Boris Johnson’s budget faces a black hole of £231m as a result of Olympic land debt, according to members of the Greater London Assembly.
Worse still, the debt won’t be eligible for subsidies from central government funding says the GLA.
The debt was taken on by the London Development Agency (LDA) to pay for the acquisition and remediation of the Olympic Park – part of which had been used as a dumping ground and exposed to toxic waste.
The debt will transfer over from the LDA to the GLA on 1 April, and will actually total £349m overall. However, government funding is expected to reduce it to £231m.
The debt figure comes despite earlier assurances from the mayor that the government would cover the whole debt as part of the agreement made when the LDA transferred ownership of the Olympic land to the Olympic Park Legacy Company (OPLC) in 2010/11.
The OPLC is charged with the long-term development and management of the Olympic Park post London Games. However, it is yet to secure any long-term tenants for the Olympic Park buildings.
Labour assembly member for City and East and chair of the London Assembly Budget and Performance Committee, John Biggs, said: “We have repeatedly highlighted the on-going financial risks from the uncertainty around the Olympic land liabilities and our worst fears appear now to have been realised.
“It looks as though the GLA now has to deal with an enormous long term debt arising from the Games land, at a time when its overall pot of money is reducing.
“What will this debt mean for London? Will funding need to be cut from other regeneration projects, and will Londoners be paying for the Olympics for even longer than originally thought? We intend to find out.”
Next week, the London Assembly’s Budget and Performance Committee will question the mayor’s chief of staff about what this debt means for the GLA and the money it has to spend.
The Committee will also ask about the impact it could have on the Olympics element of the council tax precept, which had been due to finish by 2016/17.