This week it was announced that the £1bn athletes’ village for the London 2012 Olympic Games could be nationalised due to the current financial crisis. The chairman of the Olympic Delivery Authority, John Armitt, broke the news on Wednesday in front of the London Assembly.

Prior to the banking catastrophe, the village was going to be funded primarily by private banks and developers. However, since the developer, Lend Lease, admitted that it was no longer in a position to finance the scheme, it looks likely that the funding will come from the taxpayer instead.

As the financial crisis has worsened, banks which previously showed an interest in financing the athletes’ village have demanded higher interest rates or higher shares of the profits, which will be made when the flats are sold, following the close of the 2012 Olympics.

Some critics of the scheme have asked why the government cannot fund the development of the village. If this were to happen, the £2.2bn contingency budget kept as insurance against potential problems during the development of the main Olympic facilities, could disappear.

Whilst these plans are not yet set in stone (Armitt admits that the proposal is one of several being considered at the moment), it is a worrying prospect for the average taxpayer, who will already be feeling the strain of the banking crisis on many other levels.

The athletes’ village, composed of 3,000 units, is the largest single undertaking on the Olympic campus, situated in east London. Cut-backs have already been made, with the number of apartments reduced by nearly 1,000.

Athletes will now face cramped sleeping conditions, with five people sharing a unit instead of the original intended total of four per unit. The proposal of nationalisation is just the latest piece of negative press concerning the continuing preparations for the 2012 Olympics since the start of the financial crisis.

In early September, senior government officials announced that the funding shortfall for the development was approximately £250m. Furthermore, the development of a £400m media and broadcast centre planned in conjunction with the private sector, has been destabilised.

It is now possible that the centre will have temporary sections alongside the permanent sections. The embarrassment that this could cause may be compounded by the possibility of new private offices (constructed in Stratford) being utilised to cut expenditure further.

The likelihood is that a firm decision on the future of the athletes’ village will not be made public until next week. The chancellor, Alistair Darling, is set to meet cabinet ministers in charge of the departments funding the Olympics.

The group will discuss the various options available to them and will hope to avoid what Armitt has termed “an extreme situation” which nobody wants “to see”. There is no doubt that the taxpayer shares Armitt’s desire to avoid nationalisation of the athletes’ village but, similarly, nobody wants to see the 2012 Olympic plans fall to pieces.

For some form of consolation, the public must hope that the country will reap financial benefits in the long-term as a result of a successful Olympic games.

Written by Charlotte Cook