How the British gloated back in July 2005, London had stuffed Paris and had won the bid to host the 2012 Olympics. Up-yours you froggy bastards. But how things have changed. For six months the Government has been squirming and twisting trying to avoid giving a firm estimate of the costs. Next week it is likely to reveal the estimate has risen from the original bid document figure of £2.35bn to £9bn. That’s a rise from US$4.61bn to $17.66bn.
Now there might be some confusion over billion, at one time it was a million million, but thank f#uck in this case it’s a thousand million - so why complain its only £9,000,000,000 it could have been £9,000,000,000,000. Whether it’s a thousand million or a million million the sums involved are beyond imagination.
The London Eye is by far London’s most popular attraction with 3.5 million passengers per year, each paying £14.50. It would take 177 years for it to earn £9bn. The estimated population of the United Kingdom is 60.6 million, which means each woman, man, child would have to make a contribution of £148.50 to pay for the 2012 Olympic Games. No wonder the general public is questioning whether the games are worth the investment. And no wonder the Government is reticent to discuss its cost estimates.
The Mayor of London, Ken Livingston is adamant, the inhabitants of London will not finance the cost increases. The Government is equally resolute that it should not pay. So who do the Government want to pay for the Games? The Lottery Fund. They want the Lottery to divert funds it would give to charities to fund the Olympics. You might agree, after all it is a good cause. But wait, lets examine some of the factors that are contributing to the quadrupling of costs.
One of the reasons the original estimate was so wrong was, the Organising Committee were told Value Added Tax (Vat) would not be charged. But it now turns out the Government will be collecting £1bn in Vat. Realise what is happening; as a result of the Government, by requiring the Lottery to pay the excess, will in effect be getting £1bn, (US$1.96bn) that should have been given to charities. So the Government is using the Olympics to impose a stealth tax.
At this stage of a construction project, there should be a fair degree of certainty of the final construction costs. However there are always the unforeseen or things that will not go to plan, so its normal to add a contingency sum, depending upon the degree of uncertainty 20 to 30%. However the Government is insisting on a massive 60% contingency sum. Why? Prudence, given the UK’s appalling record of failing to complete prestige projects on time and within cost. There were a number of embarrassing “Millennium Project” failures: the biggest embarrassment was the Millennium Dome which cost twice the original estimate, and failed to attract visitors. Even the London Eye, which is now a success was plagued by construction problems, resulting in its opening being delayed. The Government are more than conscious of the New Wembley Stadium saga, it should have cost £352 million and been finished early 2006, in fact it will cost £757 million (more than double the original estimate the most expensive stadium ever constructed) and might open this year. So to have a 60% contingency is prudent.
What a f#cking farce, no wonder the French are chuckling.
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