London Assmembly warns of multi-millon pound Olympic Park blackhole
By Duncan Mackay
British Sports Internet Writer of the Year
October 12 - Concerns have been expressed by the London Assembly over the financial implications of the decision to transfer the ownership of the Olympic Park to the Olympic Park Legacy Company (OPLC), a report published today warned.
The report, published by the London Assembly’s Budget and Performance Committee, claims that the London Development Agency (LDA) will be left owing £387 million ($612 million) to the Government following a deal to transfer the Olympic Park land to the OPLC.
Before the creation of the OPLC, the LDA had been responsible for the Olympic Park’s legacy and had incurred considerable costs in purchasing and remediating the site, the report says.
Under a deal agreed between the LDA board, London Mayor Boris Johnson and the Government, the Olympic land will be transferred debt-free to the OPLC.
The deal requires the Treasury to pay £438 million ($693 million) on top of the existing budget in order to partly relieve the LDA of about £800 million ($1.3 billion) in debt incurred when assembling the site.
But the report says that the LDA will still be left owing £387 million ($612 million) to the Treasury following the completion of the deal.
Earlier this year, Johnson outlined plans to abolish the LDA and fold its functions into the Greater London Authority.
But the report says that, given the Mayor’s plans to abolish the LDA, "it remains unclear" how the £387 million ($612 million) liability will be met.
It said: "The LDA was planning to make repayments over a ten-year period with the majority of cash coming from its annual Government grant income.
"However, that repayment plan now looks improbable and clarity is needed on how the debt will be repaid."
The report adds that the LDA will also have £25 million ($39 million) of OPLC "commitments" to repay and further land purchase compensation claims, currently estimated at £41 million ($64 million), "with the potential for increases if further claims are made in the future".
It said: "If the LDA is to be wound up, the outstanding debt to Government and other ongoing Olympic commitments will need to be settled.
"This may have implications for the funding available in London for economic development in 2011/12 and beyond as well as the mayor’s plan to roll the LDA’s functions into the GLA."
The Assembly welcomes the creation of the OPLC but still said it still feared that the potential economic benefits of London hosting the Olympics and Paralympics would not be maximised.
John Biggs the chairman of the Budget and Performance Committee said: "The OPLC has responsibility for the Olympic Park's physical legacy, but there needs to be a clear line of accountability for legacy beyond that, such as an investment in skills and employment, as well as legacy outside the Park.
"A huge amount of money has gone into creating the Olympic Park and this investment must result in an economic benefit for East London and the capital as a whole.
"Everyone thinks responsibility for the legacy is cut and dried, but our investigation suggests there are still many unanswered questions which need to be addressed if London is to get the kind of legacy that was promised."
The Committee is seeking a response to the issues raised in the report from the Mayor by the beginning of February 2011.
The report is the first of a two-part investigation. Part two, scheduled for early 2011, will examine the adequacy of the transformation budgets, as well as overall legacy costs and funding.
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July 2010: Olympic Park Legacy Company courting Gulf investors
July 2010: Legacy benefits of London Olympics will not be known until 2020
July 2010: Government agree to £438 million Olympic Park land transfer
July 2010: Future of London 2012 Olympic Park in jeopardy, warns legacy chief