Credit crisis is hitting funds for village, say Games chiefs

Chairman of the Olympic Delivery Authority John Armitt told a 2012 fringe meeting at the Labour party conference of the deep uncertainty created by the credit crunch.

Sitting next to Olympics Minister Tessa Jowell and London Organising Committee head Lord Coe he described how the financial turmoil created by bank collapses and bailouts had hit Olympic funding plans.

The ODA's preferred developer, Australian company Lend Lease, has not been able to raise the £450 million of private funding promised towards the £1billion bill for the village.

The Government has also warned the new Homes and Communities Agency to be prepared to act as a buyer of last resort for the village - a key feature of the east London Games site which will create thousands of new homes.

But Mr Armitt admitted the situation was now even worse than previously thought and said it was unclear how much more money could be raised privately in the current financial climate.

He said: "The reality is that the situation is changing by the day and the amount of finance that was available six months ago, a lot less than that was available two months ago and less than that was probably available last week.

"The reality is that getting a loan from the private sector for just about anything at the moment is just about impossible. And that goes for most businesses. In the meantime we've gone on with building the Olympic village. We are continuing our negotiations with Lend Lease and the banks.

"I'm very confident that we probably have more than half of the village covered. But it's a question of how much we finish up getting from the private sector."

The news follows suggestions that the £525 million Olympic stadium may have to be demolished to build a venue for a Premier League football club.

Ms Jowell spoke of the importance of securing an Olympic legacy for the capital.

She said: "This is what we are doing it for. There is no more powerful motivator than to regenerate the east end of London."

And Lord Coe said: "Fifty per cent of our teams in LOCOG and the ODA have the sole focus of developing great venues. The other half think about how we maximise their use afterwards."

Jonathan Edwards, Britain's former triple jump Olympic champion and world record holder, backed the Evening Standard's campaign to secure a proper sporting legacy for the 2012 Games.

He said: "I don't think anyone believes we should spend billions of pounds for a few weeks of sport. We all hope to look back on 2012 as a moment that changed London and the UK for the better for many generations to come."