New threat of tax rise to fund Olympic shortfall

The row over where an extra £900 million will come from to meet the new £3.3 billion cost of the Games intensified following a dramatic outburst from Lottery chief Sir Clive Booth.

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Under the Olympic 'Memorandum of Understanding' between ministers and the Mayor, any funding shortfall is met by cash from the Lottery and London council tax. However, Sir Clive Booth, chairman of the Big Lottery Fund, today said ministers would be making a huge mistake by demanding more from the Lottery in addition to the agreed £1.5 billion.

In an unusual public attack on the Government, Sir Clive said further raids would have a massive negative effect on projects supporting the underprivileged.

He said: "We are talking about disabled children, vulnerable old people and the mentally handicapped. There are real casualties in this and smaller charities who are doing important work. It will leave a sour taste if the Olympics goes forward on the back of these other people."

Mr Livingstone has vowed to fight to ensure Londoners do not pay more than the agreed £625 million towards the Games - an extra 38p a week in council tax for up to 12 years for the average household. But with such fierce opposition from the Lottery, the Mayor will come under intense pressure to take on more of the burden.

Talks involving the Treasury and Mr Livingstone are taking place. Olympics Minister Tessa Jowell has promised to give details of the new bill for building the Games venues in Stratford early this year.

She has repeatedly refused to rule out the possibility of either Londoners or the the Lottery paying more. But it is becoming clear the Government is not going to be able to meet all the shortfall through the Lottery because of likely opposition from MPs and the public.

Sir Clive added: "Any further significant diversion from the Big Lottery Fund towards the Olympics would have a damaging effect on the Fund's ability to fulfil its mission to improve communities and the lives of people most in need."

However, a spokesman for Ms Jowell's Department for Culture, Media and Sport said: "We accept that using the National Lottery for London 2012 represents a loss of income for non-Olympic good causes. But we remain convinced the benefit the Games will bring will far outstrip any effect created by such a diversion."

In November Ms Jowell admitted the baseline cost to the public of building the Olympic park had risen by £900 million from the original £2.375 billion budget.

The Government has confirmed other sources of funding are being looked at and the private sector may be approached. But the overall bill will almost certainly rise beyond £3.3, with some experts suggesting it could reach more than £6 billion.

Mr Livingstone has repeatedly stated his belief that not a penny more should come from council tax. In November he said: "The truth is ... 38p a week is something I have no intention of increasing, whatever the Government pressures are."

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