Lister told the Greater London Authority's (GLA) Budget and Performance Committee that he was on the brink of agreeing a new "clean break" arrangement whereby, rather than being given the money from the Treasury, the GLA would be given a much larger share of the Olympic Park land to raise funds to cover the shortfall.

"We will have the assets and we will be responsible for selling them and repaying our debt that way," he said.

"It means rescheduling loans, but it means we have potentially a better deal on the table.

"We are looking to conclude this before Christmas."

Committee chairman John Biggs said the Mayor had made "a clear statement that he expected the Government to meet the land debts", and added: "We have been told this morning that this is 'potentially a better deal'.

"That isn't a better deal.

"It could be potentially a worse deal if the market for selling isn't right.

"In this age of uncertainty, wouldn't it be better for us to have the cash in hand?

"It's not as if the Government has said 'here's the money, but do you want to open the box instead and have the land?'

"It seems to me that the Mayor has either been stitched up or allowed himself to be stitched up."

Lister responded: "I don't agree, because we have not yet settled this deal."

He said it had been Johnson's understanding at the time he made his statement that the Government would be underwriting the debt directly, but that that arrangement may now be superseded by the clean break deal.


In September last year the Olympic Park land was transferred from the London Development Agency to the Olympic Park Legacy Company (OPLC).

By April next year, when the GLA takes over the Olympic land debt, there will be a figure of £231million ($359 million/€267 million) to be repaid.

Neale Coleman, director of London 2012 Coordination at the GLA, said the Government "had indicated it would be likely" to underwrite the debut.

"From the discussions there were around the consequences of abolishing the London Development Agency, there were indications from the Government that they would be supportive," he said.

But Biggs's request for written evidence met with a blank response, and he made a formal request for the minutes to be searched, adding: "It does signify an error somewhere, or a trust that was not reasonably placed."

Coleman pointed out that a "very conservative" early estimate for the sale of the land in the Olympic Park had been put at £650 million ($1 billion/€756 million), and that it was likely to fetch a sum that was "very much higher".

He added: "If we have the first call on these proceeds to clear a debt of £230 million ($358 million/€267 million) we would probably not be in a bad position."

Asked what would happen if negotiations went on beyond Christmas, Lister said that there would still be time to conclude the deal as the first tranche of debt repayment – £50 million ($78 million/€58 million) – was not due until 2014/15.

"There's an awful lot going on, and we have been having meetings virtually every day, but unfortunately we are not yet at the stage where we can come to you and say 'It is agreed'," Lister added.

"But I should stress there isn't a problem.

"We are dealing with very willing partners."

He added that the one off deal would free the GLA from having to return to central funding for further tranches of money to repay their debt.

"It's either a case of us doing it and repaying the debt, or we give it to the Government and they repay it," Lister said.

"The question the Mayor has to wrestle with is: if we have much greater control over our assets, we have much greater control over our future as an organisation."

Lister said the attraction of the deal from the Treasury's point of view would be that it would give the GLA a very powerful motivation to "get a move on and get this land developed", and that it would also be moving the responsibility to the Mayor and saying "You are responsible for London, you are taking over these assets and you have to deal with the situation and make it work".

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