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2012 Games 'black hole' rejected 2012 Games 'black hole' rejected
(about 2 hours later)
Claims of a £1bn "black hole" in plans to fund the 2012 London Olympics have been rejected by the government. Claims of a £1bn "black hole" in plans to fund the 2012 London Olympics were described as "pessimistic" by the city's Mayor Ken Livingstone.
Olympics Minister Tessa Jowell and London Mayor Ken Livingstone reckon £1.8bn can be recouped after the Games from land sales at the east-end site. Olympics Minister Tessa Jowell and Mr Livingstone have said £1.8bn could be recouped after the Games from land sales at the east London site.
But The Times says an official report warns the assumption of 16% annual land price inflation may be too high and that just £800m might be raised. But the assumption of 16% annual land price rises has been criticised as too optimistic by some property experts.
It comes as MPs prepare to debate using Lottery cash to help pay for the Games.It comes as MPs prepare to debate using Lottery cash to help pay for the Games.
Cash from land sales at the Olympic site is intended to go to the National Lottery to repay loans used to pay for the Games and to ensure other lottery-funded good causes do not lose out in the long-term.
There is absolutely no black hole in the 2012 finances and these claims are completely misleading and a distortion of the facts Department for Culture, Media and Sport spokesmanThere is absolutely no black hole in the 2012 finances and these claims are completely misleading and a distortion of the facts Department for Culture, Media and Sport spokesman
Any shortfall in those finances could hit sports, heritage and arts projects. Money from the National Lottery is set to be put towards helping to fund the Olympics - which has met some opposition from sports, heritage and arts projects set to get less lottery cash.
However, a spokesman for the Department for Culture, Media and Sport rejected suggestions that it had over-estimated the amount of money that could be raised in a post-Games land sale. If more than £800m is raised from land sales the plan is for three quarters of the excess money to go towards paying back National Lottery funds.
He said the £800m figure was just the lowest in a range of projections in the report, from the London Development Agency, and stressed it also suggested that as much as £3bn could be recouped if market conditions were right. Asked by a committee of MPs about the suggestions of a black hole, Neale Coleman, the Mayor of London's director of business, planning and regeneration, said the £800m figure was a "very, very cautious" view.
"There is absolutely no black hole in the 2012 finances and these claims are completely misleading and a distortion of the facts," he said. "It's quite wrong to suggest that (£1.8bn) is the planning number, or that this creates some sort of black hole or that the Lottery won't get its money back," he said.
"The £800m quoted is the most cautious of a range of LDA projections of how much might be raised by land sales in the Olympic Park, based on 6% per annum growth. "It's very likely that the figures for land sales will be much higher than this given all that's happened in the past and all we know about east London."
"This is significantly less than the average rate of increase over the last 20 years - a period that has included both economic highs and lows. And Mr Livingstone said: "On the most pessimistic assumption, taking the worst year out of the last 10, we get £800m, which would repay all the debts we've incurred.
"The LDA's forecasts ranged from £800m to more than £3bn. Experience suggests that it is entirely realistic to believe that our target of repaying the National Lottery will be achieved." "Taking the average of the last 20 years, we would get £3bn.
'Very, very cautious" view "We've gone for something midway between and so I think we're being quite cautious."
Commons opposition expected
However, Jeremy Leaf, of the Royal Institution of Chartered Surveyors, said while land values and prices have increased, the perception now is that growth is "not going to be anything like it was for the last decade or so".However, Jeremy Leaf, of the Royal Institution of Chartered Surveyors, said while land values and prices have increased, the perception now is that growth is "not going to be anything like it was for the last decade or so".
"It's unlikely we are going to see anything like the growth we have seen in the past, so re-appraisal's very much on the cards," he said."It's unlikely we are going to see anything like the growth we have seen in the past, so re-appraisal's very much on the cards," he said.
Neil Coleman, the Mayor of London's director of business, planning and regeneration, said the £800m figure was a "very, very cautious" view. A spokesman for the Department for Culture, Media and Sport rejected suggestions that it had over-estimated the amount of money that could be raised in a post-Games land sale.
"It's quite wrong to suggest that's the planning number, or that this creates some sort of black hole or that the Lottery won't get its money back," he said. He said the £800m figure was just the lowest in a range of projections in the report, from the London Development Agency, and stressed it also suggested that as much as £3bn could be recouped if market conditions were right.
"It's very likely that the figures for land sales will be much higher than this given all that's happened in the past and all we know about east London." "There is absolutely no black hole in the 2012 finances and these claims are completely misleading and a distortion of the facts," he said.
Meanwhile MPs are preparing for a Commons debate to discuss whether to back moves to transfer money from Lottery funds to the Olympics.Meanwhile MPs are preparing for a Commons debate to discuss whether to back moves to transfer money from Lottery funds to the Olympics.
The plan is likely to ignite a row over where the money is coming from and where it is being spent, with a number of MPs saying they opposed the plans.The plan is likely to ignite a row over where the money is coming from and where it is being spent, with a number of MPs saying they opposed the plans.