Page last updated at 13:07 GMT, Friday, 11 September 2009 14:07 UK

Olympic land budget's 159m hole

London's Olympic Park under construction
Part of the project could be cut

The project to buy up land for the London 2012 Olympics has created a £159m financial hole, an audit has revealed.

The London Development Agency (LDA), the mayor's economic arm, called on accountants KPMG to investigate spending.

The shortfall will impact on other projects but will not affect the main budget of the games, the LDA said.

A spokesman for the mayor said new procedures have been put in place.

The LDA had to pay more than 3,000 businesses and individuals to buy land for the 600 hectare site in Stratford, east London, through compulsory purchase orders but has insisted there is no evidence of wrongdoing.

Major implications

The £159m of "increased Olympic land commitments" dates from 2008/9 to 2011/12 and there is a £94m shortfall this year, according to the LDA board papers.

The mayor inherited an agency with weak leadership and flawed procedures
Mayor's spokesman

The papers state: "This has major implications for the medium and long-term financial position of the agency and these issues will need to be resolved through the set-up arrangements for the Olympic Park Legacy Company and in considering the investment strategy for 2010/11 to 2013/14."

Revised budgets for 2009/10 "will require careful management to ensure that no further net overspends occur", the papers say.

A second look has been taken at projects planned for this period and a £45m package of measures including delaying or possibly cutting some projects is proposed.

The schemes in danger of being axed were not named but the LDA is looking a projects which are considered "relatively poor value for money".

The LDA has also asked the government to delay by several years repayment due this year of a £50m loan for land acquisition.

A spokesman for the mayor said: "The mayor inherited an agency with weak leadership and flawed procedures and made clear that there must be an end to mismanagement and a focus on better value for money."



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