§ Lord Moynihanasked Her Majesty's Government: What will the anticipated yearly incomes and expenditure flows be for each year up to and including 2013–14 under the financial model used to estimate public subsidy required by the London 2012 Olympic Games. [HL500]
§ The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord McIntosh of Haringey)London 2012 is currently working on its own, detailed plans for a London Olympics. In doing so it will develop its own financial models, including early income and expenditure forecasts. This work is ongoing and will be refined as the detail of the bid is developed over the next 10 months. Government and the other stakeholders will work closely with London 2012 on this task during the further preparation of the bid.
However, the consultants Arup did model anticipated yearly incomes and expenditure flows as part of their cost benefit analysis of a "specimen" London Olympic Games centred on the lower Lea Valley. Arup's figures are set out in the table below.
91WA
Expenditure £million Income £million 2003 11 3 2004 250 231 2005 215 146 2006 93 11 2007 75 0 2008 53 18 2009 366 210 2010 489 98
Expenditure £million Income £million 2011 354 201 2012 1,475 1,477 2013 132 55 2014 22 0 2015 23 0 Total 3,558 2,450 Note
The financial model used assumes: (i) that the athletes' village is based at Mill Meads and (ii) a main stadium with a football legacy. The financial model includes all attributable costs and revenues covering: the bid, staging, construction and infrastructure, land assembly and elite sports funding. The figures in the table are forecast to outturn figures (assuming an inflation rate of 2.5 per cent pa) and are rounded to the nearest million pounds.
Arup's work was used to inform the Government's own detailed analysis of the costs and risks associated with a London Olympic Games, which was based on a critical appraisal of risk and contingency, probability analysis and benchmarking past games. This work led to the development of a public sector funding package of £2.375 billion, which bridges the £1.1 billion gap between expenditure and income identified by Arup and provides further contingency to cater for foreseeable risks in staging the games.
The Amp model includes total figures of £399 million and £491 million for land assembly and land disposal respectively. These activities account for much of the income and expenditure in 2004 and 2005. Under the memorandum of understanding between the Government and the Mayor governing Olympic funding, the London Development Agency (LDA) will meet the costs of the required land assembly during the bid period and beyond. Income from the sale of this land will be at the disposal of the LDA. During the bid period the LDA will only acquire land which could be used for regeneration purposes should the bid not be successful.