Report says Treasury should have raised concerns over cost overruns before bid was submitted

MPs this week launched a stinging attack on the government’s handling of spiralling Olympic finances.

A report published by the Culture, Media and Sport select committee today said that the Treasury “could and should” have publicised its concerns about potential cost overruns before the original London bid was submitted.

“We are very disappointed that the cost estimates have been found to be faulty so early in the process,” the report said.

The government has already announced that costs associated with the 2012 Games have risen by £900m to £3.3bn and that figure is expected to rise.

The MPs said that government plans to derive more Olympic funds from lottery funds and London council tax payers would place an “unacceptable burden on both.” The National Lottery has already contributed £1.5bn of money.

They also question why the chancellor did not bring to light the issue of a £250 VAT bill on the Olympics before the bid was submitted.

The report also said that the London Development Agency, which is in process of buying up all the land required for the Olympics in east London, should not make profit from the process. It said: “We believe that the best use for such funds would be to meet any Games costs that are outstanding.”

Chairman John Whittingdale said: “Doubts about final costs must be resolved if public confidence in the project is to be maintained. Costs are still rising and the time has come for the Treasury and others to step in and share the burden of any increases."

A spokesperson for the ODA this week declined to give a date for the publication of the budget and said that it was still with the government, despite the fact that it was originally due by the end of this month.