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2012 Games 'black hole' rejected 'No more Lottery raids' for 2012
(about 6 hours later)
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. Culture Secretary James Purnell has promised MPs the government will take no more money from the National Lottery to pay for the 2012 London Olympics.
MPs will vote later on plans to take £1.1bn from the Lottery for the Games.
Tory Jeremy Hunt said he wanted a commitment that "there would be no more raids on good causes" and an ability to scrutinise the Olympics' accounts.
Mr Purnell said no more lottery funds would go towards 2012 and he rejected claims of a £1bn funding "black hole".
The budget for the London games is £9.3bn - nearly four times the estimate that helped win the bid in 2005.
Guarantees
Mr Purnell urged MPs to vote for £1.085bn to be transferred from the Lottery to the Olympic Lottery Distribution Fund in 15 instalments starting in February 2009 to August 2012.
Asked if he could guarantee that this would be the last cash transfer from the Lottery, the minister said: "There will be no further diversion from the Lottery good causes to fund the Olympics."
It will be a once in a lifetime chance. It will bring the country together. It can transform Britain's reputation overseas James PurnellCulture Secretary
He also announced that the Treasury was considering changing the tax regime for the Lottery to a gross profits system - as applies to much of the gambling industry.
"It is a complex issue but I am happy to announce that we and the Treasury will look again at this issue," he said.
And he agreed to allow opposition frontbench spokesmen to attend quarterly meetings to review funding for the Games.
The 2012 Olympics "will be an inspiration to a whole generation", he said.
"It will be a once in a lifetime chance. It will bring the country together. It can transform Britain's reputation overseas."
The Commons exchanges came after London Mayor Ken Livingstone described claims there would be a £1bn "black hole" in Olympics' funds as "pessimistic".
'Cautious' view
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.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 assumption of 16% annual land price rises has been criticised as too optimistic by some property experts.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.
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 spokesman
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.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.
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.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.
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.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.
"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."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.
"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.""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."
Growth perception
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.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.
"Taking the average of the last 20 years, we would get £3bn."Taking the average of the last 20 years, we would get £3bn.
"We've gone for something midway between and so I think we're being quite cautious.""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.
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.
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.
"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.
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.