The £1BN Black Hole

Well, well, well after months of warning on this site that the London Olympics budget was built of sand guess what?

It seems that I was right.

A £1BN black hole has been unearthed in the budget for the London 2012 Olympics. It appears that property projections, that were backed by ministers, have turned out to be ludicrous.

A report commissioned for the London Development Agency (LDA) notes that the Government's estimates for the amount it will recoup in land sales after the Games are unrealistic.

What a surprise!

Given that the budget has skyrocketed from under £3BN to £12BN (including running costs of £2BN), and is likely to rise ever further, why is anyone remotely surprised that ministers are incapable of presenting reliable figures.

Needless to say, someone will end up having to foot the bill for this shortfall. That will of course be the hapless taxpayers, and the projects that they think that some of their tax money is funding such as; heritage, sports and arts.

Ken Livingstone, the Mayor of London, and the soon to be expunged Tessa Jowell the Olympics Minister, signed a memorandum of understanding last year stating that at least £1.8BN would be raised in land sales after the Games. This figure was based on a staggering, and absurd, 16% per annum estimate in the rise of land values over the next 15 to 20 years.

The latest figure shows a more modest £800M figure expected to be raised, a mere £1BN short of Jowell's estimate.

Mark Dorman, the director of development consultancy for Savills, told the Times that any idea of raising 16 per cent per annum "is complete madness to me".

Jowell, who is living in the past, is sticking to her guns and is still relying on the fact that land rose in value by 20% per annum over the last 20 years:

"[That] gives me confidence that enough will be raised from the land sales both to build the new houses and parts of the community in the Lower Lea Valley, but also to repay the National Lottery."

Well Minister, as the old stock market warning says "past performance is no guide to future performance".

Politicians, least of all "Nu Labour" politicians, should not be left in charge of large scale projects and budgets such as the Olympics; they are simply not qualified, capable or competent enough to handle them.

The Olympics, a living memorial to the folly that is "New Labour".