Watchdog warning over Games costs

The initial estimate for staging the Games was £2.35bn

"Significant uncertainties" over the London 2012 Olympics could drive the cost of the Games higher, the government's spending watchdog warns.

The National Audit Office (NAO) said the £9.3bn budget announced in March was "sufficient to cover the estimated costs of the Games" as plans stood.

But the NAO report warned it was true only if "the assumptions on which the budget is based hold good".

It identified a number of areas where uncertainties remained over cost.

Caution urged

Venue design, construction price inflation and private-sector funding of the Olympic Park were named as areas where prices could rise.

Auditor General Sir John Bourn, who delivered the report into the escalating bill for the Olympics, said the process of setting the budget had been "thorough".

The Olympic Games is now on a firmer financial footing thanks to the budget announced in March 2007 Sir John Bourn, Auditor General

However he did note that the level of public funding had "increased greatly" from the original estimate £3.4bn when London won the bid in 2005.

The Department of Culture, Media and Sport was urged to keep a rein on spending so that as little as possible of the £2.7bn allowance for contingencies was used.

Sir John said: "The Olympic Games is now on a firmer financial footing thanks to the budget announced in March 2007.

"This should help all those involved in delivering the Games to move forward with greater confidence. However a budget is just that - a budget, not a target."

Iron grip

He said the government needed to carry out "clear and quick decision-making on funding, effective commercial arrangements with suppliers, and finalisation of designs and legacy plans".

Welcoming the report, Olympics Minister Tessa Jowell said: "We are determined to keep an iron grip on costs.

"With a robust funding package in place and world-class team at the Olympic Delivery Authority, we are now in an excellent position as we move into the next phase of the project," she said.

Conservative Olympics spokesman Hugh Robertson said: "It is... difficult to understand how a minister in one department with her civil servants and budget-holder in another can provide the clear lines of accountability necessary to keep this complex project within budget."