The £160M Black Hole

In June I noted that:

"a £100M black hole has appeared, as if by magic, in the 2012 Olympics accounts of the London Development Agency (LDA) - the budget for which is not included in the £12BN Olympics budget".

Unfortunately, it seems that the size of this black hole has increased by over 50%.

The Times has obtained the unpublished report by KPMG into the black hole, which states that the black hole has expanded to £160M.

Unsurprisingly the report, according to The Times, "hints at a cover-up by officials who waited more than a year before alerting senior managers to cost overruns".

A £1.4BN compensation deal was agreed with businesses who were forcibly removed from the Olympics site. However, approximately 70 firms have yet to receive their money.

Seemingly the LDA has not set aside enough to settle the outstanding claims.

KPMG noted that staff in the Olympic Legacy Directorate, the department in charge of the scheme, should have been aware of spiralling costs as early as April 2008.

Neither the person overseeing the budget nor his finance manager were qualified accountants. A remarkably inept arrangement, even by the standards of the Labour government and the London Labour administration (under Ken Livingstone) at the time.

The report states:

"The basic requirements for managing and accounting for a budget were not met. None of the senior officers of the LDA to whom we spoke accepted responsibility for checking the accuracy of the accounting information."

It would seem that those "in charge" of the Olympic finances couldn't "run a piss up in brewery", and then did their best to try to hide their failings. Hardly surprising that the budget for this Labour "ego fest" has ballooned from £3BN to £12BN (including £2BN running costs).

BTW, isn't funny how those "in charge" conveniently forget to add on the £2BN running costs whenever they talk about the costs?

For why?

They are trying to keep the headline figure reported in the media below the psychological break point of £10BN.

Unfortunately for the politicians, they will learn that the trouble with black holes is that they just keep growing.

Olympic Medals won during the Beijing 2008 Olympics

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Livingstone Knew Olympics Budget Was Wrong

Ken Livingstone, mayor of London, admitted on Radio Five Live that he knew that the original budget for the 2012 Olympics was an underestimate and that it was likely to rise significantly.

Quote:

"I was fairly certain that it would end up costing us more."

That's alright then!

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Ken Ensnared Ministers

Ken Livingstone, Mayor of London, admitted yesterday that he ensnared ministers to host the London 2012 Games.

He also admitted that the didn't give a stuff about the three weeks of sport, but that his plan was to ensure that the East End of London was regenerated.

Quote:

"I didn't bid for the Olympics because I wanted three weeks of sport.

I bid for the Olympics because it's the only way to get the billions of pounds out of the government to develop the East End.

It's exactly how I played it to ensnare the government to put money into an area it has neglected for 30 years."

I assume he won't be attending the opening ceremony then?

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www.olympicsdiary.com brought to you by www.kenfrost.com "The Living Brand"

The True Cost of The Games

I have stated many times on this site that the true cost of London's Olympics 2012 will be around £20BN; eg in this article published September 2007.

It would seem that, according to The Times, I am right.

Budgets for the Olympics buildings bear little resemblance to reality as costs skyrocket, eg the bill for the aquatics centre is already four times higher than the original bid price.

Jack Lemley, the former chairman of the ODA, has warned that the cost of the Olympics will come to £20BN and that Ken Livingstone and Tessa Jowell had been understating the true costs.

Quote:

"We will never be able to go really public with the full budget.

That was always suppressed and the mayor didn't want any significant growth in these budgets because it would create a bigger tax."

Needless to say, the Department for Culture, Media and Sport deny this.

Time will prove Lemley and myself right.

London Under Scrutiny

The London Olympics are under scrutiny this week from the International Olympic Committee (IOC).

Senior IOC officials, led by executive director Gilbert Felli, will perform a scheduled "project review" into the preparations for the 2012 Games. The London organising committee (Locog) will provide a series of technical updates on progress.

Locog will be keen to try to pour oil on troubled waters, re the negative headlines that the London Games have been generating.

The media have been awash with negative stories such as; Dwain Chambers' selection for the British team and his plans to challenge his life ban from the Olympics, the attempt by the British Olympic Association to gag athletes travelling to Beijing and Ken Livingstone's ham fisted handling of the invitation (now withdrawn) to Linford Christie to carry the Olympic flame.

This negative publicity has revealed a shocking lack of coordination among members of the British Olympic movement, which does not bode well for the practicalities of organising the London Games.

Ken Cocks It Up

It seems that the Mayor of London, Ken Livingstone, has made a rare admission of a mistake.

Well, rather, he has blamed an underling for a mistake.

The cock up relates to an invitation issued to Linford Christie (banned for steroid use) to be one of the Olympic torchbearers at the London 2012 Olympics. The invitation was in writing, and signed by Ken.

However, once it became public knowledge that Christie had been invited, there was an almighty storm of protest about how having a cheat acting as a protagonist in the Games would send the wrong message.

Initially the Greater London Authority (GLA) tried the old trick of denying the story, saying that the reports were "inaccurate".

However, the truth finally overcame the spin and Ken was keen to extricate himself from the mess. He revoked the invitation blaming an underling for the error.

Livingstone To Open 2012 Olympics

Ken Livingstone, mayor of London, intends to preside over the opening of the 2012 Olympics.

This promise requires quite a leap of faith, as he is currently standing for re-election and even if he wins, his term of office will expire in Spring 2012. In order to open the August 2012 games, he would need to win this year's election and the one in 2012.

He also claims that the Olympics will be ready well ahead of time, and are on course to come in at least £1BN below the £9.3BN budget.

Well that's alright then!

Don't forget though, that this is man who promised not to raise the congestion charge at the last election; as soon as he won, he promptly raised the congestion charge.

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".

Too Many Cooks

The Telegraph has a one page summary outlining the structure of the organisation behind the London 2012 Olympics.

Far too many different bodies and egos for this to work well, in my view.

Livingstone Pans Budget

Mayor of London, Ken Livingstone, has panned the Olympics 2012 budget.

Speaking on BBC Sport Mayor Livingstone said that it would be a "defeat" if the Olympics in 2012 ended up costing more than £7BN.

The current budget now stands at £12BN including operating copsts, therefore he may have his hands full trying to reign that in.

The Mayor stated that the budget was in fact £5.5BN, thus muddying the waters.

Quote:

"I'll consider it a personal defeat if we do not knock several billion off.

We've now got a budget set for £5.5bn. Inevitably, things will crop up and it will almost end up at £6bn. I'd be quite proud if we kept it at that.

If it starts going over £7bn that will be a defeat.

Prime Minister Gordon Brown has built in this huge contingency for just about everything that could go wrong.

Our job is to keep that to the minimum of things that could go wrong."

Mayor Livingstone then went on to say that "exploded" when he saw the 2012 Olympics logo.

"I'm the mayor of a city and the only thing any mayor wants in the logo is the name of the city enormous and predominant.

I didn't get that so I was a bit grumpy about that.

It was hidden from me up until about the last two weeks and it was too late to do anything about it.

I exploded pretty much as dramatically as the rest of the country when they saw it.

But it's the only thing that I haven't got my way on in the last two years so I can't complain."

Well said, the logo is crap as indeed is the budget.

Jowell To Explain Herself

Tessa Jowell, the Olympics Minister, will explain today how the government will repay the £675M that it has taken from the national lottery to cover the ever spiralling costs of the London 2012 Olympics.

A memorandum of understanding between Jowell and Ken Livingstone, the mayor of London, will explain how the money is to be clawed back from land sales from the Olympic Park at Stratford.

Under the terms of the memorandum, which will be deposited in the library of the House of Commons, Jowell and Livingstone explain that the £675m will start to be repaid after 2012; once the London Development Agency has recovered the £650M it has spent on acquiring the Olympic Park site.

There is no mention about paying interest on the money.

A week is a long time in politics, 5 years is an eternity. It is therefore highly likely that the government will renege on this agreement before then.

The national lottery will never see that money again.

London Logo Farce - The Farce Continues

As if things could not get much worse for the hapless London 2102 Olympics Organisers and the designers of the much derided "Lisa Simpson Performs Oral Sex" Olympic Logo, they do get worse.

London Mayor, Ken Livingstone, weighed in yesterday saying that the designers have failed and should not be paid the £400K for their epileptic inducing design.

Quote:

"Who would go to a firm like that again to ask them to do that work? I mean, this is a pretty basic thing".

Livingstone is known to hate the design.

On top of that an online petition to withdraw the logo has been started.

There are also reports that the International Olympic Committee are unhappy with the size of the Olympic rings in the logo, and may ask for a rework.

Maybe all of this shambles is down to one little known fact, Sebastian Coe (head of the London Organising Committee) is colour blind?

However, as this shambles progresses it is symbolic of the appalling organisation and lack of control over the budget of the London 2012 fiasco.

This story will run and run.