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UK govt bails out Olympic Village project with cash from contingency fund

A total of £394 million will be transferred from the Olympic Funders Group contingency for the project which is struggling because lead developer Lend Lease has found it difficult to raise funds from the private sector due to the economic downturn.

The OFG was set up to guard against risks outside the control of the Olympic Delivery Authority and a further £67 million has been released from the ODA's programme contingency.

Olympics minister Tessa Jowell insisted that the overall budget for the London Olympic Games remains unchanged at £9.3 billion and the contingency fund budget remains sufficient to cover the remaining risks.

'The Village and media centres 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,' she said.

'The extra funds we have allocated 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,' she explained.

'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 minister added.

Negotiations between the ODA, Lend Lease and the banks regarding private investment for the Olympic village are ongoing. Talks are also continuing with registered social landlords in relation to the provision of affordable housing which also contributes to the funding of the overall project.

The Village will house up to 17,000 athletes during the Olympics and over 6,000 during the Paralympics. After the games about one third of the apartments will be available as affordable housing.

The International broadcast centre and main press centres, located in the borough of Hackney, will house approximately 20,000 journalists and technical staff from around the world and will now be funded entirely from the Olympic budget.