London 2012 Venues Get £461m Bail-out

The government has been forced to use £461m of its £2bn contingency fund for the London 2012 Olympics to help support construction costs on two of the main projects for the Games after private sector funding failed to materialise.

The £900m Olympic Village will receive £326m from the fund, while two media centres, costing a total of £355m, will get an extra £135m.

Despite the early use of the contingency fund money, Olympics Minister Tessa Jowell pledged that spending on the Games would remain within the £9.3bn budget.

She stated: “The Village and media centres are absolutely essential to a successful London Games with a real lasting legacy.

‘With private sector funding now much more difficult to secure because of the global economic downturn, it is right that we take steps to safeguard these projects.

‘The extra funds we have allocated today come from existing contingency funds within the overall £9.3bn budget.’

Lower than anticipated construction inflation and good progress across the project had reduced risks, she said, meaning enough contingency funds remained.

Lend Lease, the Australian construction firm building the Olympic Village, had hoped to attract up to £40m in investments from the private sector.

Plans included selling off part of the Village – the base for up to 17,000 athletes and officials – as apartments after the Games.

But with investment slow to materialise, the government may have to dispose of the flats itself and take on the associated financial risk.

Earlier this month, the Olympic Delivery Authority admitted the economic downturn had threatened private sector funding for the Athletes’ Village and media centres, but pledged the Games would not exceed its budget.

The 2012 Olympic site in east London will include an 80,000-seat stadium, the 17,500-seat Aquatics Centre and Athletes’ Village.

The original budget for the Games was £3.4bn but this was increased to £9.3bn in 2007.