Olympic budget for 2012 was "wishful thinking"

By Avril Ormsby

LONDON (Reuters) - The initial budget for the 2012 London Olympics was "unrealistic and wishful thinking", a group of MPs said on Tuesday.

The Committee of Public Accounts said optimistic budgeting had resulted in costs soaring from 4 billion pounds during the bidding process to 9.3 billion in March 2007.

The Department for Culture, Media and Sport and the Olympic Delivery Authority (ODA) were criticised for omitting security, tax and contingency costs in the initial estimate and over-estimating the role of the private sector.

"It is now clear that the estimated cost at the time of the bid ... was entirely unrealistic," committee chairman Edward Leigh said in a statement.

"It ignored foreseeable major factors such as contingency provision, tax obligations, and policing and wider security requirements.

He went on to say: "At the same time, the estimate of the extent to which the private sector would contribute funding towards the Games has proved little more than wishful thinking."

Despite Treasury guidance to include contingency provision, it was omitted in the initial estimate, the committee said. When it was included in March 2007, it amounted to 2.75 billion pounds.

Tax liabilities of 836 million pounds also needed to be added to the 2007 bill.