Praise for £461m Olympic bailout

Union leaders have hailed the £461m bailout for the Olympic Village and Media Centre as “exactly the kind of ambitious project that the Government should be funding”.

TUC general secretary Brendan Barber believes the cash will guarantee jobs across the construction and media sectors.

He said: “We are pleased that the Government is to press ahead with plans for a combined press and broadcast centre in Hackney. This will provide first class facilities during the Olympics and high quality jobs for many years after the games have finished.”

The bailout was confirmed by Olympics minister Tessa Jowell yesterday following private funding difficulties on both schemes.

She pledged an extra £326m from the 2012 contingency fund for the village as developer Bovis Lend Lease struggles to raise private funding for the £1bn project. The money includes the £95m pledged last year to get construction underway.

An additional £135m is being pumped into the media centre. The original developer Carillion/Igloo will no longer be putting any private money in and Carillion will build the project using public cash.

The latest raid on the £2bn contingency fund leaves £1.5bn left over the next three years to deal with funding shortfalls. The Government said the project’s £9.3bn overall budget remains unchanged.

Jowell said:  "The Village and Media Centre are absolutely essential to a successful London Games with a real lasting legacy. 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. Lower than anticipated construction inflation and good progress across the project has reduced risks, meaning that the overall budget is unchanged and enough contingency funds remain. We are determined to deliver the games within budget.

"The increased public investment in these projects also means that the public purse will receive a greater share of receipts when they are sold after the Games."

The £326m extra funding for the Olympic Village includes the £95m announced last year and will allow works to continue whilst the ODA continues to negotiate with private developer Lend Lease, and the banks, regarding private investment for the Olympic Village.

The media centre will now be funded entirely from the Olympic budget. Following cost reductions of £25m, the total public funding for the project will be £355m. The public sector will retain ownership of the asset and receipt of all revenues from its sale after 2012.