MPs were misled over liability for the Dome's debts

The row over the Millennium Dome intensified last night after it emerged that the project is now £80m over budget and that Parliament was twice misled over the attraction's true legal status.

The row over the Millennium Dome intensified last night after it emerged that the project is now £80m over budget and that Parliament was twice misled over the attraction's true legal status.

David James, the executive chairman of the New Millennium Experience Company (NMEC), confirmed long-held suspicions that the true cost of building and fitting out the attraction is now £839m. Its official original budget was £758m.

He admitted to MPs on the Public Accounts Select Committee last night that £46m of spending by Ford and British Telecom in building their two zones at the Dome had not been included in the initial budgets or the revised budget of £739m produced after the depth of its financial crisis emerged in September.

The committee also revealed, during a detailed public hearing into the Dome's finances, that Parliament had not been told by either Chris Smith, the Secretary of State for Culture, Media and Sport, or Lord Falconer, the "minister for the Dome", that taxpayers would have been forced to meet the Dome's debts if it closed early.

It also emerged that underparliamentary procedure, the directors of the NMEC did not have the automatic right to an indemnity against being personally liable for debts if the Dome collapsed.

David Davis, the Conservative chairman of the Public Accounts Select Committee, revealed that Parliament's most senior legal authorities had ruled that because the NMEC was a company, its directors did not have the right to expect an automatic indemnity from the Government. In his legal opinion, Sir John Bourne, the Comptroller and Auditor General and head of the National Audit Office, said ministers would be legally required to meet any debts from taxpayers' money, not lottery funds, as was widely believed.

These rulings have stunned Robin Young, the permanent secretary at the Department of Culture, Media and Sport. Mr Young admitted he did not know this was the case, and said he might have to apologise to Parliament. He said to the committee: "I will naturally apologise now or later" if those opinions were shown to be correct.

The legal opinions also suggest that ministers again misled Parliament by failing to properly explain that Parliament would be offering the Dome's board an exceptional level of protection against bankruptcy.

Under questioning from Barry Gardiner, the Labour MP for Brent North, Mr Young admitted that if the Dome had been closed down in September, it would have been illegal under the two Lottery Acts for any lottery money to be used to pay off its creditors. Independent estimates put the total cost of closing the Dome early as high as £200m, but £179m extra in lottery money has now been spent on shoring up the attraction's 50 per cent collapse in visitor numbers.

This fact, which was again never disclosed to MPs or peers, raises significant questions about the Government's insistence that the Dome should be kept open for its full year.

* The veteran theatre director Sir Peter Hall revealed yesterday that the management of the Dome turned down his offer to stage an epic production there, informing him that theatre was "middle class and élitist". A spokesman at the Dome refused to comment last night.