Olympics and Paralympics (Funding)

John Bercow Excerpts

Monday 27th February 2012 Commons Chamber

[Mark Field (Cities of London and Westminster) (Con)]

One of the concerns, if not of many Members of the House, then of many people outside it, is that very little attention seems to have been paid at the beginning to how much this would all cost. Various figures were bandied around at that juncture, and £2.5 billion was suggested as the cost of the overall package. I accept that it is good that we have the games and that there is unity across the House about that, but it is equally important that there is an open debate on funding and other related issues, particularly the question of whether there will be the legacy we all hope for in that part of east London, which we will not have a definite answer to for at least another decade. One of the concerns at the outset—of course, that was a very different economic time—was that there was very little scrutiny of the whole funding issue.

[Mr Speaker]

Order. Notwithstanding the fact that the hon. Gentleman speaks for two cities, as opposed to a smaller area, a degree of economy when intervening from now on would be appreciated.

[Mr Whittingdale]

I am grateful to my hon. Friend. I do not want to disagree with him, but although he may well be right that perhaps insufficient attention was paid to funding outside in the wider world, I can assure him that the Select Committee paid close attention to it. I will deal with that in more detail, as it is the prime focus of the debate.

--- Later in debate ---

[Tessa Jowell]

May I just deal with that point, which is tediously technical? When we compiled the budget, the status of the delivery organisation had not been settled. The definition of status could have placed the delivery authority on one side or the other of liability for VAT. If it had been, in effect, a local authority, it would not have been liable for VAT. It was judged not to be a proxy body for a local authority and was therefore liable for VAT. That was not clear until, having won the bid, we were able to nail down the role and function of the delivery authority.

[Mr Speaker]

We are now clear.

[Mr Whittingdale]

I recall having that debate with the right hon. Lady in the Select Committee at the time.

The other element that increased the budget dramatically was the inclusion of the programme contingency. The Select Committee spent some time examining that, because we discovered that the £2.7 billion programme contingency came on top of the contingencies that were built into each of the individual projects. That resulted in an overall contingency within the £9.3 billion budget of £3.5 billion. We observed that that was extraordinarily large. As it happens, it will almost all be spent.

To some extent, the right hon. Member for Dulwich and West Norwood was correct in setting, right at the start, the budget with a substantial contingency, which we all hoped would not be spent, rather than having to come back and increase the budget each time. There is no doubt that there would have been far more adverse publicity if the budget had gone up every single year. The then Government decided—I do not criticise them for this—to set a substantial budget with a large contingency right at the beginning, with the expectation, I imagine, that there was no possibility that it could be overrun. As it is, it will be pretty close, but I hope that the budget will be met.