Olympic Games risk going over budget as cost hits £11bn, say MPs

The overall cost of the 2012 Olympics to the public purse has risen to around £11bn while security costs at Olympic venues have more than doubled, a report by parliament's spending watchdog has warned.

The public accounts committee has calculated that the cost of the Olympics is overrunning its £9.3bn budget once unaccounted-for costs are included. The government rejected the committee's claim.

The budget increase could have been lower if the government and the Olympic authorities had taken a tougher stance over price negotiations with its main private contractor G4S, the committee said.

Margaret Hodge, committee chair, said MPs were particularly concerned about significant increases in the security bill and said questions should be asked about London's organising committee Locog.

"Locog now needs more than twice the number of security guards it originally estimated and the costs have roughly doubled. It is staggering that the original estimates were so wrong. Locog has had to renegotiate its contract with G4S for venue security from a weak negotiating position and there is a big question mark over whether it secured a good deal for the taxpayer," she said.

Locog's original estimate for the number of security guards in and around the venues was 10,000 – a "finger in the air estimate", according to the PAC report. The government announced in December that figure has more than doubled to 23,700. Security costs from the Olympics budget for venue security have risen from £282m to £553m in just a year.

An initial deal with G4S worth £86m had been signed in December 2010. But the following year this had to be rewritten as Locog received further advice about the needs for an increase in security provisions. As a result, G4S's contract increased to £284 million.

Estimates for venue security could have been better informed at an earlier date, and that late planning undermined the government's negotiating position and ability to drive down costs, the committee claims.

Due to significant increases in the cost of venue security, the likelihood of staying within the overall £9.3bn budget for funding from the public purse is very finely balanced, the report states.

Locog's chief executive, Paul Deighton, told the committee in December that he had just £5m spare in his separate privately-raised budget of £2bn. "We have £93m contingency and our expectation of risks is £88m, so we are very, very finely balanced," he said, although he is very optimistic of not going over budget.

Hodge said: "Taking into account costs outside the package, the full cost to the public of the Games and legacy projects is already heading for around £11bn."

The Olympics minister, Hugh Robertson, said last month that he was confident the project would be delivered for less than £9.3bn, claiming the latest projections showed that more than £100m would remain in the contingency pot.

A Department for Culture, Media and Sport spokesman said that ministers do not recognise the committee's figure of £11bn.

"The cost of purchasing the Olympic Park land will ultimately come back to the public purse through the resale of the land after the Games and was therefore not included."

He added: "Funding for the legacy programmes, that the committee refer to, comes from existing business-as-usual budgets and we have been clear about this.

"These are for projects designed to capitalise on hosting London 2012 but are not an additional Olympic cost.

"We are completely committed to delivering on Lord Coe's promise to use the Games to inspire a generation to choose sport."

The Home Office said: "The venue security budget will fund venue security personnel, the associated recruitment and training costs, as well as search and screening equipment that will protect more than 100 competition and non-competition venues across the United Kingdom.

"In all the decisions taken about Olympic security we are determined to secure the best value for the taxpayer while delivering on our promise of a safe and secure Games."