London Olympics Bill
December 6, 2005
Mr. Field: Many of us who are sports lovers in London have faced the difficulty of the half-hearted and perhaps lukewarm support for the Olympic bid. I was delighted to see the scenes on 6 July, but I have expressed concerns over many years about the costs of the Olympic Games. I have always felt that the Mayor of London, Ken Livingstone, is likely to issue a blank cheque. I put that proposition to the Secretary of State a year or two ago, and it was pooh-poohed, but I fear that that will be the reality.
Overall expenditure is supposed to be £2.375 billion. A robust case was made by the hon. Member for Rhondda (Chris Bryant) that there will not necessarily be an overrun. He is right to say that we should not start in a negative frame of mind, but experience shows that there have been significant overruns. Clearly, we hope that there will be great commercial gains, which will ensure that quite a lot of money comes into central coffers, but we should recall that Sydney’s cost overrun increased almost threefold from £1 billion to £2.8 billion. That must be of great concern to us all?Londoners and everyone else in the United Kingdom?because it is in all our interests not to have an overrun.
The big issue is that, in essence, London council tax payers will be subject to a massive multiplier effect. The overall costings of £2.375 billion presume £1.5 billion of lottery funding. I entirely understand what the hon. Member for Perth and North Perthshire (Pete Wishart) said but I do not necessarily share his reluctance to see the cap lifted.
At present, it is suggested that £250 million could come from the London Development Agency and £625 million from the London council tax payer. If the overall cost is not £2.375 billion and is, let us say, £3 billion, that will in essence be equivalent to a 100 per cent. multiplier effect on the London council tax payer. That is how the additional £625 million will be raised.
It is to be hoped that we will not have a Sydney-type situation where there is a massive cost overrun of perhaps £2 billion, because that additional £2 billion would fall on London council tax payers to pay. That would be entirely unacceptable. London council tax payers would effectively be paying for the blank cheque to which I referred in the House only about 18 months ago.
Richard Ottaway : May I assist my hon. Friend with his figures? The back of a fag packet calculation that I have done is that an overrun of £0.5 billion would add £140 to the bill for every band D household.
Mr. Field: I thank my hon. Friend. I hope that he is not smoking those fags either in this place or anywhere else; perhaps he is still entitled to do so. That is the nub of the problem. In essence, in London, the risk is that we will find ourselves with an enormous burden for many years to come. Already concerns have been expressed by hon. Friends and, I think, Labour Members about the costs that are likely to be imposed upon London taxpayers. As it is, effectively, the cost is likely to be £20, £30 or £40 a year over 20 years. It could be considerably worse given the multiplier effect to which I have referred.
I notice that my hon. Friend the Member for Croydon, Central (Mr. Pelling) is no longer in his place but he rightly referred to the fact that the chairman of the London Development Agency, Mary Reilly, has admitted that the costs of preparing the Olympic site could double from the planned £478 million to £1 billion. If that became a cost overrun, rather than being dealt with by the budgets that have been agreed, that would, once again, penalise council tax payers in London fairly soon. Those are great concerns.
Anyone who has been to the Lower Lea valley site will have seen that it is greatly contaminated. It is difficult to estimate the likely cost of cleaning that land and ensuring that it is fit for purpose. Inevitably, there is always some optimism in putting forward a strategy and I accept that a robust financial case was made?it was not just a lot of cascading figures?but, very quickly, however robust the financial case, things can go horribly awry. It looks as though the cost of clearing up the site is likely to be significantly more than the £478 million that was mooted at the outset.
Thank you, Mr. Deputy Speaker, for allowing me to make this brief contribution. My hon. Friend the Member for Faversham and Mid-Kent has made a sensible suggestion and I hope that the House will seriously consider it. I am particularly glad that it has cross-party support; the hon. Member for Bath (Mr. Foster) supports it. It is wrong that London taxpayers should suffer from the potentially ruinous multiplier effect to which I have referred. There may be some merit in the comment of the hon. Member for Rhondda (Chris Bryant) that the £625 million should not be the cap if there were to be a massive cost overrun. I am sure that London taxpayers would be happy to pay their share, but the reality is that, with a cost overrun, they will pay 100 per cent. of every pound in excess. That would not be the right way forward.