We told you so....

Is anyone surprised that a new black hole has been found in funding for the Olympic games in 2012?This time it relates to overestimates on the value of land sites made originally.

The London Development Agency has admitted that the proceeds from sales of land after the games could be much less than the "at least £1.8 billion" originally estimated, in fact could be as low as £800 million, that is less than half and leaving a shortfall of £1 billion.

The reason for this is that the original forecast was that land prices in East London would rise by 16% a year. A number of experts are questioning the figure, suggesting that 6% or 8% is a more realistic figure as prices now seem to have peaked.

The LDA was to have received priority, in receiving £625 million from the sales, to reimburse the cost of buying the land. The Lottery Fund was to have received its £675 million back in installments, and there was to have been further money to the LDA to cover site costs, and to the London Mayor.

On the current more pessimistic (realistic?) assumptions, there would not be enough to meet all costs and also refund the Lottery Fund. Arts and culture, and other sport, which have already had their budgets squeezed because of earlier Government "raids" on the fund, are not pleased.
London taxpayers may have to dip into their pockets, and those of us in the rest of the country who resent the concentration on London will also probably have to pay extra. By 2013 onwards, when the chickens come home to roost, we could well have a new Government to clear up the mess.

Today Conservatives and LibDems will probably vote against government plans to promise yet more funds to finance the Olympic games. Jeremy Hunt, Shadow Culture Secretary, is quoted to have said yesterday that the Conservatives would vote against allowing the £675 million to be released from the Lottery Fund.