Government admits £500m Olympic budget hole

The budget for the London Olympics is £500m short of private funding, the government has finally admitted.

Olympics minister Tessa Jowell publicly conceded the damage done to the Games by the credit crunch after months of speculation over the funding of the Olympic village.

Speaking at a private dinner in London she said: “We have lost half a billion pounds of private investment.

“But that does not mean it won’t come back. We have to be optimistic about the coming years and that there will be deals to be done.

“We will go back to the banks when borrowing terms are more favourable.”

Olympic village developer Lend Lease has struggled to raise its share of £450m for the project, while Carillion’s media centre has also been plagued by funding problems.

Negotiations to fund the village received a reprieve this week when the government announced it would push the Christmas deadline to agree the finance package, reported the Guardian.

Negotiations will continue into the new year, which will coincide with the announcement of the quarterly accounts in January.