Olympic village touted for £1bn government rescue

The London 2012 athletes’ village could be wholly funded by the taxpayer, an Olympic boss has admitted.

Facing questions from the London Assembly, Olympic Delivery Authority chairman John Armitt said yesterday the £1bn project could be completely nationalised.

He said 100% taxpayer funding of the village was one of several options being considered, after developer Lend Lease failed to raise its share to fund the project.

The options are to be considered next week  by cabinet ministers responsible for the departments funding the Games, chaired by chancellor Alistair Darling, according to the Guardian.

“Nobody knows what the worst case scenario is likely to be,” Armitt said.

“The situation changes, attitudes change day by day. In the last two weeks attitudes have deteriorated rather than improved.”

Sources close to negotiations told the newspaper that banks considering financing the project have demanded higher and higher interest rates or shares of profits when the flats are sold in legacy.

Shadow secretary of state for culture, media and sport Don Foster told the Guardian: “We have been talking about putting more money up front.

“There could come a point where it is a better risk to fund it out of contingency rather than pay a huge price in terms of interest rates or shares of the future profits (demanded by banks).”

Armitt said some of the £400m media centre, also suffering funding problems, had been changed to a temporary building to cut costs.

If the government does prop up the village it will gobble up most of the £2.2bn contingency budget, which was hoped to solve any future construction problems.