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Last Updated: Tuesday, 21 November 2006, 17:37 GMT
Cost of 2012 Olympics 'up 900m'
Crowds celebrate London's victory in Trafalgar Square
The costs of the games have gone up 38% in just over a year
The expected cost of the 2012 London Olympic park has risen 40% since the games were won in July 2005, Culture Secretary Tessa Jowell has told MPs.

The extra 900m cost was likely to be met by London council tax payers and lottery funds, Ms Jowell suggested.

The new 3.3bn estimate, which does not include a revised security bill or regeneration costs, is still far below the 8bn some critics say is likely.

The Tories said the budget had gone "disastrously wrong".

Ms Jowell told the Commons culture, media and sport committee the rise was partly due to a doubling in the price of steel and also a decision to revise transport costs to take into account inflation in the years to 2012.

London legacy

But it also included an extra 400m to pay "delivery partner" CLM to make sure the games come in on budget and on time.

Ms Jowell, who said the games would leave a legacy "for ever" in east London, told MPs an unexpected VAT bill for building costs was unlikely to add to the overall cost to taxpayers of the games.

This project is under control
Tessa Jowell
Culture secretary

And she insisted a newspaper report that the International Olympic Committee (IOC) was to investigate London's soaring costs was "untrue".

"This project is under control. Cost control is a daily part of the rigour. Locog (the London Organising Committee for the Olympic Games) are confident that they are going to raise their sponsorship target," she said.

"The IOC commission has said we have hit every milestone to date. They know that we are further ahead than any other Olympic city at this stage."

Security 'inadequate'

Asked who would meet the extra 900m cost, Ms Jowell said discussions were on-going, but the earlier "memorandum of understanding" had been for overspends to be met by a mix of London council tax payers, and lottery games.

Planned security measures, drawn up before the 7 July attacks on London, were "inadequate", she said and were being revised.

But she said she did not assume costs would continue to rise over the next six years.

The original budget includes a contribution of 625m from London council tax payers - which works out at 20 a year for 25 years - and 1.5bn from Lottery games.

You could have guaranteed that the costs would go massively over budget. Just look at Wembley
John, UK

It was put to Ms Jowell that one other option was getting the Treasury to waive its 12p take from Lottery tickets sold.

She did not confirm or deny that possibility, saying only that "discussions" were taking place in private about a range of funding options.

The MPs were assured that whatever funding arrangement was agreed had to be "fair, sustainable and proportionate".

'Entirely predictable'

Shadow Olympics minister Hugh Robertson said: "The secretary of state has admitted to a 40% increase.

"She has failed to disclose the true cost of VAT, contingency, building cost inflation and security, much of which was entirely predictable at the time of the bid.

"Today's increase is just a starting point. While the figures remain ambiguous, we can only expect further increases."

Liberal Democrat culture, media and sport spokesman Don Foster said: "The government must get a grip on the chaos and confusion surrounding the Olympic costs."

Any extra plans for regeneration should be privately funded and further government funding should be restricted to extra security, he added.

But Pete Wishart, for the Scottish Nationalist Party, said London "must pick up the bulk of the tab", as it was London that would benefit the most.

The ODA and the government are reviewing the original budget for the games and are expected to announce a revised financial plan next February.

Tessa Jowell defends the rising costs of the Olympics

Is the legacy of the Olympics worth the cost?
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Q&A: Olympic costs
21 Nov 06 |  UK Politics
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15 Nov 06 |  London
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07 Nov 06 |  UK Politics
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22 Nov 05 |  Olympics 2012

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