The Government announced today that further funding from the £9.3 billion London 2012 Olympic budget has been allocated to support the building of the Olympic Village and media centres.

The Games’ overall £9.3 billion budget remains unchanged and the contingency remains sufficient to cover the remaining risks to the project.

A total of £394 million was agreed today from the Olympic Funders Group contingency, the part of the budget designed to guard against risks outside the control of the Olympic Delivery Authority (ODA). Separately, £67 million has been released from the ODA’s programme contingency.

The use of part of the contingency funds contained in the budget – an additional £326 million towards the Olympic Village and £135 million towards the International Broadcast and Main Press Centres (IBC/MPC) – is needed to meet a shortfall in private sector funding as a result of the global economic downturn.

Olympics Minister Tessa Jowell said:

“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.

“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 £326 million extra funding for the Olympic Village includes the £95 million 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.

Negotiations are also continuing with Registered Social Landlords (RSLs) 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 IBC/MPC – which will house approximately 20,000 journalists and technical staff from around the world – will now be funded entirely from the Olympic budget. Following cost reductions of £25 million, the total public funding for the project will be £355 million. In addition to the original £220 million public sector funding, £135 million contingency will be required comprising £68 million from the Funders Group contingency and £67 million from the Olympic Delivery Authority’s programme contingency. The public sector will retain ownership of the asset and receipt of all revenues from its sale after 2012.

The new budget includes funding to ensure that the buildings left in legacy have the flexibility to be adapted to a wide range of uses, to maximise the potential employment opportunities after the Games.

The IBC/MPC are still planned to be built as permanent structures with some temporary elements for the Games. They will be based at Hackney in the north-west corner of the Olympic Park as originally planned.

Special
1. The £9.325 billion public sector funding package announced in March 2007 included £2.7 billion of contingency. £0.5 billion was released to ODA when its Baseline Budget was confirmed at the end of 2007, and £0.238 billion was allocated as contingency for security. £2 billion of contingency therefore remained available for the ODA of which 25 per cent has been released leaving £1.5bn remaining.

2. Of the total contingency released only £35 million has not been allocated to the Village or IBC/MPC. Of this, £21.5 million was allocated to cover budget increases required on a number of projects, including the headhouses for the powerlines and legacy requirements for the Aquatics Centre; £8.9 million was allocated to the Olympic Stadium for primary strengthening works; £4.7 million was allocated to the Handball Arena for HD lighting, improved acoustics and additional seating.

3. The announcement was made following a meeting today of the ministerial group which is chaired by the Chancellor of the Exchequer (Alistair Darling) and consists of the Chief Secretary to the Treasury (Yvette Cooper), Minister for the Olympics (Tessa Jowell), Culture Secretary (Andy Burnham), Communities Secretary (Hazel Blears) and Transport Secretary (Geoff Hoon). The Mayor of London attends but is not a member.

4. Strong progress is being made on the Olympic Park: 80 per cent of the site has been cleaned and cleared, the construction of the power-line tunnels and removal of the overhead pylons is complete and construction work on the main venues remains on schedule.

5. Programme Contingency is for risks managed by the ODA, in relation to delivering a programme of projects on this scale, on a tightly constrained site, against an immovable deadline.

6. Funders’ Contingency is to cover other risks, beyond the project and programme level – principally risks outside the control of the ODA.

7. Part of the funding required is controlled by the Olympic Lottery Distributor and their board will consider the issue in due course.

Source: Department for Culture, Media and Sport