Olympics cost blow-out threat

1:47pm Wednesday 25th October 2006

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IT has been revealed that the bill for construction of the 2012 Olympics could rise from £2.375 billion to more than £4 billion.

The revelation comes a day after Culture Secretary Tessa Jowell admitted there was no limit on the amount Londoners would be expected to pay if the 2012 Olympics ran over budget.

Ms Jowell reportedly backs an increase, which is needed because of escalating security costs post July 7 and to improve the regeneration and legacy spin-offs from the Games.

Ms Jowell told the Culture, Media and Sport Select Committee yesterday: "What I cannot say is that there will be any guarantee there will be a cap."

Olympic Delivery Authority chief executive David Higgins was yesterday questioned by MPs at the hearing over whether construction costs would rise.

Mr Higgins said there had been new regeneration plans since London won the bid.

"We could do a very superficial regeneration but it is not a responsible thing to do," he said.

It's understood the ODA wants the regeneration costs to be added to the construction budget, which would mean costs would not be identified as Olympic construction over-runs.

The Standard reported that a large share of the money would be raised by extending the period of the special National Lottery games devoted to the Olympics, which were due to finish shortly after the Games.

It's not known how much of the increase will be paid for by Londoners.

Londoners are currently slated to pay £625 million in council tax for the Games.

Mayor of London Ken Livingstone yesterday reiterated his opinion that Londoners shouldn't feel aggrieved at having to contribute 10 per cent towards the cost of the Games.

The London Assembly Conservatives, who have called for the Olympic Bill currently going through parliament to include a cap on the level of council tax contributions Londoners should make, attacked Ms Jowell's admission.

Conservative Olympic spokesman Angie Bray said: "This is a terrible day for Londoners. It confirms what we have always warned - that under this Labour government and Labour mayor, Londoners' interests always seem to come last in any negotiation."

Tory spokesman Bob Blackman said: "It is apparent that the actual bid document has fallen to pieces, in effect: not worth the paper it was written on.

"We simply cannot accept any possibility that this extra burden will fall exclusively upon Londoners - after all the whole of the country will benefit, and London already contributes disproportionately through levels of income tax."

It's understood that Treasury officials and ministers will scrutinise the new spending and the two departments would enter negotiations shortly.

Damian Hockney, one of two representatives of the One London Party in the LA, predicted the Olympics would cost £10 billion.

"We said before the London bid was successful that the costings were unrealistic," Mr Hockney said.

"Now Londoners are left to face the financial hangover to pay for the politicians' folly. Now the organisers must listen to Londoners - it's not too late to give us all properly costed figures, and a say in the way the money is being spent.

"We are in great danger that the legacy of the 2012 games will be a huge financial catastrophe."