A review of how the public sector handles prestige schemes is needed after a damning report into the handling of London’s Olympic Stadium, according to a leading tourism economist
Last week, London mayor Sadiq Khan released an independent report into legacy arrangements for the Populous-designed London Stadium, which slammed financial mismanagement that left the taxpayer footing a £20 million annual bill.
Dan Anderson, director at consultancy Fourth Street, said the fiasco had a number of parallels with the botched procurement of Boris Johnson’s proposed Garden Bridge.
He said: ‘There seems to be a running degree of naivety about how difficult these projects are. These big decisions are being made in haste and being influenced by immaterial public relations and optics issues.’
The report on the London Stadium by accountancy firm Moore Stephens found that the £323 million cost of transforming the venue was significantly higher than the ‘unrealistic’ and poorly scrutinised estimate of £190 million.
The review found that a 2011 decision to re-run the procurement exercise reduced competition in the process and led to West Ham Football Club, the final tenant, producing a less generous offer.
The costs of including retractable seats in order to retain the stadium’s running track were significantly underestimated, and their inclusion has reduced options for raising revenue from other events, the study found.
Anderson said that the incident was the latest in a number of botched procurements by the public sector.
He said: ‘We hear over and over again that it is easy to raise capital to build projects but that they often falter because of a lack of planning for revenue income to keep them going.
’Those making decisions on capital funding know that someone else will be responsible for the running costs. It keeps happening over and over again and we don’t learn the lessons.
‘I think we need a review of all these reviews to come up with guidance to help avoid problems recurring.’
Anderson said that the problem was not limited to one government or London mayor.
He said: ‘A lot of the things we are saying now could have been said about the Millennium Dome.
‘But there is no escaping the fact that it happened a lot under Boris Johnson – the London Stadium, the Garden Bridge, the Orbit, the cable car. It seems the rationale was often: “How is this going to look on the front of the Evening Standard?”’