The government has finally responded to growing pressure and unveiled its revised budget for the London 2012 Olympics with Culture Secretary Tessa Jowell revealing to the House of Commons that the cost of the Games has risen to £9.35bn.
The new budget, marginally under the £10bn predicted by media speculation, is an increase of three times the original estimation of the funds needed to stage the 2012 Olympics.
Of the new figure, construction costs are now estimated at £5.3bn, while there is also now a £2.7bn ‘contingency fund’ should costs in this area continue to spiral.
The £5.3bn construction budget for the Olympic Delivery Authority is made up of £3.1bn to build the Olympic Park and venues, £1.7bn for regeneration and infrastructure and a £500m contingency allowance.
The rest of the budget increase comes from extra security and tax costs. The figure does not include tax, but the anticipated £840m tax bill will be met from central government funds.
Despite calls for the government to meet the lion’s share of the budget increases, Jowell stated that a further £675m will be taken from the National Lottery.
‘London 2012 will bring huge financial gain to the whole country ... and it is only fair that the Lottery good causes should share in any such windfall,’ she told MPs.
‘I am determined to ensure that this temporary diversion from the existing good causes to the Olympic good cause is done with the least possible disruption.’
London Mayor Ken Livingstone has also pledged to contribute an extra £300m, she said - but the money would not be funded from London's council tax, nor higher transport fares.
But Shadow Olympics minister Hugh Robertson said: ‘If you add together all the separate parts, the budget for which the government is responsible has nearly trebled since the Olympic Bill left Parliament under a year ago.
‘In raiding the Lottery for a further £675m to make up the shortfall the government will penalise precisely the clubs and small organisations, up and down the country, that were supposed to benefit from the Olympics.’
London 2012 announced its first top-tier sponsor earlier this week with Lloyds TSB paying an estimated £80m to be associated with the Games. It is not known whether the newly increased budget will see an upwards revision of the sponsorship target of £750m to help pay for the rise in costs.