Security costs for the 2012 Olympic Games have risen by a third to £838 million, and there is a 20 per cent chance that the £9.3 billion total budget will be exceeded, the Government admitted yesterday.

Tessa Jowell told MPs that the Olympic Delivery Authority (ODA), which is responsible for building the venues, was on course to stay within its £8 billion budget, including a £2 billion contingency fund. But figures published yesterday show that policing costs were already expected to rise by at least £238 million to £838 million, pushing the total to nearer £9 billion – three times the original bid price.

Officials conceded yesterday that the security costs were difficult to gauge and could rise further in the event of unforeseen events, such as a terrorist attack. Ms Jowell, the Olympics Minister, said that regular meetings would be held with the Metropolitan Police, the relevant Cabinet Committee and the Home Office to scrutinise costs. There were also uncertainties about transport and construction costs. The ODA had been allocated £500 million in contingency costs to cover site preparation, venues and transport expenses where prices have been higher than expected.

Olympic chiefs are concerned about rising construction costs and the small number of bidders that are prepared to come forward to tender for the key venues. Those that have put in bids are trying to reduce the risk of spiral-ling costs, such as those that blighted Wembley Stadium, by ensuring that the Government picks up most of the bill if the costs overrun.

The final bill for some of the biggest venues, such as the Aquatics Centre, have still not been finalised. But the Olympic Stadium is, at £496 million, already double the original bid price and the Aquatics Centre could be triple the bid price of £75 million.

Building cost estimates have risen by about 25 per cent over the past year, fuelled by a shortage of skilled labour and soaring prices of raw materials, particularly steel and glass. Demand for projects in China and India have outstripped supply.

Many of the biggest British construction firms are preferring to pool their resources for multibillion-pound projects in the Middle East. John Mc-Donough, group chief executive of Carillion, the construction firm that is bidding to build the media centre, told The Times: “There is still a competitive element but not a long queue of people bidding. The Middle East has three times the margins of the UK. So guess where we want to go.”

Officials admitted yesterday that, following a risk assessment, there was only an 80 per cent chance that the Games would be delivered within the £8 billion ODA budget, and that no risk assessment had been made for policing costs.

However, Ms Jowell tried to reassure MPs that most aspects of the Games had kept within the overall figures published last March. In a written statement in the Commons she provided the most detailed breakdown of the Games so far, drawn up by CLM, a consortium that is helping deliver the venues in the Olympic Park.

“The budget is consistent with the funding package I outlined in March this year,” she said. “Months of careful scrutiny have confirmed that the ODA has the money it needs to deliver the venues and infrastructure for a terrific summer of sport, as well as leaving a long-term legacy for one of the most deprived parts of the country.”

The breakdown shows that nearly £2 billion will be spent on the preparation and infrastructure of the site, and nearly £1 billion will be spent on the venues, including the £496 million Olympic Stadium. Transport costs are expected to reach £897 million and other projects in the Olympic Park, including security for construction workers, will total £868 million. The final total is £8 billion excluding policing costs, legacy costs and the expenses of running the Games, which will be picked up by the London Organising Committee of the Games through private sponsorship.

Hugh Robertson, Shadow Olympics Minister, said: “Today’s statement establishes a welcome initial baseline but falls far short of the full and open budget we had been seeking.”

Going for gold

ODA base cost £6.09 billion

Contingency fund £2 billion

Security costs £838 million

Elite and community sports £290 million

Paralympic Games and Look of London £98 million

Total £9.3 billion