Not Saussure

November 8, 2006

Olympics — Oh, we may have forgotten to include the VAT. Sorry.

Filed under: hubris, nemesis, UK — notsaussure @ 9:29 pm

Marcel Berlins in the Guardian:

We should seriously be thinking about giving the 2012 Olympic games back, before it is too late. It’s all very well to say that it will be all right on the night, but that’s now looking increasingly unlikely. Tessa Jowell’s performance in the Commons on Monday confirmed that there already exists a state of mild chaos.

It is almost unbelievable that the VAT liability for the games was not clarified before the costs were drawn up. The background is rather murky, but it seems that someone at the Treasury gave someone else an assurance that VAT would not be levied on the construction and other costs of staging the games. It now appears that the Treasury, perhaps even the chancellor himself, is saying that VAT will have to be paid after all because – here it comes again, the usual excuse when no one knows what’s really going on – European Union rules insist on it.

It has been estimated that this may add £1bn to the costs- or possibly only £250m, depending on whom you ask to pluck a figure out of the air. But no one seems to know how much the total bill is to be. It is a major issue that “we are working through” said Jowell; “Work is still continuing to finalise the budget,” a spokesman for her department explained. What we know for certain is that the cost estimates are already a lot more than the figures that were bandied about only last year. And that they will be a lot, lot higher as we approach 2012. We can safely assume – following many precedents, of which I need name only two, the Scottish parliament and Wembley stadium – that costs will rise quickly, inexorably, and by a large multiplicand of the original estimate.

More at: Guardian Unlimited | Comment is free | Marcel Berlins: Is it too late to give the Olympics back?
From the Commons questions to which he refers:

Hugh Robertson (Faversham & Mid Kent, Conservative) Link to this | Hansard source

But what the Secretary of State does not answer is why the amount of money going into sport through the national lottery, according to a parliamentary written answer that she gave me, has been cut from £397 million to £260 million. A key component of the Olympic bid are the mass participation benefits that will arise from the post-games use of the stadiums. The Secretary of State gave me a personal assurance that VAT would not be levied on their construction. The organisers were clearly given the same commitment, because they made no allowance for VAT in the budget. Will she confirm to the House that a possible VAT bill of a quarter of a billion pounds will not be levied by the Treasury on the 2012 Olympics?

Tessa Jowell (Secretary of State, Department for Culture, Media & Sport) Link to this | Hansard source

Perhaps the hon. Member for Faversham and Mid-Kent (Hugh Robertson) would like to listen to the answer. Let me deal first with the VAT point. The candidature file did not include VAT on construction of venues for 2012 because at that time the position of the unspecified delivery body, which had not been legislated for or given effect, could not be anticipated. A cross-Government group signed off London’s plans and agreed that it was the right approach not to anticipate at that point the VAT status. The issue was not raised by PricewaterhouseCooper, who advised us on the costs, nor were issues in relation to VAT at that point identified by the Treasury or by departmental accounting officers—[Hon. Members: “Oh!”] However, what I did do when we won the bid was to initiate an immediate review of the costs and funding needs of the games. As the hon. Gentleman will be aware, the costs of the Olympic park have been significantly reduced. The funding needs of the games—including VAT, the need for security and so forth—are a matter of continuing discussion within Government. That is the position, delivered to the hon. Gentleman on the Floor of the House rather than in corridor conversations.

Then, a bit later,

Don Foster (Bath, Liberal Democrat) Link to this | Hansard source

The issue of VAT on the Olympic buildings is of crucial importance to everyone in this House. If the Secretary of State is unable at present to confirm whether VAT will be paid on the buildings, given that £1 billion is at stake, will she at least agree to come before this House as a matter of urgency and make a statement on that issue?

Tessa Jowell (Secretary of State, Department for Culture, Media & Sport) Link to this | Hansard source

I am a subject of this House on any matter to do with the funding of the Olympic games, or any other aspect of them. This is a large and complex project and a major issue that we are working through. The International Olympic Committee has expressed its utter satisfaction with the progress being made in the planning of the games. I will answer to the House at any point on the issues as they arise.

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  1. Interesting – in Categories there’s 25 entries under ‘Hubris’ but only 18 for ‘Nemesis’. Have the Erinys slackened off?

    Comment by alabastercodify — November 9, 2006 @ 11:47 pm

  2. On the subject of Jowell and Hubris/Nemesis, is David Mills about to get his comeuppance? Perhaps if enough of us clubbed together we could buy a whole Italian court just to make sure…

    Comment by alabastercodify — November 9, 2006 @ 11:57 pm

  3. Nemesis isn’t immediate; she sometimes takes her time arriving, does she not?

    Comment by notsaussure — November 10, 2006 @ 12:13 am

  4. Indeed – Mills may find himself being ground slowly, but exceeding small.

    Comment by alabastercodify — November 10, 2006 @ 12:40 pm

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