Budget worries are soothed by realistic targets and prudence

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Indy Politics

There was uproar three years ago when the former government announced that the bill for the London 2012 Games had risen from the estimated £2.4bn to £9.3bn.

But since then – and unlike at previous games such as Athens – this figure has remained re-assuring stable and there is even hope among the organisers that the event might come in under budget.

Of the £7bn in public funding for London 2012, two-thirds comes from the Government, 23 per cent from the National Lottery and 10 per cent from the London Development Agency. In the wake of the austerity measures announced last month, the ODA has cut its costs by £27m and claimed last week that it had saved £700m through efficiency since 2007. It was hit to the tune of £45m, however, by the VAT increase in June's budget.

The search to find the remaining £2bn from the private sector is the task of Lord Coe's London Organising Committee of the Olympic Games (Locog), which is tapping four separate channels. It is seeking to raise £700m from sponsors and is just £20m short of its target.

It hopes to raise £75m from sales of the mascots Wenlock and Mandeville and spin-off products when they are released next week.

The rest of the money will be generated by the international broadcasting rights and the ticketing revenues. Locog still has £700m worth of contracts to issue in preparation for the games. Of those, 98 per cent will go to UK companies.

Chris Daniels, head of London 2012 Activation at Lloyds Banking Group, said: "The crunch focused everyone's mind on the how they could create value from the Olympics, but we were pretty much left unscathed."

Lloyds is officially supporting Locog, which was set up to operate the games in two year. The body is "definitely on target" to raise the £2bn it needs to run the 17-day Olympics and 12-day Paralympics, Mr Daniels said. "We are not looking to make a profit, but break even. If there is any left over it will go to local charities," he said.

Mr Daniels said there was no point comparing the games to those held in Beijing, which cost an estimated $39bn (£25bn). "That is way off the scale and China was clearly trying to show itself off. We are trying to bring the games a bit closer to their roots."

He added: "Athens was a case study in how not to do legacy. Rather than develop the site after the games, it was cheaper just to lock it up and let it rot. However, Barcelona showed how it can be done. It went from a sleepy fishing town into a global centre."

The Olympic complex now employs 10,000 workers and Mr Daniels estimated the stimulus to the local economy would more than pay back the investment within 20 years.