The government is preparing to take on the £1.1bn of debt racked up by the London Development Agency when it bought the site for the Olympic Games, in order to safeguard post-2012 regeneration plans
LDA bosses were due to meet to thrash out the details of the move as Building went to press.
The issue has come to the fore because ownership of the land is due to be passed, by next month, to the Olympic Park Legacy Company, the body spearheading the regeneration of the park after the Games.
The transfer cannot happen without working out what will happen to the debt, and although the legacy company, chaired by Margaret Ford, does not have the capacity to take it on at present, the LDA is refusing to keep it on its books.
Sources close to Ford said she was “entirely confident” the transfer of land would go ahead.
We were looking at having a pavilion in Shanghai, but this is no longer possible
Peter Rogers, LDA
All the options to ensure this involve the debt being transferred to central government in some form until the legacy company is ready to start developing the site, it is understood.
The news comes amid further repercussions from the £160m overspend on the land by the LDA, which came to light earlier this summer. The LDA admitted on Tuesday that plans for a £1.5m London pavilion at the 2010 World Expo event in Shanghai had been shelved to help it cut spending.
The structure, designed by Shelton Fleming to promote the capital, would have been visited by about 70 million visitors over a six-month period. It is understood that the plans were still at design stage, but were close to completion.
In a grilling by London assembly members, Peter Rogers, chief executive of the LDA, admitted: “We were looking at having a London pavilion, but this is no longer possible.” Liverpool will now be the only UK city at the event with a pavilion.