Tax threat over Games

Londoners could face higher council tax bills to pay for the Olympic Games under plans by Chancellor Gordon Brown to protect Treasury coffers.

The proposal would see Mayor Ken Livingstone granted powers to borrow money from the City and reclaim it from council taxpayers in the run-up to the 2012 Games.

Ministers have not reached a final estimate of the full cost. If it came in at £2.5 billion, average council tax could rise by £3 a week for seven years.

The Treasury proposal, which would be certain to dent public support for an Olympic bid, came as ministers raised fresh doubts over the value of seeking to host the games.

Culture Secretary Tessa Jowell released the findings of a governmentcommissioned opinion poll showing that most people would rather see the cash going to schools, hospitals, transport or even grassroots sport.

An alternative funding proposal from Ms Jowell's department could see a dedicated weekly lottery draw established to raise money for the Olympics.

The findings of the ICM poll came as a surprise because early selective leaks of its findings showed that four out of five Britons would like to see the Olympics come to London.

But asked about their priorities for spending public funds, 56 per cent said money would be better spent on improving grassroots sports facilities. About 40 per cent preferred the Olympics, with the rest undecided.

Further questions suggested voters would also prefer to see public funds spent on health, education or transport.

Backers of a bid claimed the questions were designed to produce a negative response and

that there was no guarantee that money saved by not bidding for the Olympics would go into any particular area of public spending.

ICM surveyed about 3,000 people across Britain, but with the sample weighted to London.

The Cabinet must decide by 30 January whether to support a bid. The British Olympic Association has warned that without full government backing it will drop the idea.

But in a Commons debate last night Ms Jowell was lambasted by MPs on all sides for sounding unenthusiastic about a London bid. The Culture Secretary told MPs that the decision was "finely balanced". Ministers are still unclear about how much a bid could cost taxpayers. A report commissioned from consultants Ove Arup estimated the public subsidy at £1.1 billion out of the £3.6billion total cost. Later work by civil servants revised the subsidy estimate to £2.5 billion, but the BOA is disputing the new figure.

MP after MP rose in last night's debate to tell Ms Jowell that her lack of enthusiasm could harm Britain's chances of beating foreign rivals including Paris and New York for the Games.

Only two out of 17 speakers, both Labour MPs representing Manchester seats, argued against a London bid. Ms Jowell has cited four tests which an Olympic bid must pass if it is to receive government backing.

She told MPs that the project was likely to be deliverable, but questioned London's chances of winning the international competition, and the value of the legacy the Games would leave in the capital. On the fourth test, affordability, she said: "Any public subsidy of the Games must, by definition, come from other areas of public spending. It is the duty of the Government to balance what are, inevitably, competing claims."