Look Tessa, a bill for a billion

Tessa Jowell, the Secretary of State for Culture, Media and Sport, has explained that the oversight arose because when the Olympic Games bid was being put together, the legal status of the body to be set up to prepare the Games had not yet been decided. She claims she had received assurances from the Treasury that VAT on construction of the sites would be waived. The Olympic Delivery Authority was eventually set up, but the nature of its corporate structure means that a waiver of VAT would breach EC rules on state aid.

So what is going to happen? The government bodies are trying to downplay the situation, by claiming that the VAT payment is an 'internal transaction' between them. Not if the eventual cost is going to be borne by the taxpayer, it's not. Tony Blair has stepped in and promised that the taxpayer would not be expected to pay the VAT bill, but how many times has he made a promise, only to break it? The Fisherman rather suspects that Uncle Gordon will waive the VAT bill. There is a leadership election around the corner, you see, and our dear Gordon is not averse to a bit of good publicity. He did, after all, come to the 'rescue' of the Live8 concert last year by waiving its (around £500,000) VAT liability. The Olympic Games are a much, much bigger prospect. Watch this space.