Olympic chiefs admit: We may bust £2.7bn contingency budget

John Armitt, chairman of the Olympics Delivery Authority, admitted he could not guarantee the project would not go over budget.

The ODA has already dipped into almost £500 million of the contingency fund set aside for cost overruns on the project.

Mr Armitt told MPs the £2.7billion fund was a "realistic assessment" and that he intended to stick to the strict spending limits.

However, he added: "If you say to me do I guarantee absolutely that this is going to happen, no I couldn't do that."

The admission was made during a grilling by MPs of Olympics chiefs in the second parliamentary inquiry into Games finances since the budget tripled to £9.3billion in March.

Senior 2012 figures admitted last month the contingency fund will almost certainly be spent in its entirety.

But the latest admission that the total cost of the Olympics could not be guaranteed to stay within budget prompted concerns that the overall £9.3billion bill could rise.

Shadow Olympics minister Hugh Robertson said: "The contradictory messages being given out about the budget will give nobody any confidence at all that the process is under control.

"Until the Government produces an open, honest and transparent budget it is difficult to have any confidence at all that the current figure will be final."

Mr Armitt told the Commons Culture, Media and Sport Committee that the huge emergency reserve of £2.7billion was "very sensible" in the circumstances.

"We have every confidence that it is realistic and we treat it as the absolute maximum we have available to us to deliver these Games," he said.

Facing criticism from the committee that £2.7billion was excessive for a contingency fund, the Olympics boss said it represented about 40 per cent of the total budget before VAT (£6.7billion), which he described as "quite normal".

"As the project develops and you have more certainty so it goes down. By the time you sign the contracts with the contractors you may have gone down to 25 per cent," he said. "All we're doing is saying we have very limited information at the moment."

ODA chief executive, David Higgins, added: "We expect a substantial part of the contingency to be spent on a programme of this complexity. Clearly we want to minimise the expenditure."

Refusing to confirm whether even more contingency funds existed, Mr Higgins revealed that Olympics minister Tessa Jowell would publish a detailed budget within the next fortnight.

Meanwhile, accountancy firm Deloitte was announced as the latest "second tier" official sponsor of the 2012 Games.

The firm's status as "professional services supporter" means it will inject at least £20 million cash as well as provide professional support. In return, Deloitte will use the 2012 logo and get hospitality tickets for the Games.

Olympics chiefs have already raised £170 million from three main sponsors - Lloyds TSB, EDF and Adidas - and hope to have raised 40 per cent of the £650 million sponsorship target by March.