Complete and Utter Zebu

If somebody gave you an estimate for work, then kept revising it upwards after you’d given the go-ahead, you’d surely be livid. How angry would you be if you were asked to pay six times the original figure, with no guarantee that the bill wouldn’t rise further?

That’s the case with the 2012 Olympics. The original estimate of the cost, when the bid was submitted in 2004, was £2.1 billion. That was revised up to £3.3 billion in 2005. By November 2006, it had grown to £4.2 billion, double the first estimate. Officially, it has doubled again, with a figure of £9.3 billion announced in March 2007. As Olympics Minister Tessa Jowell announced in Parliament: “£9.325 billion is the absolute limit of public money, whether it comes from the lottery, the London council taxpayer or the Exchequer”.

That appears not to be true. Thanks to Freedom of Information requests, it seems that the Government and other public organisations are spending a minimum of £2.7 billion above and beyond this figure on the Olympics and projects directly relating to the Games, £1.5 billion of which relates to the London Development Agency’s costs for buying and preparing the Olympic site.

That makes the current total bill a whopping £12 billion. If it doesn’t rise any further everyone in the country will be paying an average of £200 towards the Olympics, without the right to attend any of the events. That’s assuming, of course, that the estimate doesn’t keep rising. Jack Lemley, the former chairman of the Olympic Delivery Authority, was convinced that the total would turn out to be at least £20 billion, and that was early in 2008.

Why is it that large-scale public spending projects spiral so regularly spiral out of control? We’ve recently seen the woeful control of public money by the procurement arm of the Ministry of Defence, while the massive NHS IT project to link patients’ records (NPfIT) is currently expected to cost over £20 billion; its original estimate was £2.3 billion.

Sadly, there are plenty of other examples of such profligacy with our money in Complete and Utter Zebu. Being public sector projects, nobody takes ultimate responsibility. There is nobody to carry the can if costs spiral out of control. Without such responsibility and without any sanctions if the eventual cost turns out to bear no relation to the original estimate, such massive public spending overruns will surely keep on happening.