Evening Standard

Brown and Cameron: illustration by Paul Dallimore. Image coutesy of Evening Standard

David Cameron has little reason to say a good word about Gordon Brown. But, next year, as he takes his seat for the 2012 Olympics opening ceremony, he may reflect that the former Prime Minister has been responsible, albeit unwittingly, for an unexpected success story. London, the only city to host the Olympics three times, will also be the first in modern times to come in under budget. Not quite a golden legacy but at least, in this area, Labour has left Cameron some money – the Government will be getting back more than £800 million from its Olympic budget.

To appreciate how unexpected this is, consider the spat between the chairman of arguably the most powerful Commons committee and the highest civil servant in the department responsible for the Olympics. It came in 2008, just a year after Brown’s government had finally announced that the budget for the Games had risen almost four times, from its original estimate of £2.375 billion to £9.3 billion.

Edward Leigh, then chairman of the Public Accounts Committee, could not have been blunter with Jonathan Stephens, Permanent Secretary to the Department of Culture, Media and Sport (DCMS). “What worries me is that, judging by your record, I do not have any confidence in your ability to plan ahead,” he said. “I think what is going to happen in the run-up to these Games in 2012 is that you are going to start panicking, things will be half-finished and you’ll start throwing money at it.”

Stephens defended himself, saying the Games were on a sound financial footing, but he was clearly not believed. The PAC report on the budget was as damming as any Commons Olympics report. In essence, it said that the government had not been transparent and it could not be sure that the £9.3 billion budget would turn out to be the final cost.

Three years on, the picture could not be more different. Last month, as the Government released its quarterly economic report on Olympic costs, Dennis Hone, chief executive of the Olympic Delivery Authority (ODA), announced that, with 83 per cent of construction complete, savings of more than £830 million had been made.

Some of the savings are due to the Brown downturn. But that amounts to £80 million as a result of inflation – which was expected to push up construction costs – no longer being a factor. The downturn has led to some venues, such as the one for basketball, being made temporary and others, such as the one for fencing, being scrapped. However, most of the savings the ODA claims proudly are due to getting value for money and keeping a tight rein on delivery time. The ODA’s recently departed chief executive David Higgins, knighted in the recent honours list, can claim credit for this. But the real story is that this is also a wonderful illustration of the British muddling through to the right result.

London 2012 was always a huge fight against Brown and the Treasury until the budget was finally agreed in March 2007. The bid was launched against a background where bidding for the Olympics was like waiting for a British winner at Wimbledon. In the decade leading up to the success in Singapore in 2005, two bids by Manchester and one by Birmingham had failed. Then, having secured the 2005 World Athletics Championships, the British behaved almost like a Third World country and gave the championships back. The reason given was that Britain could not afford to build the required facilities. There was also the ongoing saga at Wembley and the bail-out of the 2002 Manchester Commonwealth Games.

Brown, in any case, did not care for the Olympics and had set his heart on getting the World Cup back to this country. Indeed, on becoming Prime Minister, he bounced the Football Association into bidding for the World Cup. He always saw the Olympics as a Tony Blair initiative.

Brown’s reluctance was all the stranger because of the alliance backing the bid – that of Tessa Jowell, then Secretary of State for Culture Media and Sport, and Ken Livingstone, then London Mayor. Jowell had persuaded Blair to back the Olympics by telling him that it would be a great shame if the fourth largest economy [as the UK then was], could not even bid for the greatest show on earth. She had also persuaded him not to vacate Downing Street when he was under pressure from Brown to do so.

Brown was even less pleased to learn that Cherie Blair, who is also close to Jowell, wanted to head the London bid. Indeed, she was so keen that I was asked to brief her as to what would be involved. The tea-time meeting at the Reform Club, to where she had been brought by Michael Beloff, the QC who shares her chambers, demonstrated that she certainly felt she could do the job. She left the meeting telling me that, “I will have to talk to him.” She did not have to specify who “him” was. But in the end, the security problems that would have been created by a Prime Minister’s wife hanging around the hotel lobbies of the world, cosying up to members of the International Olympic Committee, proved too daunting.

Livingstone, a long-standing enemy of Brown, had no interest in sport but saw the Olympics as regenerating the East End. He persuaded the British Olympic Association to move from its original choice of west London.

It was Livingstone who, in a now famous meeting on Jowell’s sofa at DCMS, agreed the funding package. The Government had increased the £1.8 billion costs estimated by a British Olympic Association study to £2.375 billion. Treasury insiders have confirmed that officials, not expecting a win in Singapore, did not examine the figures in any great detail.

Livingstone has since told me, “The Treasury saw the Olympics as a toy for Tessa and me. They did not expect us to win.” The Treasury may well have been proved right, had London had to fight Madrid in the final round instead of Paris. Keith Mills, deputy chairman of the bid, had calculated that, in a London versus Madrid fight, London would lose by five votes.

On returning from Singapore, the Government carried on as if the budget calculated before the unexpected victory would not change. As the legislation for the London Games was being considered by Parliament in January 2006, a briefing note given to MPs reiterated the original figure but it did also mention the Lower Lea Valley Development, estimated at £800 million. It said those costs “are not associated with the Olympics”. There was also £650 million for the athletes’ village but this, it promised, “will be privately funded as part of the broader development of Stratford City”.

However, behind the scenes, a titanic battle was being waged between the DCMS, the Mayor’s office and the Treasury. Brown’s department, having finally looked at the figures in detail, was insisting on a 60 per cent contingency.

I was then the BBC’s sports editor and in February 2007 I revealed that the budget had risen to £9.3 billion. On the day of my 10 O’Clock News broadcast, I got a very angry message from an insider in the Mayor’s office saying I had been spun a line by the Treasury about costs. I was accused of falling for the game the Treasury was playing with the DCMS. The final figure, I was told, would be nothing like what I had revealed. A month later, the Government confirmed the budget of £9.3 billion.

The Treasury had insisted on the huge budget contingency because it expected the Olympics to take place while Britain was booming. The recession would soon change things but it also meant that the Treasury’s contingency was to come in very handy.

The downturn’s first casualty was the Olympic Village as the developer, Lend Lease, could not raise the necessary money to build it. The Government decided to fund the Village using £650 million from the contingency pot. Another £135 million of the contingency was used to build the media centre, part of which will be temporary.

So, in what may well prove the greatest of ironies, Gordon Brown, who least cared about the Games, has left his successor a valuable pot for a wholly unintended Olympic bonus.


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