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Last Updated: Saturday, 24 February 2007, 10:00 GMT
London Olympics could cost 9bn
By Mihir Bose
BBC sports editor

Olympic rings on fire
The cost estimates for London 2012 continue to rise
The cost of the 2012 London Olympics could rise to nearly four times the figure set out in the city's bid for the Games, the BBC has learned.

The Treasury and the Department for Culture, Media and Sport (DCMS) are discussing a price of 9bn - up from an initial figure of 2.35bn.

Construction alone could cost 3.3bn, the government has said.

The DCMS said budget talks were still ongoing and accurate figures would be announced later.

'Staggering'

Costs have mounted since London won the right to host the games in July 2005.

On top of soaring construction bills, an extra 2bn has been allocated as a contingency fund.

HAVE YOUR SAY
It's a complete waste of money. We should have let Paris take it
Alan Bates, UK

Regeneration costs of 1.8bn and a 1bn VAT bill have also been added.

And security costs have grown to at least 900m.

Shadow culture secretary Hugo Swire said the news was "staggering", and said Chancellor Gordon Brown should take responsibility, because he signed off the original budget.

"There is no doubt that there will be real worries across the country about the huge increase in costs... it is time we got a proper explanation from Gordon Brown on what has gone on and assurances as to what the government is doing to control the ever-increasing budget," he said.

'Outstanding issues'

There has been some suggestion that the Treasury and the DCMS have clashed over the budget, but the DCMS has denied this.

"This is just the latest of many different figures to be quoted by the media in the last few months, claiming to be the cost of the 2012 games," a DCMS spokesman said.

"Discussions are going on across government to resolve outstanding issues and we will make an announcement about long-term budget figures when they have concluded.

"It is completely incorrect to suggest government departments are at odds on this issue. This is simply not the case."

In the wake of heavy criticism of the government's handling of the games, Culture Secretary Tessa Jowell admitted to parliament in November that the cost of the Games would rise by 900m - 40% - to 3.3bn.

But critics have continued to express wide-ranging concerns over everything from transport to the burden on the tax payer and the effect on the National Lottery's funding of good causes.

Decontamination work

The Treasury has insisted a 60% contingency should be to be added to the construction cost.

But this figure has been resisted both by the Mayor of London Ken Livingstone and also the DCMS.

Both of them would like a much lower contingency, a view that appears to have support from CLM, the Delivery Partners.

A variety of other factors are also at play.

These include rise in commodity prices, adjustments to transport figures to reflect 2012 prices and a revised estimate for inflation on construction costs.

The land in the east end of London chosen for the site also needs decontamination and major remedial work before it can be fit for the games.

The Treasury has also decided that the Olympic Development Authority will have to pay VAT.

While VAT is in effect paid to the Treasury, the cash initially still has to be found before it is reclaimed.

The chairman of the CMS Select Committee, John Whittingdale, said it was important the British taxpayer was not asked to write a "blank cheque" for the Olympics.

He said: "I think the total is going to be a lot bigger than was initially suggested, and what is important, I think, is that the government comes out and gives a clear statement so that we can actually have some facts rather than continue to have figures bandied about which seem to rise by the week."

The deputy leader of the Liberal Democrats, Vincent Cable, questioned whether so much money should be spent.

"I think the people promoting it will say there will be a legacy. But I would have to say the answer would be no. We just cannot talk about that magnitude of money. We just cannot have an open-ended budget and people just signing cheques. It isn't going to happen and it's not right".




VIDEO AND AUDIO NEWS
Regenerating the Olympic site in east London



VOTE RESULTS
Is the legacy of the Olympics worth the cost?
Yes
 36.72% 
No
 55.37% 
Not sure
 7.90% 
41034 Votes Cast
Results are indicative and may not reflect public opinion

SEE ALSO
Doubts over 2012 transport plans
20 Feb 07 |  UK Politics
Coe uncertain over Olympic costs
12 Feb 07 |  Olympics 2012
Investment 'key' to 2012 legacy
19 Feb 07 |  Olympics 2012
London 2012 told to clarify costs
08 Feb 07 |  Olympics 2012
Lottery 'must not fund Olympics'
24 Jan 07 |  UK Politics

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