000-seat temporary fencing venue in the Olympic Park and relocating the sport to an existing facility.

The change of plan, which would see the fencing events take place outside the Olympic Park at the ExCel Center in Docklands, could save the Olympic Delivery Authority as much as £90m.

However, they insisted that cost was not the major consideration for the scrapping of the fencing arena.