LONDON VAUXHALL DEALERS

The government has promised the Olympics will come in under budget – at a cost of less than £9bn to taxpayers – but will spend extra money within that on crowd control measures in light of a bigger-than-expected turnout for the jubilee celebrations and the torch relay.

The sports and Olympics minister, Hugh Robertson, admitted that organisers had underestimated by around a third the amount that would be required to pay for signage, stewarding and crowd control measures such as crush barriers and temporary bridges that will ease congestion in Greenwich and Hyde Park.

It is expected that larger than expected crowds could throng the capital in the three days before the opening ceremony as the torch enters central London and will turn out in huge numbers for the marathon and the cycling road race, which finish on the Mall.

"There is a certain amount of this that you assess as the thing develops and these costs emerge. As a government, you're caught here. The first responsibility of a government is the safety and security of its people," he said.

"We have to do everything we can reasonably do to ensure the safety and security of the very many people, judging by the jubilee, who will attend. There is an element of managing success here."

An extra £19m will be added to the budget for crowd-control measures and managing central London, taking it to £76m. Overall, there was an increase of £29m in the money released to Locog over the most recent quarter, including £8m for putting in concessions and toilets around the Olympic venues.

That will take the total that the London organising committee of the Olympic and Paralympic Games (Locog) has received from the public funding package to £736m, including a security budget to cover guards within Olympic venues that almost doubled to £553m.

Robertson said that the crowds who lined the river during the jubliee river pageant despite the inclement weather, estimated at around 1.2 million, and the popularity of the torch relay showed that numbers attending might be even higher than expected.

"We knew this would be the moment when people suddenly got this. But we have been pleasantly surprised by the sheer scale of it. If you consider that the torch is coming down the Thames [on July 27] the capacity for lots and lots of people to come and see it is increased," he said.

The additional investment was an insurance policy to ensure that London could cope with the influx, he said.

"London is going to be the place this summer, if the rain holds off, to come and have a party. It is very difficult to estimate how many people will take the car, the train or the ferry and come here for a party with a rucksack on their back."

Transport for London is planning on the basis that there will be 1 million extra people in the capital, although that could be offset by a decline in non-Olympic tourists.

Critics have claimed that Locog, which has a privately raised budget of £2bn to stage the Games but has now received £736m in public money on top of that, should be subject to greater scrutiny. But the government argues that all the public money that has flowed to the organising committee is either for pre-agreed elements of the budget such as security or is for new tasks that it has taken over from the Olympic Delivery Authority.

With the project 98% complete, there is £476m of contingency funding remaining, and Robertson said he could now be confident that it would come in under £9bn.

The National Audit Office had warned there was a real risk that the budget would be bust, but the Department for Culture and Media and Sport and the Government Olympic Executive have continued to insist that they would come in below £9.3bn.

The original bid estimated the cost of the Games at £2.4bn but didn't include VAT or security costs.

The Labour government, chastened by the experience of the Millennium Dome and Wembley, built in a huge contingency fund of £2.7bn when the current funding package of £9.3bn was set in March 2007. The huge increase was justified on the back of the regeneration of east London and other claimed legacy benefits.

Robertson said that the large contingency was a wise move because it allowed the project to weather the economic downturn, bearing the cost of building the Olympic Village and the International Broadcast Centre from public funds before selling them back to the private sector.

Much of the credit for coming in on time and on budget will go to the Olympic Delivery Authority, which came in more than £500m below its baseline budget through savings made during the construction process. Delivering the venues on time, despite the ongoing debate about the future of the £428m stadium, meant that it avoided the prospect of escalating costs as contractors rushed to finish venues.

Robertson said the publicly funded budget had delivered value for money: "I have been a cheerleader for this process right from the beginning. There was a recognition right from the word go the original figure would have to change dramatically. Everybody's eyes were opened to the possibility that this gave us once we had won the bid."

Attention is now likely to turn to the use of a surplus of more than £400m. Despite lobbying from some sports organisations, Robertson said there was no chance that it would remain within sport and would instead flow back to the Treasury.

But campaigners said that would "verge on money laundering", because lottery money that was partly used to fund the Games was diverted from other causes.

"It will be an utter outrage – and verging on money laundering – if lottery revenues raided by the government to fund the Olympics go back to the Treasury," said Jay Kennedy, the head of policy at the Directory of Social Change.

"This money was taken away from supporting vulnerable people and communities across this country at a time when they needed it most. Government needs to keep its promises and do the right thing – any underspend must be used to refund the Lottery as soon as possible."

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