£461 million bailout for 2012 Olympics
By politics.co.uk staff
The government is injecting £461 million to bail out two venues for the 2012 Olympics after private sector investment disappeared.
The money will come out of the government's £1 billion contingency fund which was reserved for "force majeure" with three-and-a-half years still to go.
East London's £900m Olympic Village and two media centres were going to run out of money in March as falling property prices and the credit crunch scared off commercial backers.
Olympics Minister Tessa Jowell said the latest cash injection was necessary to the security of the projects and the games would still make the £9.3 billion budget.
"The Village and media centres are absolutely essential to a successful London Games with a real lasting legacy," Ms Jowell said.
"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 £9.3 billion budget.
"We are determined to deliver the Games within budget," she added.
£40 million was expected to be raised from the private sector by selling off part of the village and turning it into apartments after the games.
But with few investors excited by the prospect, the government may be forced to take on the financial risk itself.
Hugh Robertson, shadow Olympics minister said the need for contingency funds shows just how bad the financial situation is.
"However, if a high-quality housing development, underwritten by the government, in a prime parkland setting, cannot secure any private sector funding, it does tell us that the economy is in a very bad state indeed," he said.
Tom Brake, Liberal Democrat Olympics spokesman, argued the media centre project is an unneeded expense and should be scrapped.
He said: "It's time the Olympic Delivery Authority cancelled these plans for a grand media centre, otherwise London will be left with a huge white elephant."
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.
