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State takes control as cash crisis hits Olympic village
Matthew Beard27.05.09
The £1 billion Olympic Village was completely nationalised today after Games chiefs finally abandoned plans to raise private funding.
Olympic chiefs announced that a total of £650 million would be taken from the 2012 contingency pot.
A further £268 million will be provided for the social housing element of the project from the Government's Homes and Communities Agency.
The agency, run by Communities Secretary Hazel Blears, will part-fund the deal through private lending at commercial rates.
Today's deal brings the total bill for the village, including the £147 million post-Games conversion cost — to £1.095billion. The package was agreed last night by the funders committee of government ministers. During the bid for the Olympics it was anticipated that the village would be funded entirely by the private sector.
In the latest raid on the contingency fund, ministers released £324 million — on top of £326 million approved from the same source a few months ago.
With more than three years until the Games, only £702 million remains "unallocated" from an initial contingency pot of £2.7 billion.
The village's Australian developer Lendlease offered £375 million in cash and loans but this was rejected as "not in the best interests of the taxpayer".
Ministers offered a verbal guarantee that at least a third of the village's cost would be recouped in property sales after the Games. The Olympic Delivery Authority has scaled back the project from 4,000 to 2,800 apartments.
Affordable homes will make up 1,400 units and will be run by Triathlon Homes, a consortium of social housing groups. The ODA also revealed plans for an 1,800-pupil secondary school set in 10 acres of parkland on the village site after the Games.
In its quarterly update on the 2012 budget the Government said the anticipated final cost of the Games — after village receipts — would be £7.234billion, down £179million from the last quarter.
Olympics Minister Tessa Jowell said: "The funders decided that a public sector approach offered better value for money than a deal with the private developer and would cost substantially less public money in the long term." Tory shadow Olympics minister Hugh Robertson said: "Today's announcement is an unwelcome reminder of the severity of the current economic crisis.
Despite enormous infrastructure improvements around the park it still proved impossible to attract private sector investment on favourable terms."
More than three years until the Games and only £702million remains in the contingency fund.
Reader views (13)
To recoup some of the money can we have Coe and Jowell running around the track while the public lob eggs at them. Now that would be worth paying for....Id pay £20
- Dc, Ealing, London
I do agree
- Jingi, russia
The village looks rather ugly from the artists impression. I believe it's not too late to switch venue.Paris is good to go.
- Paul, Kent
It is totally unacceptable to expect tax payers to fund the games. This country is bankrupt. The games should be cancelled or the athletes housed in university halls of residence. This debacle proves that Coe and Jowell have proved not fit for purpose.
- R.F., Yorks, UK
Mike, according to ODA figures workers on the Olympic site constitute 63% British and 8% Irish. The remaining 29% are foreign workers with 14% of the overall total from non- European Union countries. Clearly the facts speak for themselves that the majority of people working on the site are born and bred in this country, and if you were to cancel the Games these several thousand would essentially be placed on the dole, whom would them be even more of a drain on the nation's financial purse than them being kept employed by the Olympic project.
- Darren, London
The 1000s of workers Darren refers to are two thirds migrants and oversea's workers so no great loss to the UK. This farce is just like the Dome where millions and millions kept being added to keep it going then it went bust at taxpayers expense. Its called cutting your losses and knowing when to quit hence why it should be scrapped now. How many more £billions will it be over budget in another 3 years and if it took Canada to pay of its debts from 70s games until last year what chance of UK paying for it in next 50+ years!
- Mike, London England
Why not just construct an Olympic shanty town.It's cheap and appropriate!
- Steve, London
I look forward to the flats being handed back to the UK taxpayer via a lottery then. Why should Landaners get the sole benefit of these flats? Northeners are not only putting money into banks to save rich Landaners, so they can rip us off until the next crash, but are also putting money into these flats so poor Landaners can benefit without doing anything to earn that benefit. If the flats aren't put in a lottery, one ticket per person only, then Landaners will be seen to have learned "nathin" from the debacle in the City and the rest of us will know if they have their way we are still to be fleeced forever more. We watch with interest to see what "appens". 
- John, Aberdeen, UK
And what would become of the half built stadium, venues, park and village in Stratford if the event was cancelled tomorrow Mike? Thousands of construction workers suddenly finding themselves redundant, a huge unfinished building site gathering dust in east London and an embarrassing apology to the IOC for giving up on the Games. Not exactly a great global advertisement for London, is it? The long term benefits of the change that is happening to this area of London are worth the short term financial pain we are currently facing. Don't throw out the baby with the bathwater.
- Darren, London
People are losing their jobs, being forced to take pay cuts, and still have huge taxes and daily expenses to pay. When are the MP's going to get it? We don't HAVE any more money to give them for their lavish schemes.
Chris, the amount of money spent will not equal the amount of money brought in for at least 30 years. The budget that was set for this project has exceeded the limit several times already. Why should we continue to pay out for the mistakes of the original budget, if they continue to get it wrong? It seems like the tax paying people of the UK are viewed as an open cheque book by those who are meant to be protecting our interests.
Do you REALLY believe the ordinary UK citizen will reap the benefits of the Olympics? If so, you probably believe in Mr Brown too.
- Smb, London, UK
I agree with the opportunity the Olympics brings to London, but I believe the Olympic Delivery Authority is taking advantage of the naivete of our current Government and is not challengin hard enough to ensure private sector investment and thus be able divert contingency funds to the legacy aspects which are being more or less ignored. As a former housebuilder, I find it hard to believe that the value to a private investor of the Olympic site is zero and that we taxpayers must cough up all the dough.
The Olympics is an area along with many others where the lack of strong political leadership required to maximise the wonderful opportunity is glaring. It is hard to believe in the credibility of any politician given the latest expenses scandal, and the alternative are not at all inspiring, but it is time for Labour to go.
- Mark, london
Intelligent comment as ever Mike.
Think about it - the Olympics is happening - and is likely to be the stimulus this Country needs both in a social/cultural sense, and an economic one.
If the Village does become largely funded from the contingency fund - then it is the public purse that will reap the re-sale rewards in 5 years time - not some private developer.
Think about it. The Olympics is a fantastic opportunity to bring the World to London (and their cash!)
Lets do it right.
- Chris, London
Scrap the whole farce now, UK is broke why make it worse?
- Mike, London England
