Olympics costs hit £650m a year and could go higher

Olympic officials are spending more than £650m a year to build the London 2012 Olympics and have not ruled out asking the government for more money.

Olympic Delivery Authority (ODA) chief executive David Higgins said £1bn had been spent in the past 18 months and another £1bn would be spent over the next 18 months to ready the Olympic Park for competition.

But even more could be required if banks refuse to lend money to fund the Olympic village being developed by Bovis Lend Lease, which has struggled to finance the project.

Mr Higgins said despite work starting, a funding arrangement for the village was not yet in place.

He confirmed final arrangements would involve “some element” of public money but that it was “highly unlikely” banks would outright refuse to fund the project.

Despite the bullish claims, the ODA said it was trying to secure down costs by pre-ordering materials, including 10,000 tonnes of steel, and scaling the village down from 4,000 apartments to 3,000.

Mr Higgins said officials were negotiating with housing associations for a cash injection, with one association agreeing to buy 900 of the village apartments.

"(Bovis Lend Lease) want to remain involved in the village and invest equity." Mr Higgins said.

"We are working with housing associations and other partners to come up with a financial structure and hold to our goal to have financial close by the end of the year."