London Olympics facing £1bn VAT bill

Dearie me, at first glance, it looked as though the Olympic planning folk had not done their homework properly:

"The 2012 Olympics were hit by a £1 billion tax bombshell today. The Treasury has told organisers they must pay VAT on building and staging the Games - a cost which was not built into the initial budget. It is refusing to back down on the bill, saying European rules on competition mean it cannot be seen to be aiding the 2012 organisers."

But then on further reading, it turns out that Culture Secretary Tessa Jowell had promised, when the London Olympics Bill was going through Parliament, that the VAT would be waived by the Treasury.

Maybe that was the original plan. However, now that the costs are in danger of spiralling out of control, dear Gordon is well and truly in a quandary of schizophrenic dimensions. Should he 'generously' waive all VAT, thus boosting his popularity, or should he act 'according to nature' and sting them for every last penny? It will be interesting to watch this one unfold. The downside is that if Gordon does claim the VAT, London council tax payers will find out all about it in a very painful way.