Thousands of community projects covering health, education, arts and sport face cuts or closures over the next five years to fund the £9.3 billion bill for the 2012 Olympic Games.

The costs, which have trebled since the Olympic bid was submitted in 2004, have forced Gordon Brown to raid a further £675 million from the National Lottery and £5 billion more from Whitehall departments. The Tories accused the Government yesterday of “massive financial mismanagement” as Tessa Jowell, the Culture Secretary, gave MPs the first detailed breakdown of the costs.

It emerged last night that the Chancellor had been pressing for a much larger contribution from the National Lottery, which Ms Jowell strongly resisted. Government sources told The Times that the negotiations with the Treasury had taken so long because Mr Brown had wanted £2 billion from the lottery. Yet the £675 million cut in funding that was finally agreed provoked anger, despite Ms Jowell’s assurances that voluntary groups and existing projects would be protected.

The National Lottery is already providing £1.5 billion for the Olympics, and any further call on its funds will have a huge impact on services, its leaders said. While grants till 2009 will be protected, thousands of new groups applying for cash in the next five years are likely to be turned down.The Big Lottery Fund, which supports tens of thousands of community projects, is to lose 17.5 per cent of its funding, totalling an extra £425 million over four years. The Arts Council England faces an extra £62 million cut, the Heritage Fund will lose £90 million and Sport England will lose £55 million during the same period.

Ken Livingstone has also agreed to supply a further £300 million — but this will not come from London council-taxpayers, who are already paying £650 million towards the Games. The Mayor of London pledged he would protect transport fares, but his office said the funding would be shared between Transport for London and the London Development Agency which is buying the land for the Olympic site.

The £9 billion covers the £5.3 billion cost of the park, including £1.7 billion for regeneration, £600 million for security, £850 million for VAT which will be met by the Treasury, £390 million for a community sports programme and a £2.7 billion contingency fund. The rising costs of construction, security and consultancy fees, the big contingency fund, and a shortfall in private sector fiance, are the main reasons for the problem.

Hugh Robertson, Tory Olympics spokesman, said: “The fact that the Olympic budget has almost trebled in just a year is a sign of massive financial incompetence from the Government. In raiding the lottery to make up the shortfall, the Government will penalise the clubs and small organisations up and down the country that were supposed to benefit from the Olympics.”

Peter Hewitt, chief executive of Arts Council England, said he was deeply disappointed that more money was to be diverted away from the arts. “The impact is likely to be felt across the whole of England and disproportionately by smaller arts organisations, local projects and individual artists — the main recipients of our lottery funds,” Mr Hewitt said.

Dame Liz Forgan, chairwoman of the Heritage Lottery Fund, said that the cuts were “bad news for the UK’s heritage” and that she expected libraries and museums to face serious cutbacks. “In recent years our lottery money has been the single largest source of support not only for our historic places, museums and galleries but also for our natural heritage and the cultural history of the people of these islands.”

Derek Mapp, the chairman of Sport England, said: “The decision to divert a further £55.9 million of Sport England’s share of lottery income between 2009 and 2012 to fund the Olympics and Paralympics seriously endangers the creation of a sporting legacy from the 2012 Games.”

Sir Clive Booth, chair of the Big Lottery Fund said that the Government’s decision to divert £425 million from its good-causes resources “will be a cause of concern for many organisations across the UK”.

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