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| 2012 village 'may need bail-out' | 2012 village 'may need bail-out' |
| (10 minutes later) | |
| Efforts to raise private cash to build the 2012 Olympic village and broadcast centre could end in failure, Olympics minister Tessa Jowell has told MPs. | Efforts to raise private cash to build the 2012 Olympic village and broadcast centre could end in failure, Olympics minister Tessa Jowell has told MPs. |
| She said "intense" talks were still under way to find private partners but if they came to nothing the cash would have to come from contingency funds. | She said "intense" talks were still under way to find private partners but if they came to nothing the cash would have to come from contingency funds. |
| She insisted the projects were still on budget and using contingency money was not "any kind of failure". | She insisted the projects were still on budget and using contingency money was not "any kind of failure". |
| She told the Commons culture committee the games budget was still on target. | She told the Commons culture committee the games budget was still on target. |
| The planned Olympic village has already been cut in size from 4,600 to 2,800 flats, following a fall in property prices, with plans for tower blocks scrapped in favour of more modest, low rise developments. | The planned Olympic village has already been cut in size from 4,600 to 2,800 flats, following a fall in property prices, with plans for tower blocks scrapped in favour of more modest, low rise developments. |
| Plans to sell off the part of the village as expensive luxury apartments when the games have finished had to be modified, the committee was told, but the "athlete experience" would actually be better as a result. | Plans to sell off the part of the village as expensive luxury apartments when the games have finished had to be modified, the committee was told, but the "athlete experience" would actually be better as a result. |
| Cheaper location | Cheaper location |
| It was put to Ms Jowell that the estimated value of the property to be sold off had fallen by £1bn - she did not deny it but said that was not a figure which had "an official status". | It was put to Ms Jowell that the estimated value of the property to be sold off had fallen by £1bn - she did not deny it but said that was not a figure which had "an official status". |
| Lend Lease, the Australian firm contracted to build the village is meanwhile reported to have asked for more time to raise the £1bn it needs to complete the project. | Lend Lease, the Australian firm contracted to build the village is meanwhile reported to have asked for more time to raise the £1bn it needs to complete the project. |
| The government have already advanced £95m in contingency money to enable work on the project to continue and Ms Jowell told the committee that negotiations with Lend Lease continue, amid reports other developers are keen to take over. | The government have already advanced £95m in contingency money to enable work on the project to continue and Ms Jowell told the committee that negotiations with Lend Lease continue, amid reports other developers are keen to take over. |
| I am not conceding that either of these will be wholly publicly funded projects and I want that to be absolutely crystal clear Tessa JowellOlympics minister | I am not conceding that either of these will be wholly publicly funded projects and I want that to be absolutely crystal clear Tessa JowellOlympics minister |
| There are also funding concerns about the International Broadcast Centre (IBC), which is to be housed in a building which according to Ms Jowell will be "one and half times the size of Canary Wharf tower" in Hackney, East London, after the private developers Igloo who were down to part fund the project pulled out. | There are also funding concerns about the International Broadcast Centre (IBC), which is to be housed in a building which according to Ms Jowell will be "one and half times the size of Canary Wharf tower" in Hackney, East London, after the private developers Igloo who were down to part fund the project pulled out. |
| Plans to split facilities for journalists between two sites, in Hackney and Stratford, to save cash are underway with an announcement expected soon, said Ms Jowell. | |
| But Ms Jowell said she was confident an alternative source of funding for the broadcast centre - as well as a proposed use for it when the games have finished - would be found before work on it begins next spring. | But Ms Jowell said she was confident an alternative source of funding for the broadcast centre - as well as a proposed use for it when the games have finished - would be found before work on it begins next spring. |
| "We haven't given up. There is, at the moment, no private sector contribution on the table and that is a change since the contract was first signed, but the venue has to be built. | "We haven't given up. There is, at the moment, no private sector contribution on the table and that is a change since the contract was first signed, but the venue has to be built. |
| "This is not a good time to pursue private sector investment but, remember, there is a three and a half year build and development programme. Just because now isn't right, doesn't mean that in two, two and half year's time, conditions may not be better and more sympathetic to getting private sector investment." | "This is not a good time to pursue private sector investment but, remember, there is a three and a half year build and development programme. Just because now isn't right, doesn't mean that in two, two and half year's time, conditions may not be better and more sympathetic to getting private sector investment." |
| 'On budget' | 'On budget' |
| Asked by culture committee chairman John Whittingdale if there was a possibility the economy would not improve and no private cash would be raised at all for the two projects, she said: "Of course there is a possibility but that doesn't mean that we will give up on the possibility." | Asked by culture committee chairman John Whittingdale if there was a possibility the economy would not improve and no private cash would be raised at all for the two projects, she said: "Of course there is a possibility but that doesn't mean that we will give up on the possibility." |
| She said talks on both IBC and Village were ongoing and the 2012 organisers were "fortunate we have substantial contingency". | She said talks on both IBC and Village were ongoing and the 2012 organisers were "fortunate we have substantial contingency". |
| She added: "I am not conceding that either of these will be wholly publicly funded projects and I want that to be absolutely crystal clear." | She added: "I am not conceding that either of these will be wholly publicly funded projects and I want that to be absolutely crystal clear." |
| She also tried to reassure the committee that all of the £2bn contingency fund, which is set aside for unforeseen cost increases such as security, would not be spent on bailing out the two projects - and that it would not lead to an increase in the £9.3bn budget set by the government. | She also tried to reassure the committee that all of the £2bn contingency fund, which is set aside for unforeseen cost increases such as security, would not be spent on bailing out the two projects - and that it would not lead to an increase in the £9.3bn budget set by the government. |
| "So far the budget is on time and within budget," she told MPs. | "So far the budget is on time and within budget," she told MPs. |
| "Headroom is being created within the contingency because risks that were costed are risks which, at this stage, have not materialised." | "Headroom is being created within the contingency because risks that were costed are risks which, at this stage, have not materialised." |
| Hotel 'rip-off' | Hotel 'rip-off' |
| She added: "At this stage, I would not revise down our expectation for final cost... the use of contingency should not be seen as any kind of failure. It is very often the means by which the trade-off between time and cost can be properly accomplished." | She added: "At this stage, I would not revise down our expectation for final cost... the use of contingency should not be seen as any kind of failure. It is very often the means by which the trade-off between time and cost can be properly accomplished." |
| Meanwhile, London's hotels have been warned about "ripping off" foreign visitors during the 2012 Olympic games. | Meanwhile, London's hotels have been warned about "ripping off" foreign visitors during the 2012 Olympic games. |
| Games organisers told MPs there would not be compulsory fixed tariffs to prevent hotels profiteering from foreign visitors. | Games organisers told MPs there would not be compulsory fixed tariffs to prevent hotels profiteering from foreign visitors. |
| But Paul Deighton, chief executive of the London games organising committee, said hoteliers had a duty to prevent damage to London's international reputation. | But Paul Deighton, chief executive of the London games organising committee, said hoteliers had a duty to prevent damage to London's international reputation. |
| He said the Visit London tourist authority may draw up a voluntary code of conduct to prevent abuses. | He said the Visit London tourist authority may draw up a voluntary code of conduct to prevent abuses. |