Olympics budget announced

The budget for the 2012 Olympics has risen to £9.35 bn, Culture secretary Tessa Jowell has told MPs.

Jowell told the House of Commons today that total construction costs of the Olympics would be £5.3bn, up from an initial budget of £2.4bn. There will also be a further £2.7bn contingency fund.

Jowell said that to meet the costs the National Lottery would contribute an extra £675m, making its total contribution £2.2bn.

Building understands that intense negotiation were ongoing between the Olympic Delivery Authority and the government over who will manage the contingency funds for the London games.

One of the major issues of contention between the ODA and DCMS has been the management of the emergency money. A source close the negotiations said that the ODA has not been happy about the levels of contingency in the construction budget. The source said: “we would have liked for it to have been more, as this has to deal with materials fluctuations and any other incidents, such as rebuilding resulting from a security incident.”

The source added that the second issue is that of who should manage the contingency. The source said: “Treasury will want to manage this closely, but the ODA may well believe that they will struggle to cost and manage the programme unless they can control overspend from unforeseen incidents.”