Olympics bail-out to cost taxpayer £500m after failure to secure private
finance
By Rebecca Camber
Last updated at 10:26 AM on 14th May 2009
Taxpayers stand to lose £500million in a £1billion bail-out of the
Olympic Village project after talks to secure private finance failed.
The athletes' village for the 2012 Games has had to be nationalised
after private investment dried up in the credit crunch.
The investment was supposed to be recouped through the sale of the 2,800
apartments in the complex after the London Games.
But if property prices continue to stagnate, Olympic chiefs estimate
that their sale will allow only half of the £1billion burden to the
taxpayer to be paid back into the public purse.
The Government has now raided another £324million from the Olympic
contingency fund to pay for the village in Stratford, East London,
raising fears that little will be left in the pot for unforeseen costs.
More than £100million is also being pumped into the village through a
social housing grant outside of the Olympic budget, allowing ministers
to claim that they have not broken their promise to stick to the
£9.3billion overall budget for the London Games.
The Government has already stepped in with contingency funds once this
year, providing £326million in January to ensure that building work on
the village could begin.
Quarterly budget figures show that £1.3billion of the £2.7billion
Olympic contingency fund remains unspent.
But latest estimates suggest that £703million of that has already been
earmarked by the Olympic Delivery Authority, leaving just £585million
spare with more than three years to go until the Games.
Yesterday Tory Olympics spokesman Hugh Robertson said: 'Today's
announcement means that over half of the £2.7billion contingency budget
has been used up delivering only a third of the Olympic programme.
'This has to be a cause for concern. The lack of private sector funding
for the athletes' village is a direct reflection of the severity of the
current economic downturn.
'As soon as market conditions improve, it must be sold to the private
sector and today's outlay recouped for the taxpayer.'
Originally the village, which is the most costly construction project on
the Olympic Park, was conceived as a privately funded project.
But contractors Lend Lease were unable to raise the required investment
because of the credit crunch and were only prepared to invest up to
£150million in equity.
This meant they needed a further £225million in bank loans to finance
the construction, and ministers rejected the package, deciding it was
not in the best interests of the taxpayer.
Olympics Minister Tessa Jowell said: 'A private-sector deal was
available but because of the credit crunch it was not a good deal. By
funding the entire project, the village will become publicly owned and
the public purse will receive substantial returns from sales.
'The Olympic Delivery Authority will make a fresh assessment of the
market nearer to completion with a view to pursuing deals with other
possible investors.'
The extra £324million investment, approved at a meeting chaired by
Chancellor Alistair Darling, includes £63million from savings elsewhere
in the overall Olympics project.
The total cost of the village, including £147million of post-games
development costs, will be £1.095billion.
Olympic Delivery Authority chairman John Armitt said: 'The majority of
contingency used to date has been for projects affected by the economic
downturn - the village and the international broadcast centre and
press centre.
'Nearly £1.3billion is left unreleased in contingency, the public sector
owns a world-class asset and we remain on track to complete on time and
within budget.'
Http://www.dailymai l.co.uk/news/ article-1181406/ Olympics- bail-cost-
taxpayer-500m. html
Posts
