The Untouchable

Whenevr a poltician claims that a partiuclar sum of money is "ring fenced" for a specific purposeMinisters are preparing to raid an "untouchable" £2.2 billion emergency fund set aside for last-minute costs of the 2012 Olympic Games.

A large slice of the official contingency fund that Tessa Jowell, the Olympics Minister, has said would remain "locked away" for the next few years, may have to be used to ensure that the Olympic village is built as planned.



The Daily Telegraph disclosed last month that the credit crunch and falling property prices had thrown a "spanner in the works" of negotiations on a public-private deal between the Olympics authorities and Bovis Lend Lease, the development firm selected to build the village.



However, because problems have deepened rather than eased, plans have been drawn up to rescue the project by using an as yet unspecified lump of taxpayers' money in the supposedly sealed fund.



Article continuesadvertisement



Olympics sources say Bovis Lend Lease is having difficulties raising the necessary money to fund the £2 billion project because of the reluctance of banks to lend on such a big scale at a time of restricted credit.



Bovis Lend Lease is also understood to be concerned that a London property price crash would drastically reduce the amount it could recoup when selling or renting the homes in east London after the games.



Although the company insists work is "progressing well", insiders say the company is demanding a greater financial input from the Government than was envisaged.



The news that the contingency fund may be used so early is another embarrassment for organisers, who have admitted that costs have risen from an original estimate of £3.4 billion to £9.325 billion.



To release the money, ministers, including Miss Jowell and Alistair Darling, the Chancellor, have to give approval. Sources say that while no date for a meeting has been set, progress will have to be made by the end of the year if the project is to stay on schedule.



The Olympic Delivery Authority, which is responsible for providing the buildings and infrastructure, had hoped to agree a contract with Bovis Lend Lease by early this year.



The fund originally contained £2.7 billion, but £500 million has already been allocated. The aim was that the remainder be used for last-minute problems, if at all.



One source said: "It is not getting any easier. Plan B is to use some of the contingency fund." Hugh Robertson, the Tory Olympics spokesman, said: "The Government's decision to announce a £2.7 billion contingency fund has simply encouraged contractors to increase their budgets."



Bovis has refused to be drawn on details of the negotiations. Last week, Gordon Brown said there was "determination" to ensure that the games came in on time and without blowing the budget.

Don't forget to visit www.theolympicswarehouse.com

www.olympicsdiary.com brought to you by www.kenfrost.com "The Living Brand"