2012 Olympic Village May Need Bail Out

Sport secretary Tessa Jowell has admitted that the £1billion Olympic village may possibly have to be completely funded with public money.

Jowell told the Commons Culture Committe said: “At the moment there is no private sector contribution, but we haven't given up on securing a deal. There's three-and-a-half years to go before the Olympics… in two or two-and-a-half years there might be a better situation to get funding.”

Asked by culture committee chairman John Whittingdale if there was a possibility the economy would not improve in time and no private cash would be raised at all for the two projects, she said: "Of course there is a possibility but that doesn't mean that we will give up on the possibility that there is private sector or investment from another source beyond government."

She said talks on both IBC and Village were ongoing and the 2012 organisers were "fortunate we have substantial contingency".

The planned Olympic village has already been cut in size from 4,600 to 2,800 flats, following a fall in property prices, with plans for tower blocks scrapped in favour of more modest, low rise developments.

Plans to sell off the part of the village as expensive luxury apartments when the games have finished had to be modified, the committee was told, but the "athlete experience" would actually be better as a result.