The costs of mounting the Games are separate from those for building the venues and infrastructure, and redeveloping the land for the Olympic Park. While the Games are privately funded, the venues and Park costs are met largely by public money.
On 15 March 2007 Tessa Jowell announced to the House of Commons a budget of £5.3 billion to cover building the venues and infrastructure for the Games, at the same time announcing the wider regeneration budget for the Lower Lea Valley budget at £1.7 billion.
On top of this, she announced various other costs including an overall additional contingency fund of £2.7 billion, security and policing costs of £600 million, VAT of £800 million and elite sport and Paralympic funding of nearly £400 million. According to these figures, the total for the Games and the regeneration of the East London area, is £9.345 billion. Then Mayor Ken Livingstone pledged the Games Organising Committee would make a profit.
The costs for staging the Games (£2 billion) are funded from the private sector by a combination of sponsorship, merchandising, ticketing and broadcast rights. This budget is raised and managed by the London 2012 Organising Committee. According to Games organisers, the funding for this budget broadly breaks down as:
64% from Central Government;
23% from National Lottery
13% from the Mayor of London and the London Development Agency
On 18 August 2007 The Belfast Telegraph reported that jubilation over winning the right to stage the Olympic Games was becoming more muted as realisation dawns on the public of the enormous costs involved in creating facilities for the athletes.Grassroot sport cuts will fund the Olympics, government figures suggested on 19 August 2007.
In November 2007, Edward Leigh MP, criticised the organisers for significantly under-estimating the cost of staging the games, suggesting they had either "acted in bad faith or were incompetent".
On 10 December 2007 Tessa Jowell announced confirmation of the budget announced earlier in 2007. In June 2007, the Ministerial Funders’ Group (established to manage the allocation of contingency to the ODA within the overall budget) met and agreed to a first allocation of contingency to the ODA, being £360 million out of the £500 million of initial contingency announced in March, to enable the ODA to manage early cost pressures.
Following its second meeting on 26 November 2007, the Funders’ Group has now agreed a baseline budget and scope proposed by the ODA. The total budgeted base cost to be met by the public sector funding package remains at £6.090 billion including tax and excluding general programme contingency as announced in March. This includes the allocation to the ODA of the remaining £140 million from the initial £500 million contingency announced in March.
There have, however, been concerns over how the Olympics are to be funded. In February 2008, a London Assembly culture and sport committee report expressed concerns over the funding of the games taking away money from London's sports and arts groups. There have also been complaints that funding towards the Olympics has been to the detriment of funding other areas of the UK. In Wales, there has been criticism from Plaid Cymru about the games depriving Wales of money, by using UK-wide funding rather than English funding. The Wales on Sunday newspaper claimed former UK Prime Minister Tony Blair broke his promise to not use National Lottery funding for the Olympic games.
As at December 2009, the Delivery Authority had allocated £702 million of Programme and Funders’ contingency, largely to cover the decisions to publicly fund the Village and Media Centre after it became clear private funding could not be secured on acceptable terms during the 2008 to 2010 economic crisis. According to the Government Olympic Executive and Olympic Delivery Authority risk assessments the remaining £1,270 million contingency is sufficient to manage risks to the Delivery Authority’s programme.
Also from May 2010, the Olympic budget will be cut by £27 million as part of the £6.2 billion cuts by the new Conservative-Liberal coalition government.
On 19 July 2011, Hugh Robertson, Sports & Olympic Minister,revealed that he expected the project to be delivered on time and under budget. "With one year to go to London 2012, the Games construction is 88 per cent complete and ahead of time and under budget. That is an extraordinary thing for a Government Minister to be able to say a year out from the Games.