£1bn Olympic budget may be 'inadequate'

The budget for the London Olympics – which was £2.4bn in 2005 but is now £9.3bn – could yet be overwhelmed by a "perfect storm" of soaring construction prices, plunging demand for housing and an increase in terror threats to the 2012 Games, according to a new report by a City troubleshooter. The £1bn contingency budget for the games may be "inadequate" because of increasing building costs, the credit crunch, slow security planning and delays in agreeing the Games' long-term legacy, Carphone Warehouse co-founder David Ross said.

More public money is likely to be needed to bail out the Olympic Village, while the credit crunch and the slowdown in the housing market has raised doubts over whether the sale of the site after the games will meet predictions, according to the report, commissioned by London Mayor Boris Johnson.

His report, presented to London Mayor Boris Johnson yesterday, also said Home Office plans for security at the Games were "significantly behind the rest of the planning" and could significantly increase costs and threaten the security of visitors. Mr Johnson will today outline an Olympics action plan to crack down on cost.