London 2012: good or bad value for money?

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When Seb Coe spoke to London’s bid to host the 2012 games, he justified it in simple terms. Choose London, he said, and more people would take part in sport than could be achieved by any of London’s rivals. “Choose London today and you send a clear message to the youth of the world: more than ever, the Olympic Games are for you”. Choose London, he also said, and more would be done for less than could be achieved anywhere else.

Since London’s victory in 2005, there have been some attempts to keep an eye on whether these two promises have been met. The London Organising Committee (LOCOG) publishes annual accounts, and there has been some Parliamentary scrutiny of the organisers, mainly through the House of Common’s Public Accounts Committee (PAC).

It now seems clear that there will be no significant increasing in sporting participation as a result of the games. In 2008, the last government set Sport England a target to increase adult participation in sport by a million by March 2013. The Department for Media, Culture and Sport (who share LOCOG’s panglossian instincts) told the PAC in March that they believe sporting rates have increased by around 100,000 over the last 4 years (i.e. net sporting participation has gone up by less than 1% ). LOCOG’s publicity says as little as possible about adult involvement in sport, although there are frequent references to the number of schools who have been sent Olympics merchandise (a cynic would suggest that this has also been a cheap way of disposing of tens of thousands of items marketing the main Olympic sponsors).

All across Britain, local authority funding cuts are leading to a gradual degrading of Britain’s sporting infrastructure. Facilities, which are ageing, are not being replaced. A number of pools, tracks, etc are simply being closed.Campaigners have called on the Olympics organisers to intervene in support of threatened facilities but the celebrities on LOCOG’s board have declined to do so. This was even true of the Atherton leisure centre, the only council-run sports centre in the Olympic borough of Stratford, which was originally closed at the end of 2011, and then re-opened on a skeleton basis only until June 2012, without the merest peep of protest from Lords Coe, Moynihan, or any of the athletes on the LOCOG committee.

In terms of cost: the London Olympic bid was for £2 billion, of which, it was said, the majority would be raised from the private sector. Some £700 million has indeed been raised from the private sector, for which the UK sponsors (placed into three tiers according to the services than can expect from LOCOG) will gain significantly in terms of brand awareness etc.

As for the total cost to the public purse, this has increased from £1 billion (in the original bid) to £11 billion according to the latest PAC report.

The Public Accounts Committee is critical of a number of decisions LOCOG have taken, but I will focus here on just one. Between 2005 and 2011, the organisers budgeted for 10,000 security guards at a cost of £282 million. In late 2011, a decision was taken to increase the number of guards to 23,500 at a cost of £553 million. LOCOG, with two Tory peers on its organising committee, chose to give the contract for the additional guards to G4S, a business which has a track record of granting well-remunerated but low-effort non-executive directorships to former politicians. “There is no evidence”, the PAC writes, that “the Government has secured any price advantage” from renegotiating this contract.

In other words, although you might have thought that buying services on this massive scale would lead to a price reduction, the Government and LOCOG, appear to have accepted the first offer that G4S put to them.

Don’t assume that the workers will benefit from LOCOG’s largesse. In a letter sent by Seb Coe to the Commons’ Culture, Media and Sport Committee, in January 2012, LOCOG spelled out how G4S’ contract will work.

904 managers are going to be employed at G4S’ Olympic Project Management Office. Their pay levels will be subject to relatively modest scrutiny. As for the 16,000 or so security guards to be provided by G4S, they will be paid just £10 per hour. And G4S are “incentivised” (in their contract with LOCOG) to “identify saving opportunities in labour costs”. IE if some of this can be outsourced, and agencies can be found who will pay less than £10 per hour, G4S will to keep the profit.

I’ll write in a separate post about what the Olympics have been worth to the LOCOG committee members; but suffice to say that – seen in the round – the Olympics appears to be developing into one of those exercises, of which we are all drearily familiar, by which large sums of public money are used to protect the wealth of those who are already fabulously rich.

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