(P135) Whitehall warned over London bid

Mistakes made over Wembley's huge costs must not be repeated

Olympic Games - David Hencke, Westminster Correspondent
The Guardian, 10 February 2004.

The government must learn from the huge cost overruns and bad procurement practices over the Millennium Dome and the new Wembley Stadium it is not to repeat mistakes in its support for London's bid for the Olympic Games in 2012, a powerful committee of MPs will reveal today.

The two projects each cost more than double the original estimates because Whitehall failed to appreciate the real costs required to make them happen. The Millennium Dome went from £300m to nearly £700m and Wembley Stadium from £320m to £757m. The stadium was due to open two years ago, it is now expected to be completed in 2006.

How the new Wembley Stadium will look when it it completed
four years late and massively over budget

Whitehall is attacked by the Commons public accounts committee for failing to follow best procurement practice over Wembley Stadium and and singles out Sport England for blame for initially handing over £120m of national lottery money to the Football Association without requiring any guarantees or asking it to put up any cash. "Had the project collapsed, it is doubtful that the lottery money would have been recovered," says the report.

Sport England, according to MPs, then weakened its position further by closing the existing stadium, cutting its value from £120m to £30m, on the basis of a financing deal that then collapsed.

Two years later a new deal was signed, with the Football Association and public authorities sharing more than 40% of the cost and Westdeutsche Landesbank finding £426m, or more than 56% of the project. Should this deal go wrong, the bank will have priority over the taxpayer in any asset sale. The FA will also keep all the profits from the deal, even though the taxpayer is providing a fifth of the cash, but must meet any further overruns.

The MPs state that, if costs go up, the most likely looser will be the public, with big firms likely to demand more premium seats for corporate hospitality as their price for injecting more cash or apply more pressure to allow the stadium to be used by a Premier League club.

The MPs demand that Sport England and the Department of Culture, Media and Sport receive regular and comprehensive progress reports to be ready for new cost overruns.

Sport England and the Ministry are attacked for not making any comparisons with major European projects such as Stade de France in Paris, and for agreeing to an athletics track that may never be used.

This was "little more than a device to keep in the project the £20m that the Football Association would otherwise had to repay," says the report. There are no plans to stage athletic events at Wembley Stadium if London is successful in bringing the Olympics to the capital in 2012.

Edward Leigh, the Conservative chairman of the committee said: "The Wembley project has a chequered history: £120m of public money was committed without proper consideration of the financing and viability of the project.

"An additional £41m of public funds has had to be put in, while the number of public access seats has gone down. And the justification for retaining the £20m in the project for athletics is dubious, with the stadium likely to be used for this once or ice in 20 years. if at all."

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9/2/04 Last Updated 9/2/04