The UK Government has announced it will invest £324m in the 2012 Olympic Village, rejecting a £375m offer from private construction firm Lend Lease, to take the village into public ownership.

The Department for Culture, Media and Sport said the private offer proved too risky in the current climate and was not in the best interests of the tax payer. With the Olympic Village now publicly owned, the public sector will receive returns from sales after the Games.

“After careful assessment it is clear that investing in the Olympic Village now will save public money in the long term,” said Minister for the Olympic and Paralympic Games Tessa Jowell.

“A private sector deal was available, but because of the credit crunch it was not considered a good deal. By funding the entire project the village will become publicly owned and the public purse will receive substantial returns from sales. The ODA will make a fresh assessment of the market nearer to completion with a view to pursuing deals with other possible investors.

“A third of the way through construction there remains nearly £1.3bn of contingency left. Forecast costs have come down and the overall budget of £9.3bn remains unchanged. It will not be exceeded.”

By staff writer.