Tories to cover millennium debt

In a last throw of the dice to rescue the pounds 700m Millennium Exhibition at Greenwich in south-east London, the Deputy Prime Minister, Michael Heseltine, has agreed that the Government will underwrite all its costs, making it into a public, rather than private project.

This unusual reversal of the Government's credo is an attempt to keep the plans on track in the face of refusals by Labour to guarantee any potential losses. It is also a recognition that although the private sector was to have contributed pounds 150m in sponsorship, less than one-third of that has been guaranteed so far.

Under the plan the organisers, Millennium Central, would become a quango, rather than an independent entity as it is at present. However, the agreement of the Labour Party, which is needed because of the likelihood that it will be in power when the event takes place, has still not been obtained. Jack Cunningham, Labour's heritage spokesman, has refused to sanction the pounds 700m budget, which includes pounds 200m from the Millennium Commission.

Earlier this week in Parliament Mr Cunningham said that the ultimate cost might be pounds 1bn and wondered whether the scheme should go ahead "at any price or be allowed to pre-empt more and more Millennium Commission funds".

There is a suspicion that Labour would like to see the whole plan ditched in favour of smaller, regional exhibitions. One source involved in the plans said: "Mr Cunningham is not being clear. He keeps on saying the budget is excessive, but he refuses to say exactly how much should be spent on the project." According to consultants to the organisers, losses could be up to pounds 427m, if there were building site overruns and a bad summer.

The decision by Mr Heseltine to "nationalise" the exhibition carries echoes of the Festival of Britain in 1951 when a similar move was made in the late Forties by the ruling Labour Party to ensure that the event would take place even if the Tories won the 1950 election. In the event, Labour just held power and by the time the Tories won later in 1951, the festival was so popular that they did not attempt to curtail it.

According to Richard Weight, who is writing a book about the exhibitions of 1851, 1951 and 2000, concerns about overspending may be exaggerated. He says that criticism of overspending on the Festival of Britain was "so strong that they managed to keep to budget. The Arts Council was even left with a surplus since its events were so popular".