Tax row escalates over 2012 Olympics

Tuesday, 7 November 2006 12:00 AM

Ministers have admitted the 2012 Olympics could face a tax bill of as much as a billion pounds that was not included in the original bid.

Sport minister Tessa Jowell told the Commons yesterday that the original file for the Olympic bid did not include VAT costs.

This morning chancellor Gordon Brown said the bill would be paid whatever the cost - stressing that the government had made a commitment that the Olympics will be completed.

Opposition parties have said this added tax bill could prove catastrophic.

"There's now total confusion as to whether or not VAT has to be paid on Olympic buildings," said Hugh Robertson, shadow minister for sport and the Olympics.

"The issue of VAT on the Olympic sites was raised by the Conservative party during the passage of the London Olympics and Para-Olympics Bill and we received specific undertakings from the government that the Treasury would waive these costs.

"It would be catastrophic if Gordon Brown were to renege on that commitment now."

Liberal Democrat culture media and sport spokesman Don Foster MP added: "With up to £1 billion at stake, Tessa Jowell and Gordon Brown must get their acts together.

"The credibility of our ability to build the Olympic facilities to budget is already under strain and this confusion does nothing to inspire confidence."

The government admitted there was no tax bill in the original Olympic bid paper, but said that regardless of the eventual cost the Olympics would be delivered on time.

Culture secretary Ms Jowell told parliament yesterday: "The candidature file did not include VAT on construction of venues for 2012 because the position at that time of the unspecified delivery body - which had not been legislated for and which had not been given effect - could not be anticipated.

"The funding needs of the games - including VAT, the need for security - are a matter of continuing discussion within government.

"This is a large and complex project and a major issue that we are working through. The International Olympic Committee has expressed its utter satisfaction with the progress being made in the planning of the games."

This morning the chancellor gave assurances that this will not prevent the Olympics being completed.

"The Olympic bill will be paid," he told Today

"Whatever happens we are committed to making the Olympics work."

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• domestic policy
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• london 2012 olympics
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• sport