London Eye from St James's Park.

So it's happening. Tony Blair has finally announced he is throwing his weight behind a London 2012 bid, as it was obvious all along he would.

Headhunters Saxton Bamfylde are interviewing Tony Cronies to head up the bid. Which businessman wants to spend two years on a project with a 30% chance of success? Tony knows he needs better than the piss-poor Lord Falconer who did for the Disastrous Dome.

But the decision about the bid leader is a distraction from the really important unanswered questions: what is the infrastructure investment that a London Olympic Games would require and how would it be paid for? And how can we ensure that a London Olympic bid (and any eventual London Olympic Games) incorporate the very best principles of openness and good governance?

In the battle of spin so far, the bid committee refused to state what infrastructure investments would be needed in order for London 2012 to go ahead. The public were only ever told of the cost of the operations of the Games themselves (though they also omitted the cost of the Athlete's Village and other items from their estimates, blithely assuming it would be commercially developed and sold at a profit). Here's what the Select Committee said in January:

Before any city can host the Olympics, in addition to operating costs, between £5 billion and £13 billion of additional investment in infrastructure is needed. In the case of London the burning question is Crossrail. But there are others: you that you will soon see BAA claiming that the three new runways it wants are absolutely essential if London is to host the Games. And that's just the start of the list.

Part of the problem lies in the nature of the Olympic bidding process itself. With the most egregious practices of simply buying IOC votes supressed, and the Olympic Games formula down to the last pigeon and fanfare laid out in the the Olympic Charter, the modern way to win the bid process is to promise ever-more over-blown transformations of the host city. Athens is spending £13 billion of EU money on this, and calling it an Olympic legacy. Of course the unelected IOC belly-scratchers in their 5-star hotels love it!

The much-vaunted funding package which Tessa Jowell and Ken Livingstone have put together will fund the operating deficit of the Games, but not the infrastructure costs, and not the knock-on costs of security and social services outside the narrow confines of the Olympic venues themselves.

In essence there are three ways to meet these astronomical, and so far unbudgeted costs:

• The Barcelona Model, in which the whole country is taxed, and the proceeds invested in the host city;
• The Athens Model, in which the whole of Europe is taxed, and the proceeds invested in the host city;
• The Montreal Model, in which the host city is taxed, and goes spectacularly bankrupt.

So, Mr Blair (and whichever Nabob you annoint with your great wand of bid leadership): which Model will London 2012 follow: Barcelona, Athens or Montreal?

Sydney and Athens demonstrate the risks. Inspection of their true costs, not just those met by the Organising committees, but also those borne by the public purse, exposes the cynical process by which bid leaders mis-represent the cost of hosting an Olympic Games, only to present taxpayers with the bill later.

According to the Auditor-General of New South Wales, Sydney 2000 ended up costing over twice the pre-bid figures. In Athens, total costs will be at least four times as high as the bid committee's initial budget. The extent of spending on infrastructure for the Athens Olympics is so huge it's hard to establish an exact figure, but the majority of the famous "Olympic Legacy" of Athens is in fact being largely borne by EU taxpayers under the unaudited and colossally wasteful Community Support Funds.

In their attempts to win public support, we were repeatedly told by the bid backers that the London Olympic Games would make a profit. We were told that they would cost less than £2 billion, that the public subsidy will be less than £500m and that their legacy will be an enormously improved sporting and transport infrastructure.

These claims proved to be garbage. They were based on a report commissioned in Summer 2002 by Sport Minister Richard Caborn and Mayor of London, Ken Livingstone. I am proud that my letter to the Evening Standard back in October 2002 was the first shot in a humiliating climbdown by the bid leaders, a climbdown that culminated with all parties except the economically-illiterate Ken Livingstone accepting that the London Olympics will require a vast public subsidy.

The bid leaders' were basing their absurd claims about profits on a cost/benefit report undertaken by construction engineers Ove Arup and property consultants Insignia Richard Ellis. Ove Arup, you will note, are not economic forecasters. They are, of course, winners of several awards for Sydney 2000 Olympic venues.

When the costs were examined by the Treasury, they had to be revised upwards. Ove Arup now claim the costs will be nearer to £3.6 billion. The Government now thinks £5.2 billion might be the right answer for the costs, and the shortfall would be £2.6 billion, to be funded from a combination of central government, a precept on London Council Tax and a special Lottery game.

We should be very sceptical of all these figures until we see the detail behind them.

The second burning issue is openness, transparency and governance.

The Olympic Movement has staggered from one scandal to the next. If it isn't bribery, it's drugs. If it isn't drugs it's influence peddling (this year most of the leadership of the US Olympic Committee resigned in yet another ethics scandal). If it isn't influence peddling it's abuse of athletes by Olympic coaches. If it isn't abuse of athletes, it's drugs again. It never ends. And it will never end until the governance of the Olympic Movement is reformed.

Especially in the wake of the corporate scandals that have rocked the world, we still have the self-elected IOC presiding over a billion-dollar franchise, deciding on the fate of cities, completely unaccountable.

If the Olympics are not won cleanly and held cleanly, they are not worth spit. The Olympics should be a model of good, open governance, so that not only can we point to the athletes as models of their generation, but we can point to the organisation as a model for corporations and charities around the world.

Is this what we are going to see if London wins the bid? So far we have had spin, attempts to fool politicians and public over the costs, lack of openness, a patronising refusal to publish anything more than the summary of a report paid for by the taxpayer. The signs are very poor indeed.

I say this in the spirit of trying to drum into the bid leaders the understanding that they are playing with fire. The Olympic Movement cannot stand another scandal. You think people love the Olympics because you surround yourself with people who love the Olympics. Look at the anti-globabalisation movement. Look at how little respect people now have for once-revered institutions. Do not kid yourself that you have dealt with the causes of the rottenness at the heart of the Olympic Movement. You have not.

If you do not want Londoners to turn against your beloved 2012 bid over the coming years, this is what you have to do:

Do these things now, when you are riding high, when there is euphoria about the bid. Don't wait until opposition builds up, until the truth about how Athens won the 2004 Games hits the headlines, until 2008 when the demonstrators against China's occupation of Tibet are camped outside your Wandsworth bunker and until you are mired in a thousand controversies about the London 2012 Olympic Games!

As for me, I don't have a strong view on whether or not London should host the Games. I think on balance we have enough transportation and housing problems, without adding more. It shouldn't really take an external stimulus like an Olympic Games to sort these out.

If in 2005, after a proper and well-informed public debate, the public (and in particular Londoners) want to proceed with a final bid, then and only then is it proper to do so. Otherwise stand by for another unpopular and expensive White Elephant, by the same team that brought us the Millennium Dome!

London 2012 Bid Standards

Click here for my proposal on the standards we should demand of a London bid and a London Olympic Games.