Comment: The real cost of the Games

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A report from the London Development Agency suggests the Government's £1.8 billion estimate for the amount it will get back from land sales after the Games are over were based on "ludicrous" property price projections; that means there may well be a shortfall in the final Olympics budget of up to £1 billion.

At the same time, the Culture Secretary, James Purnell, seems set to promise there will be no further raids on the National Lottery once MPs today approve an extra £1.1 billion from the fund. Yet, as Mr Purnell reminds us in this paper today, Ms Jowell promised back in March that £675 million of National Lottery contributions would be repaid after 2012 from Olympic Park land sales profits. If those profits are based on "ludicrous" property estimates, is there any chance of that still happening?

Few Londoners need reminding that property prices are volatile but still, between last March and the end of the year land prices were not quite so febrile as to result in an entirely unexpected shortfall of £1 billion between official estimates and those of more sober analysts. Who were the experts who signed off the inflated estimates? And if there is indeed a billion-pound shortfall in the projected income from land sales, how is it to be made up? It is likely that the Lottery will not in fact get its £675 million back but that would still leave another £325 million to be covered. The Mayor is, laudably, committed not to increase the £20 per household payable by London council-tax payers; the Government is already overstretched in terms of public expenditure, post-Northern Rock; the Opposition will not tolerate further raids on the Lottery.

There is no doubt that the Olympics will contribute hugely to the morale of the city and the nation but the real optimism that Londoners feel about the Games will be diminished if their financing is so complex and opaque. The 2012 budget has already almost quadrupled from the original estimates. Tessa Jowell must now make clear where we now stand and how she intends to keep costs within budget as she promised.