Lottery fury at £9bn Olympics bill

Schools, historic buildings, village halls and sports and arts groups across the UK face a massive spending squeeze for years after the cost of the London Games almost quadrupled to £9.3billion.

A fifth of the entire lottery budget until 2013 will be swallowed by the Olympics - with almost everybody losing out.

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Culture Secretary Miss Jowell sanctioned the cash raid after finally admitting how spectacularly the bill had rocketed from its original estimate of £2.37billion.

The Government is now being forced to bail out the project to the tune of £5.95billion of taxpayers' money - £4.9billion more than first planned. It will bite deeply into Chancellor Gordon Brown's summer spending review, with public services hit.

The lottery raid was bitterly criticised by fund chiefs, including usually loyal New Labour supporters.

Sport England chairman Derek Mapp, a friend of John Prescott, said the loss of £55.9million of his organisation's lottery cash would hit community sport and seriously endanger hopes of creating a sporting legacy from the Olympics. He declared: "This is a cut too far."

Big Lottery Fund chairman Sir Clive Booth, who campaigned for Labour at the last three elections, spoke of his "deep regret".

The Fund, known as BIG, is the largest single loser, with £638million snatched over the next six years. It could have paid for new school gyms, open to the whole community.

BIG also pays for thousands of health, education and environment projects each year.

MPs mocked Miss Jowell during her statement to the Commons. They pointed out that when the Games was awarded to London in July 2005 she insisted the £2.375 billion budget was sound. Last year, she had to concede the bill had risen by £900million. And, finally, she has confirmed it is now a staggering £9.35billion.

The total includes £3.1billion for site and stadium construction, £1.7billion to regenerate London's East End, and a vast £2.7billion contingency fund for overspends.

There is a tax bill of £840million and £600million for security in the wake of July 7. A further £390million will go on the Paralympics and paying for sports coaches.

All these figures are either huge increases or were simply left out of the bid document submitted to Olympic chiefs and MPs. The lottery was originally supposed to provide £1.5billion. Yesterday that was increased by £675million.

MPs and peers will have to sanction the raid, however, and may yet embarrass ministers with a revolt.

Shadow Culture Secretary Hugo Swire said: "Gordon Brown's latest raid on the lottery will devastate good causes up and down the country. It was the Chancellor who signed off the original budget, and he is raiding the lottery pot again to pay for his own mistakes.

"This admission means the taxpayer will be contributing an extra £5billion and the lottery another £700million. The Chancellor will be responsible for closing projects and denying much-needed revenue for arts, heritage and grass-roots sport."

Every lottery distributor, apart from UK Sport, will be clobbered. Arts and Film Councils across the UK will lose a combined £161.2million. The Heritage Lottery Fund, which pays out to repair crumbling buildings and support museums, will miss out on £161million.

Miss Jowell said no existing lottery projects would be affected. The cash will be slashed from the sums the distributors would have received.

She also said charities and voluntary groups would be protected, telling MPs: "I am determined to ensure that this temporary diversion from the existing good causes to the Olympic good cause is done with the least possible disruption. London 2012 will bring huge financial gain to the whole country."

But Mr Mapp insisted: £The decision to divert a further £55.9million of Sport England's income between 2009 and 2012 is a cut too far and

seriously endangers the creation of a sporting legacy from the Games.

"The bid had at its heart a promise to build a legacy by increasing participation in sport and boosting community sport across the country.

"It is difficult to see how such a significant reduction in funding for these activities can be squared with the clear commitments the Government has already made about the wider benefits the Games will bring.

"This cut is a real blow to community sport in England. No other country has succeeded in delivering a sporting legacy from their Games. This makes our attempt harder."

Dame Liz Forgan, chairman of the Heritage Lottery Fund, said: "This is bad news for the UK's heritage. Our grant-making for the foreseeable future will be seriously reduced, affecting people right across the country.

"In recent years lottery money has been the single largest source of support, not only for our historic places, museums and galleries, but also for our natural heritage and cultural history."

Peter Hewitt, chief executive of Arts Council England, said: "We are deeply disappointed that more money is to be diverted from the arts. The impact is likely to be felt across the whole of England and disproportionately by smaller arts organisations, local projects and individual artists."

Tory MP Nigel Evans said: "The fact is that the Olympic symbol, the rings, are hanging like a noose now over future generations who are going to have to pay this huge debt that the Government has created because they have lost control over the financing of the Olympic Games."

In a bid to stop the bill rising even further, Miss Jowell has been told by the Treasury to bring in new project managers and financial experts.

London Mayor Ken Livingstone has pledged a further £300million from the Greater London Authority but said council taxpayers would not have to pay any extra.

The spiralling costs focus attention on the worrying financial legacy of other modern Olympics.

Montreal took until 2005 to finish paying its debts from the 1976 Games, while the acknowledged cost of Athens 2004 is now approaching £billion - four times the original estimate.