Taxpayer faces £60m bill for delays to new Greenwich homes

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A report by the National Audit Office today said English Partnerships, the Government's agency for regeneration, would struggle to meet its target of constructing 4,250 houses by 2016 in the area around the former Millennium Dome, which is now known as the O2 arena. Under the terms of the development, drawn up in 1997 when the Government spent more than £225million on securing the peninsula for redevelopment, a share of profits made on the 170-acre site would be returned to the public purse.

But these profits will not be realised until the new homes, 38 per cent of them affordable, are built. Tim Burr, head of the audit office, said: "The Greenwich Peninsula is an ambitious regeneration, highlighted by the landmark O2 venue. The pace of housebuilding is already two years behind schedule... English Partnerships needs to safeguard returns to the taxpayer by addressing the effects of delay."

Edward Leigh, chairman of the Commons public accounts committee, said: "Returns to the taxpayer from the residential and commercial part of the deal are likely to be lower than forecast - to the tune of between £45million and £60million. English Partnerships needs to use its influence with key players in this project to recover lost ground."

English Partnerships admitted today that early forecasts had "slipped".

Chief executive John Walker said: "This has been due to the sheer complexity of the task and a huge amount has been achieved in the meantime.

"Over 50 planning conditions have been met, commercial development has begun, with the first new offices opening next year, and Ravensbourne College has announced its intention to relocate there.

"I am confident that £550million will be returned to the taxpayer over the lifetime of the project."