Preparations for the London 2012 Olympic and Paralympic Games - Public Accounts Committee Contents

Conclusions and recommendations

1.  It will be important that the full cost to the public purse of the Games and their legacy is transparent. The £9.3 billion Public Sector Funding Package is close to being used up after taking account of the most likely expenditure, and the Government is also obliged to meet any shortfall in LOCOG's finances. In addition, there have always been costs outside the Funding Package, such as £766 million to purchase the Olympic Park land and at least £826 million for the legacy programme. As a result, the full cost to the public purse of delivering the Games and the legacy projects is already heading for around £11 billion. However the Department has since made clear that it estimates that £100 million of the funding package will remain as headroom. The Department should produce a single auditable account covering Olympics and legacy-related public expenditure and income within six months of the Games ending.

2.  Operational and financial risks have emerged in areas of LOCOG's responsibilities. This is important because the Government is highly dependent on LOCOG to deliver a successful Games and is spending over £800 million through LOCOG. LOCOG now needs more than twice the number of guards it originally estimated for venue security and associated cost estimates have almost doubled in a year. There have also been delays in LOCOG's consultations on changes to London's road network. In addition, LOCOG itself has now almost no contingency remaining in its budget. In view of the critical dependency on LOCOG, and the risks that have emerged, the Department should set out in its reply to us what more it is going to do to satisfy itself that LOCOG's plans are adequate, complete, and are now fully-costed.

3.  The cost of venue security has nearly doubled in the past year, from £282 million to £553 million. Despite significantly increasing the business for its security contractor, there is no evidence of LOCOG securing any price advantage when renegotiating the contract. LOCOG signed a contract for venue security in December 2010, based on what the Home Office described as a "finger in the air estimate", with an estimated cost of £86 million. Since then, both the number of guards required and the expected costs have roughly doubled, and LOCOG has renegotiated the contract, which now has a current estimated cost of £284 million. 7,500 of the 23,700 guards will be military personnel, and 3,300 will be civilian volunteers, but recruiting the remainder, and training them, will present significant challenges in the short time available. We do not accept LOCOG's and the Home Office's assertion that the likely cost and numbers could not have been better estimated much earlier. Against this background:

  • the Home Office should make clear who is accountable to Parliament for the delivery of, and the value for money of public expenditure on, venue security;
  • in response to our report, the Government - as funder of venue security costs - should provide an assessment of the extent to which LOCOG renegotiating the contract, without competition, has contributed to the increased contractual costs; and
  • the Department should carry out a lessons learned exercise on why the original estimates were so wrong.

4.  Despite spending £450 million poor progress has been made on the original target to get 1 million more people participating in sport by March 2013; this expenditure represents poor value for money. Increasing participation in sport was a key part of the rationale for bidding for the Games in the first place. Sport England is funding the National Governing Bodies of sports for this purpose, but after three years of a five-year programme it is a long way short of the original goal, with only 109,000 more people taking part in sporting activities. The Department told us that the Government has chosen not to adopt the target of 1 million new participants, and that it is now aiming to improve sports participation through the School Games and other programmes. The Department was unable to provide us with any sense of the scale of its current ambitions. The Department should set out the level of sports participation it now expects as the Olympic legacy.

5.  It is not clear who will be accountable for the delivery and coordination of the promised Olympic legacy once the Games are over. We were told that responsibility is shared across "many different parts of government", which leaves us concerned about the scope for failure to coordinate activities properly and for a lack of clarity over respective responsibilities. The Department should set out precisely who will be accountable to Parliament for delivering the legacy benefits from the significant public spending on the Games, and how various legacy strands will be coordinated after the Games.

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© Parliamentary copyright 2012
Prepared 9 March 2012