(I was unable to take part in the debate in the House of Commons on Wednesday 29th October but part of the article below would have formed my contribution to that debate.)
In Autumn 2008 with Britain heading into a recession, volatility in global stock markets and the banking world still shaking from near collapse, one could be forgiven for not being able to remember the excitement of 6 July 2005 when London was awarded the Olympics. As the world’s eyes remain transfixed on the financial crisis it is easy to forget that in less than four years time London will host the 2012 Games. The current economic climate is clearly going to have a significant effect on the London Games and most importantly the infrastructure legacy for the decades ahead.
We are currently in a crucial phase of preparation for the 2012 Games, with much of the building work underway and most contracts are now signed for future works. Yet at a time when the government is spending and borrowing tens of billions of pounds to stabilise the banking sector, the decision taken not that long ago to commit to a costly Olympic dream, may now seem to many a rather foolish idea. Indeed the French, with whom we competed so closely to win the games, must now be breathing a huge sigh of relief. With the world on the brink of a recession who would want to be footing the bill for an Olympic Games. Of course 6 July 2005 was a great day and the sports fans amongst us, such as myself would be lying if we said that we were not enthused at the prospect of hosting the Olympic events here in our own capital city. However I have always, both in previous articles and in debates in the House of Commons, shared my concerns about the costs and the dangers of London 2012, and I was not alone. Yet to all of us who were doubtful, sceptical, and even fearful, we were constantly reassured that it would all be worth it; that the Games were not just for a few weeks but that a legacy that would be built and last well beyond 2012. A social legacy, an environment legacy, a regeneration legacy, as well as a sporting legacy, which would benefit not just London but the whole of the UK for years to come. Now heading into a recession we must be careful that this well branded positive legacy does not become an expensive white elephant.
Even in the summer of 2005 the warning signs were already there. Even during the good times, the seemingly never ending boom, many people were nervous about the prospect of holding the Olympic Games. Was it just British scepticism and concerns about our ability to host the world’s biggest sporting event? No. As I talked to my constituents here in London I saw and heard people’s concerns about the cost of the Games and the contribution, financial and otherwise that Londoners would have to pay for the event. These concerns were present right at the start of the consultation stage of the Olympic bid. Even at this early stage more than 50% of voters were against London hosting the games believing that costs would outweigh any benefits. History would seem to suggest that the majority had good reason to be doubtful; only two games have ever been completed on budget – Los Angeles (1984) and Atlanta (1996) both of which were criticised for being overly-commercial.
The initial budgeted forecast of £2.375 billion pounds would have added an extra £20 per head per annum, for a minimum of 20 years onto the council tax bills for those living in London. By June 2007 Culture Secretary Tessa Jowell told MPs that the budget had been revised and now stood at a huge £9.35 billion, a near fourfold increase. This figure is now set in stone and we are promised that there will not be a further rise – the Games will have to be achieved within this figure of £9.35 billion including the legacy projects.
In a time of huge borrowing by the government and the biggest budget deficient in years, it is now more difficult than ever to justify such a large amount of money being given to London 2012. The legacy of 2012 is now being questioned once again three and half years before the Games. This should not however be a surprise, one only has to look back to 1999 and recall the legacy that the Millennium Dome was planned to leave, a project that was over budget and over due. Now it is being used and is doing well but for years this £900 million pound project was left empty as the government tried to wash its hands of it to the highest bidder. An empty shell was not much of a legacy. We must learn from this lesson and ensure that this does not happen to the facilities that we are spending huge sums on now.
Not only have costs soared and economic capacity decreased but the oncoming recession will affect the size of the Games which will undoubtedly have to be on a smaller scale. The government has already had to make changes to the initial plans much to the disappointment of the IOC. Fencing has already been moved to a shared venue, while the shooting, basketball and equestrian sites are under review. In contrast to Beijing where blank checks were written it is an undoubted fact that in 2012 you are going to get a lot less bang for your buck.
Meanwhile a huge projected source of income for the Games is through sponsorship and whilst the Olympic Delivery Authority claim that the downturn has not affected sponsorship deals, it is clear that once again any shortfall in sponsorship will be met by the taxpayer. Businesses both large and small are rewriting their marketing budgets as costs are cut across London, and it is unlikely that the original sponsorship targets will be met. There is speculation that the contingency fund is already being used and while we do not know yet how much the general taxpayer will have to pay towards London hosting the Olympics, it is clear that it will be more than the initial figures that were predicted by the government. At a time when the purse strings are being tightened and families are having to budget more carefully to counter the increased cost of food and energy bills, it will increasingly be regarded as inequitable to expect people to help pay for London 2012 as well. Moreover, the National Lottery funds are being drained to the detriment of other worthy arts, heritage, sports and cultural projects nationwide, in order to make a contribution to the spiralling Olympic bill.
The current financial situation is also a cause for concern for the developers, many of whom are suffering from the downturn in the construction industry. With the developers’ loans from the banks becoming evermore crucial it is highly probable that the government will again have to step in and underwrite loans to ensure building work takes place at all.
Of course we need to appreciate the positive aspects of being awarded the Olympics. It proves that London is a prestigious city and we will of course see certain parts of London benefitting from regeneration. Watching Team GB do so well in Beijing this summer was an inspiration and there is no doubt that the country will quite rightly be passionately supportive of our athletes come 2012. To my mind the actual Games will prove to be a spectacular show for three weeks in summer 2012. The legacy on the other hand may prove to be a disappointing failure with an overwhelming feeling that we will have missed a great opportunity for regeneration in the Lea Valley area.
The Olympics in Sydney 2000 and Athens 2004 serve as a stark warning of Games that were over-budget where insufficient attention was paid to a lasting regeneration. In Athens many facilities are now deserted and we can see the danger of the Olympic dream. After a great party there is always the risk of a huge mess and Sydney and Athens are not alone in being Olympic cities that are still paying for the Games of yesteryear. On top of this both Sydney and Athens took place in good economic climates. A risk taken in the age of an economic boom is a potential disaster in times of a world wide recession. The question that remains of course is that of whether the impact and sporting and regeneration legacy of London 2012 will be worth the cost. We still have time to get this right.