The chaos on the money markets has impacted into the building of the London 2012 Olympics – and the government will expect us to pick up the bill.
The Olympic Delivery Authority’s (ODA) developer Lend Lease has not been able to raise the £450 million of private funding towards the £1 billion bill for the Olympic village.
The cost of the village was worked out on the basis of selling the houses built at the end of the project – with an assumption that property prices would rise by 6 percent a year.
Since that is now unlikely the government is expected to pay outstanding costs.
Plans for a £400 million Olympic media centre designed to host 20,000 journalists are also in trouble.
Doubts have emerged over the ability of the Carillion Igloo consortium building the centre to raise the money from banks to cover its £200 million share of the cost.
The costing of project is based on being able to sell 1.3 million square feet of office space after the Olympics. Again the government is in line to pick up the bill when this doesn’t happen.
The alleged £9.2 billion of public spending for the Olympics looks like a severe underestimate.