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| MPs press for Olympic costs cap | MPs press for Olympic costs cap |
| (20 minutes later) | |
| MPs are calling for a cap on the amount taxpayers will pay towards the 2012 London Olympics, amid spiralling costs. | MPs are calling for a cap on the amount taxpayers will pay towards the 2012 London Olympics, amid spiralling costs. |
| They say they are "disturbed" that the projected cost of hosting the Games has risen £900m since the bid was made. | They say they are "disturbed" that the projected cost of hosting the Games has risen £900m since the bid was made. |
| In a report, the Culture, Media and Sport Committee said it was surprised £400m extra was to pay a "delivery partner to exercise cost control". | |
| The Department of Culture, Media and Sport said much of the rising cost was to ensure a good legacy for London. | |
| The original bid had not included the costs of VAT, a "programme contingency" or inflation, the committee reported. | |
| Costs were still rising and any extra should be met by the Treasury, not Londoners or the National Lottery, the MPs said. | Costs were still rising and any extra should be met by the Treasury, not Londoners or the National Lottery, the MPs said. |
| They also voiced concern that a recent ban on advertising some food on television could mean there is a big dip in money coming in from major sponsors. | They also voiced concern that a recent ban on advertising some food on television could mean there is a big dip in money coming in from major sponsors. |
| "We can only conclude that cost-control procedures were not fully thought through at the time the bid was submitted," the report said. | "We can only conclude that cost-control procedures were not fully thought through at the time the bid was submitted," the report said. |
| "The committee is concerned about the distance between the figures submitted in the bid and the true costs, which will not become evident until after the Games." | "The committee is concerned about the distance between the figures submitted in the bid and the true costs, which will not become evident until after the Games." |
| 'Unacceptable burden' | 'Unacceptable burden' |
| In November, Culture Secretary Tessa Jowell said the cost of the Olympic Park had risen from £2.4bn to £3.3bn. | In November, Culture Secretary Tessa Jowell said the cost of the Olympic Park had risen from £2.4bn to £3.3bn. |
| She said it was due to inflation and the decision to spend £400m on "delivery partner" CLM, which will aim to make sure the Games come in on budget and on time. | She said it was due to inflation and the decision to spend £400m on "delivery partner" CLM, which will aim to make sure the Games come in on budget and on time. |
| But the report by the CMS committee said that the government's "apparent intention" that the extra money must be met from the Lottery and London's council tax payers was "placing an unacceptable burden on both". | But the report by the CMS committee said that the government's "apparent intention" that the extra money must be met from the Lottery and London's council tax payers was "placing an unacceptable burden on both". |
| Doubts about final costs must be resolved if public confidence in the project is to be maintained John WhittingdaleCommittee chairman class="" href="/1/hi/uk/6289357.stm">Games 'greenest ever' | |
| Instead the Treasury should provide more funding, by foregoing the tax payable on the proceeds of the Olympics, while the London Development Agency should pay more from profits made on land sales, it said. | Instead the Treasury should provide more funding, by foregoing the tax payable on the proceeds of the Olympics, while the London Development Agency should pay more from profits made on land sales, it said. |
| The report pointed out that Ms Jowell said in October that rigorous attention was being paid to costs, but by November 2006 the extra £900m had been identified. | The report pointed out that Ms Jowell said in October that rigorous attention was being paid to costs, but by November 2006 the extra £900m had been identified. |
| "The committee is disturbed that such statements have been disproved in such a relatively short space of time," said the report. | "The committee is disturbed that such statements have been disproved in such a relatively short space of time," said the report. |
| The original £1.5bn budget for staging the Games had not taken inflation into account, but this had not been "clearly stated" in the bid. | The original £1.5bn budget for staging the Games had not taken inflation into account, but this had not been "clearly stated" in the bid. |
| MPs said the rationale for a "programme contingency", not mentioned in the bid and which could reach £2bn, had to be "thoroughly explained" amid fears it might encourage overspending. | MPs said the rationale for a "programme contingency", not mentioned in the bid and which could reach £2bn, had to be "thoroughly explained" amid fears it might encourage overspending. |
| VAT liability | VAT liability |
| VAT was not included in the original bid, apparently on the assumption that the Olympic Delivery Authority would be exempt, but has since been estimated at £250m or more. | VAT was not included in the original bid, apparently on the assumption that the Olympic Delivery Authority would be exempt, but has since been estimated at £250m or more. |
| MPs welcomed assurances that the taxpayer would not be liable but criticised the Treasury for not establishing the position from the start. | MPs welcomed assurances that the taxpayer would not be liable but criticised the Treasury for not establishing the position from the start. |
| The report questioned whether other factors - such as a potential new Lottery operator - may disrupt finances. | The report questioned whether other factors - such as a potential new Lottery operator - may disrupt finances. |
| We are applying rigorous financial controls to ensure that every pound we spend is well-spent Department for Culture, Media and Sport spokesman | We are applying rigorous financial controls to ensure that every pound we spend is well-spent Department for Culture, Media and Sport spokesman |
| And it pointed out that, as only 50% of the Olympic Park, a site "criss-crossed" by railways, sewers, power lines and roads, had been investigated, there was still uncertainty about the scale of its contamination. | And it pointed out that, as only 50% of the Olympic Park, a site "criss-crossed" by railways, sewers, power lines and roads, had been investigated, there was still uncertainty about the scale of its contamination. |
| The committee's Conservative chairman, John Whittingdale, said it applauded the 2012 delivery team for its work and planning. | The committee's Conservative chairman, John Whittingdale, said it applauded the 2012 delivery team for its work and planning. |
| But he added: "Doubts about final costs must be resolved if public confidence in the project is to be maintained." | But he added: "Doubts about final costs must be resolved if public confidence in the project is to be maintained." |
| A spokesman for the Department for Culture, Media and Sport said: "We are applying rigorous financial controls to ensure that every pound we spend is well-spent. | A spokesman for the Department for Culture, Media and Sport said: "We are applying rigorous financial controls to ensure that every pound we spend is well-spent. |
| "Some costs have risen, but that is principally because of the importance of ensuring a long-term legacy from 2012." | "Some costs have risen, but that is principally because of the importance of ensuring a long-term legacy from 2012." |