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Sunday, June 22, 2008

What, more money?

A report in Friday's Guardian reveals that yet more public money may be needed to bail out the London Olympics, on top of the £9.3 billion already pledged. Apparently, the impact of the credit crunch and the sliding domestic housing market has left the Olympic village short of cash to the tune of tens of millions of pounds:

The chairman of the Olympic Delivery Authority, John Armitt told the Guardian: "The government at the end of the day will have to come in and support the village [financially] - that is understood. But negotiations are going on at the moment to try and minimise the degree to which further government funding to support the village is required."

Armitt's admission came as the National Audit Office (NAO) warned that the existing deal with Lend Lease, the contractor charged with building the £1bn village, could collapse entirely. The village is the single most expensive element of the Olympic Park construction project, but plans for a public-private partnership between Lend Lease and the Olympic Delivery Authority (ODA) have been undermined by problems in the banking market, which have made securing loans more difficult.

The ODA had agreed to put in £550m of public money, with the remaining £450m made up of equity from Lend Lease and private-sector financing. Lend Lease has encountered serious difficulty in raising the funds however, and is seeking a new deal to reduce its exposure.

In addition the projected cost of the main venues has risen by £106m since November last year, and is now £1.277bn. Is there no end to the leeching of public money by this project? The total cost is already approaching the annual budget of the Welsh Assembly. It would not be so bad if there were a Barnett consequential for Wales. Instead we are seeing vital sports and arts projects here starved of money so as to subsidise this London event.
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