'No guarantee' on Lottery money for Olympics

Olympic Delivery Authority (ODA) chairman John Armitt (pictured) said he could not guarantee that all the money taken from the National Lottery for the London 2012 Olympics will be returned.

Edward Leigh, chair of the Public Accounts Committee (PAC), said it was "wishful thinking" that money taken from the Lottery for the 2012 Games would be repaid.

The cost of the Olympic project trebled from original estimates to £9.3 billion.

Mr Leigh told Mr Armitt at a PAC hearing looking at preparations for the London Games: "The Lottery has given up £2 billion to good causes to you. It is absolutely essential they get some of the money back.

"You cannot possibly guarantee they will get the money back? It is possible the Lottery would not get any money back."

Mr Armitt, in charge of Olympic build and infrastructure, replied: "I would not guarantee anything."

But he said there would be "development gains" after the Games.

Jonathan Stephens, the culture department's permanent secretary, said the aim is for the Lottery to get a share of the profits from the development and regeneration of the Olympic Park in Stratford, east London, after 2012.

He told the MPs: "This is a long-term investment and development programme. Over that sort of scale these sorts of investment are realisable but it is a long-term development programme.

"Over a long-term period you are right there cannot be any guarantees but the Olympic investment will create, very close to the City of London, one of the best connected transport hubs within London with significant economic and employment opportunities and housing to be built which is needed in London.

"There cannot be any guarantees. It is a long-term programme but it is realistic to expect returns to the Lottery over that long-term period."

Mr Stephens said the aim is still to repay the Lottery and "we have got no such proposals at all" to suggest ministers approve further funding from the Lottery.

Homes in the Olympic Village are to be sold off after the Games but property prices are unknown.

It will be the job of the Olympic Park Legacy Company to develop further housing and economic opportunities, reflecting the fact that "something like three-quarters of the construction budget is actually devoted to providing a future regeneration" of the site, Mr Stephens said.

In order to get £675 million for the Lottery, at least £1.8 billion would have to be secured from the sale of land and assets, Mr Leigh suggested.

Mr Armitt replied: "It is not a figure that I instantly recognise but I can well believe that it makes sense.

"For that money to come back would require development way beyond 2012 in conjunction with other private sector developers and upside agreements with those developments which could generate income, but I would not sit here and say with any certainty that could be guaranteed."

Mr Stephens said the Olympic project has weathered "one of the worst economic downturns in recent decade" to remain on time and on budget.

Last month the National Audit Office, the Government's spending watchdog, said more of the remaining £1.3 billion contingency fund for building and infrastructure is likely to be spent in the run-up to the Games.

The NAO raised concerns that there is no legacy tenant for the £540 million Olympic Stadium or for the £334 million Olympic media centre in Hackney Wick, which is a long way from the main public transport links serving the Olympic Park in Stratford.

On the future users of the media centre, Mr Armitt said: "I know they have not got any firm takers yet but I would not be surprised by that.

"In the current economic marketplace any commercial building is not flying off the shelf.

"I think it would be quite realistic to think there would be a little time before people are willing sign up to that."

London 2012 chief executive Paul Deighton said the organisers are still short of its £700 million domestic sponsorship target as part of a £2 billion budget to stage the Games.

He said: "To date we have raised £603 million in cash and goods and services sponsors provide. We need to raise another £100 million."