Mayor's agency's 'outlook bleak'

London's Olympic Park under construction

The �159m funding shortfall will not affect the main budget of the games

The financial outlook of the Mayor of London's economic agency is "bleak", a London Assembly report has said.

The London Development Agency's (LDA) reputation was damaged by a £159m financial hole created by a project to buy up land for the Olympics, it said.

The shortfall "damaged the agency's reputation and reduced its resources", the performance committee pre-budget report has claimed.

The LDA blamed the budget problems on "failures" by previous agency bosses.

The report said the LDA may lose more than a fifth of expected resources by 2010/11.

By 2012/13 it is likely to have only around 60% of the programme budget available to it last year.

'Reduced resources'

"The LDA is tasked with helping Londoners through this tough economic time, but it will find it very difficult to make a big impact given its reduced resources," said John Biggs AM, chair of the assembly budget and performance committee.

"The committee's confidence in the LDA's ability to produce and monitor budgets accurately has been dented."

The LDA paid 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.

A LDA spokesman said the Olympic budget problems were part of "historic management failures that were inherited by the LDA's new leadership".

He said the LDA was "continuing to address this legacy and are ensuring that the organisation is fit for purpose and able to maximise its strategic impact in London and for Londoners".

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

The shortfall will not affect the main budget of the games, the LDA said.