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3 February 2012
By Andrew Haldenby, Director
The economic legacy of the London Olympics and Paralympics is meant to be one of the distinguishing features of this year’s Games. The attendees at this Reform seminar agreed that the various Olympic authorities had been committed to the idea of a strong economic legacy from the moment of the very first intention to bid. The seminar was conducted under the Chatham House Rule and led by Sir John Armitt, the Chairman of the Olympic Delivery Authority.
Certainly the increase in the capacity of the London economy on account of the Games is already very great. The project has cleared a remarkable area of contaminated land (actually the site of the Industrial Revolution in London) and freed it for new development. The majority of development spending, 75 pence from every pound spent, has been devoted to infrastructure (such as better transport links) as opposed to stadia. These changes have enabled the investment by Westfield into Stratford, to take just one example. The Westfield investment was initially priced at just less than £1 billion and now may be worth twice that much.
The Games will also cause a temporary boost to generate higher consumer spending, in particular from tourism. Similar effects have been measured from other major sporting events, such as the 2010 football World Cup in South Africa and the 2011 Rugby World Cup in New Zealand. The Games are very likely to create major new opportunities for top-level UK design and construction, not least to participate in the creation of future Olympic and Paralympic Games.
The more open question is the impact of the Games on the productivity of the local economy. Much effort is going in to improving the educational outcomes of local people, for example through a new Westfield retail academy and, potentially, a new postgraduate campus for University College London. But changes of this kind can only succeed in the context of the development of the rest of the London economy, which is inevitably out of the control of the Olympic authorities.
The final outcome of the discussion was new (at least to me) – that the Olympics and Paralympics are a model example of joined-up government working in partnership with the private sector. The Labour Government learnt the lesson of the Millennium celebrations. It created the right institutional framework for the delivery of the Games and absolutely did not interfere after that. It eliminated political risk by keeping the then Opposition fully in the loop. This good practice in government should certainly be part of the Games’ legacy to policy makers if not to the economy.