London 2012 Games come in UNDER budget - by £377m

The overall cost of the Games is forecast at £8,921 billion from a budget of £9,298 billion

Ministers expect to return nearly £400m of unspent contingency funds to the Treasury after the accounts were made public today.

While still £6.5bn higher than the figure made public during the bid process, the final bill includes extensive extra costs including £1bn on security alone. The total spend for the London Olympics is expected to be £377m within its revised budget but that saving will not be spent either on helping pay for the Olympic Stadium’s redevelopment nor as a windfall for grass roots sport.

The stadium’s future is expected to be settled next month and West Ham United remain favourites to be granted a 99-year lease. The delay in deciding the preferred bidder surrounds the cost of transforming the £500m stadium. The original budget laid aside £38m to help convert it from its current 80,000-seat Olympic capacity.

It is now estimated that the conversion West Ham desire would cost £160m and negotiations are ongoing between the Premier League club and the London Legacy Development Corporation, led by Boris Johnson, over who pays for what. In all there are four bids under consideration.

Hugh Robertson, the sports minister, yesterday suggested that none of the unspent budget would be made available to pay for stadium costs. Instead the Treasury retains the money and it would need Johnson to make an approach to the Chancellor to request extra funds, an approach that would only bring one response.

There is currently £377m of unspent contingency funds – a figure that will rise as the final costs are determined by the end of the year – will not go to help grass roots sport either, despite calls from the likes of the Sports and Recreation Alliance for extra funds in order to capitalise on the Olympic afterglow and help make a rise in participation a reality. Yesterday Sebastian Coe attended a cabinet meeting to stress the need not to let this opportunity slip.

The government is already committed to spending £1bn over the next five years through Sport England towards improving facilities as grass roots level.

The final cost of the London Games will not be known until the start of next year when Locog, the organising committee, makes public its final accounts. As it stands the overall cost if forecast at £8.921bn from a budget of £9.298bn. The Games were originally won in 2005 with a predicted budget of £2.4bn – that was dramatically revised to the current figure two years later.

There is likely to be a further fall as more contingency funding is returned – there remains £103m of contingency money split between Locog and the Olympic Delivery Authority as the remaining 2,000 contracts are wound up and the Olympic Village is prepared for handover.

Discussions between Locog and G4S over the amount the firm will pay following the security fiasco in the immediate build up to the Games are still to be settled.

Robertson described the current estimate as “prudent,” He said: “London 2012 has set a new benchmark for the management of Olympic and Paralympic Games in future. The £377 million figure is conservative because there are lumps of contingency that are still attached to the outstanding work. The central expectation has to be in line with the rest of the project that not all of that will be needed. It is entirely reasonable to expect that figure to rise."