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A damning report by MPs into the £9.3bn cost of the London 2012 Olympics has branded the original budget "entirely unrealistic" and accused ministers of ignoring obvious factors that led to a £5.3 billion price rise.

The Commons public accounts committee said the original £4 billion budget had ignored Treasury guidelines to include a contingency fund.

Extra spending on tax, policing and security was also easy to predict, according to the report.

Committee chairman Edward Leigh said: "It is now clear that the estimated cost at the time of the bid, just over £4 billion, was entirely unrealistic. It ignored foreseeable major factors such as contingency provision, tax obligations, and policing and wider security requirements.

"At the same time, the estimate of the extent to which the private sector would contribute funding towards the Games has proved little more than wishful thinking. Despite the astonishing increase in the level of public funding for the Games, the Department did not specify in detail precisely what will be delivered for this money, including the legacy benefits."

The report goes on to say "the public will find it hard to be confident" that the Games will be delivered even within the new higher budget.

The report said the £2.7 billion contingency fund was not included at the time of the bid "despite Treasury guidance" that costs of tax and security, now estimated at more than £1.4 billion, were excluded from the estimates as they were uncertain.

The target of £738 million income from the private sector has now been cut to £165 million.

Mr Leigh said the committee would hold the Department for Culture, Media and Sport to account to ensure that the £9.3 billion figure is not exceeded.

Copyright Press Association Ltd 2008, All Rights Reserved.

8:33am Tuesday 22nd April 2008

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