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Games 'at risk of exceeding budget'

The London 2012 Olympics is in danger of overshooting its £9.3 billion budget unless "rigorous action" is taken to curb costs, the Whitehall spending watchdog has warned.

The National Audit Office (NAO) said a doubling in the estimated security costs meant the budget was now so "finely balanced" there was a "real risk" that additional taxpayer funding would be needed.

Ministers insist more than £500 million remains in unallocated funds for dealing with any further contingencies.

However the report is likely to alarm the Treasury at a time when public spending is being pared to the bone as the Government grapples with the massive deficit and flagging economic growth.

The NAO also highlighted delays in finalising the transport plan for the Olympics and warned that without effective operational planning there could be "abiding damage" to the reputation of the Games.

Overall, the NAO said that the Olympic Delivery Authority remained on course to complete its work on the Olympic Park on time and on budget. However, on current projections, almost all the £9.298 billion public sector funding package is likely to be required, with little margin for any further unforeseen costs emerging in the final eight months.

Sports minister Hugh Robertson, who has announced a further £41 million in public funding for the opening and closing ceremonies, insisted the budget remained under control.

"Consistent careful management of the finances has enabled us to fund additional costs such as venue security from within the public sector funding package, as well as to invest in projects that will help drive economic growth from the Games," he said.

However, the head of the NAO, Amyas Morse, openly questioned the Government assurances on the Olympic financing, warning that it had little room left for manoeuvre.

"Not everything is rosy," he said. "The Government is confident that there is money available to meet known risks, but, in my view, the likelihood that the Games can still be funded within the existing £9.3 billion public sector funding package is so finely balanced that there is a real risk more money will be needed."

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