Minister concedes 2012 contingency fund will have to be raided if attempts to obtain private funding fail
Sport secretary Tessa Jowell has admitted that the £1bn Olympic village may possibly have to be completely funded with public money.
However, she said that the Olympic Delivery Authority (ODA) and the government are working hard to conclude a deal with developer Lend Lease, while hinting it is likely the government will have to dip into its £2.7bn contingency fund.
Jowell said: “At the moment there is no private sector contribution, but we haven't given up on securing a deal. There's three-and-a-half years to go before the Olympics… in two or two-and-a-half years there might be a better situation to get funding.”
Asked if it is possible that Lend Lease might never buy itself back into the scheme as a developer, Jowell said: “Of course it's possible we won't get any private funding, but that doesn't mean we give up.”
The ODA has previously admitted that Lend Lease has been unable to raise funding for the 2,800-home athletes' village. Referring also to the £400m media centre, Jowell said: “We're not conceding that either of these will be wholly publicly funded projects at this stage.”
However, despite Jowell's comments, Building understands that the ODA is working towards concluding a deal with Lend Lease by the end of January.
This follows from the revelation by Building last week that housing association Southern Housing Group is being brought in to help with the development of the affordable homes element of the village, in a move designed to pave the way for the deal with Lend Lease.
Jowell also indicated that the funding issues mean the ODA will probably have to draw on its contingency fund. She said: “It is fortunate we have a contingency fund in place to use. Whilst headroom has been created within the contingency fund [by recent falls in commodity prices], at this stage we are not revising down our estimates for the final cost.
“I don't think the use of the contingency fund should be seen as any kind of failure.”