The construction industry has the Olympic Delivery Authority (ODA) “by the short Olympic rings” according to a Labour MP.

Austin Mitchell made the charge following the government’s admission that the entire £2.7bn contingency fund for the 2012 London Games is likely to be spent.

The revelation from Jonathan Stephens, permanent secretary to the Department for Culture, Media and Sport (DCMS) means the budget for the Games is likely to be at least £9.3bn – double the original estimate.

Labour MP Don Touhig described the disparity as "the most catastrophic piece of financial mismanagement in the history of the world".

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The admission from Mr Stephens came during a heated appearance in front of the Commons committee, which was questioning Olympic officials over the revised budget.

Mr Stephens said: “The only safe assumption is to expect all of it to be spent. Obviously we are all working to ensure that less is spent but on a project of this size we might expect risks will materialise, and as they do contingency will be transferred to the ODA.

“We are trying to advance the timetable to deal with cost pressures but it is realistic to expect a significant amount, if not all, of the contingency to be spent.”

The original budget, compiled in 2004, claimed construction costs would amount to £2.375bn, while a further £1bn was set aside for regeneration costs. Another £700m was to come from the private sector.

Olympic officials had previously insisted that the new construction budget was broadly comparable to the 2004 figures once VAT and compound inflation to 2012 prices was taken into account – a claim which is somewhat contradicted by this latest admission.

ODA Chief Executive David Higgins, however, insisted that the body is working to keep costs down.

(NS)