3 Engaging the private sector
22. In 2004, Partnerships UK advised the Department
that there was potential to secure £1,300 million of private
financing for the Games, but that the information to support a
robust analysis of the scope for private sector funding was not
yet available. In particular, there was no legacy plan, which
Partnerships UK considered would be the key to determining a more
accurate assessment of potential private sector funding opportunities.
After considering this advice the Department reached a more conservative
estimate of £738 million for private sector funding (nearly
one-fifth of the total funding then required). This was the estimate
in place at the time of the bid to host the Games.[23]
23. In June 2005, the Department received further
advice from Partnerships UK that there was little prospect of
securing significant private sector funding to deliver the Olympic
Park due to the tight timetable and a lack of clearly identifiable
revenue streams. At the time of our hearing there were
still no detailed legacy plans. In the March 2007 budget, the
Department reduced the estimated private sector funding to £165
million, which comprised contributions to the media and broadcast
facilities and to utilities on the Olympic Park.[24]
24. The Department considered the overall level of
private sector contribution towards the Games was significantly
higher when sponsorship contributions to the LOCOG budget and
the Olympic Village were taken into account. LOCOG's budget, however,
has always been separate from that for the venues and infrastructure
(see paragraphs 2 and 14 above).[25]
The Olympic Delivery Authority confirmed that it still intended
that the majority of the Village would be paid for by the private
sector, but with a public sector contribution of about £175
million to the cost , which was reflected in the March
2007 budget. It expected that following conversion of the Olympic
Village to housing units, their sale after the Games would yield
substantial profits which would be shared with the public sector
funders. The contract for the Village was due to be signed shortly.[26]
25. Private sector construction firms will build
the Olympic venues and infrastructure, and their response to the
Olympic Delivery Authority's invitations to bid will have an important
bearing on the cost of the Games. The Authority, however, was
operating in a very competitive construction market. Whilst there
had been competition for infrastructure works, it has experienced
difficulties in achieving competition for the main venues, and
only one bidder had emerged for the Main Stadium.[27]
23 Qq 12, 61-63; C&AG's Report, para 30-31; Figure
7 Back
24
Q 86; C&AG's Report, paras 31, 51; Figure 7 Back
25
Qq 136-137 Back
26
Qq 12, 33, 82, 87; C&AG's Report, para 53 Back
27
Qq 94-96, 119; C&AG's Report, para 52 Back
|
