Olympic windfall hope

The Government is being urged to use an expected tax windfall to help cut the cost to Londoners of hosting the Olympics.

For every £1 bet on the new lottery, the Treasury would get 12p in tax. The game is expected to make about £3billion. After prizes and administration, London is expected to benefit by about £1.2 billion.

Now Mr Brown is under pressure to return the windfall ?340 million to the London 2012 organisers - helping to reduce the amount residents would have to pay in council tax at a stroke.

Under current arrangements, about £625million is expected to come from council tax - meaning a typical household would pay £20 extra a year for up to 12 years.

But a refund of the tax windfall could dramatically ease this burden - or help bale out the capital in the event that a London Games overruns its £4.875billion budget.

Conservatives met Mr Brown's Cabinet col league, Culture Secretary Tessa Jowell, last night to press home their request. They reason that the Chancellor has already agreed a similar refund of ?4million in VAT which the Treasury expects to make from sales of the new Band Aid single and Live Aid DVD.

They believe repaying the tax would provide the London 2012 bid with an enormous boost only days before full details of how the capital would host the Games are due to be submitted to the International Olympic Committee.

Tory shadow sports minister Lord Moynihan, who won a silver rowing medal at the 1980 Moscow Olympics, said: "It can be sorted out immediately and it would have all-party support. As a party we are completely supportive of the

Games and will do everything we can to support Lord Coe and the London 2012 committee. The major concern at the moment is the financing package. Londoners are being asked to pick up the lion's share of any overspend. That is a great concern.

"The prime minister of France has stated that its government will be injecting £1.7billion into a Paris Games. We have zero. Not only is nothing coming from the Government but they trouser the 12p Olympic lottery tax."

The IOC will decide in July which of five competing cities gets the 2012 Games. Paris is the favourite, with Madrid, New York and Moscow trailing London. All the candidates will submit their bids on Monday. The Government, Mayor Ken Livingstone and the London 2012 bid team are adamant that a London Games would not overrun its budget. They say the council tax rise is fixed and would work out at only 38p extra a week for a typical family.

But the Tories point to the experiences of the previous two host cities, Sydney and Athens, which both ended up with costs soaring well above planned expenditure.

They point out that Londoners face the risk of paying more council tax if the Games did overrun as the Government would look to the Mayor to help pick up the bill.

London 2012 refused to comment on the claims but Mr Livingstone said in a statement: "The funding package ne gotiated between me and the Government allowed for substantial contingencies. I am confident that a London 2012 Olympic Games can be delivered on the basis of this funding package."

A Department for Culture spokeswoman said: "We don't expect any cost overrun. The stakeholders have worked together to produce very robust costings."