Government ministers have delayed a taxpayer bail-out for the £1bn athletes' village at the London 2012 Olympics until the beginning of next year at the earliest.
A committee chaired by the chancellor, Alistair Darling, yesterday ordered Olympics organisers back to the negotiating table with banks and developers to find private finance for the project which has been rocked by the credit crunch and the collapse in the housing market.
The group comprising the Olympics minister Tessa Jowell, communities secretary Hazel Blears, culture media and sport secretary Andy Burnham and transport secretary Geoff Hoon was under pressure to release at least £250m from contingency funds to rescue the stricken project.
The scheme hit trouble when the developer Lend Lease could not raise finance and the possible resale value of the flats slumped. Also at the meeting was John Armitt, the Olympic Delivery Authority chairman, who has said taxpayers might have to bail out the entire £1bn cost.
"The Ministerial 2012 Funders Group today approved the continuation of negotiations with private sector partners, including Lend Lease, banks and registered social landlords to fund the construction of the Olympic village," a spokesman for Jowell said in a statement.
"Due to the current situation in the credit and housing markets it is now likely that these negotiations will run into next year. Our priorities are to secure value for public money, the village delivered on time and a long-term asset that will provide up to 3,000 homes, with a return for the taxpayer."
The decision means the Government is effectively hoping the banking system will recover sufficiently to finance the largest single piece of the Olympic campus.
The British Olympic Association may go outside the top-tier commercial sponsors for 2012 to ensure the go-ahead of Sir Clive Woodward's coaching academy.
Woodward, director of elite performance at the British Olympic Association, needs £15m for his plan that would see up to 15 coaches given support and finance in the pursuit of gold at the Games in London.
The BOA is hoping the funding will come from one of the main London sponsors who have commercial rights but its chairman, Lord Moynihan is happy to listen to offers from outside parties.
As he was re-elected unopposed as chairman yesterday, he said: "Can money be invested from outside? Yes, but on a non-commercial basis. A London billionaire could ring me up tomorrow and say: 'I don't want any commercial sponsorship but I do want to support the programme.'"
