London Olympics, an economic letdown for UK?

“That’s what politicians do. They want to look good”, said Oxford Professor Bent Flyvbjerg after British Prime Minister David Cameron spoke of the London Olympics: “It’s on-time, it’s on budget, all the building’s being done.”

In 2005, the original budget bid for the London Olympics was estimated at around 2.4 billion pounds. But, what does really happen when, as mentioned by Oxford researchers, “of the thousands of people engaged to work on the program, few of them will ever have been on a Games committee in the past”?

The outcome is an announcement by the country’s Culture Secretary Jeremy Hunt that the London Olympics was set to come in under its 9.3 billion pound budget, announced two years later in 2007.

But, does a budget estimate, even as large as almost four times its original bid, truly represent the costs? Oxford University researcher Allison Steward says it can only “represent ‘politically acceptable’ costs” because the real costs can be known only after a comprehensive investigation following the Games.

A Sky Sports investigation revealed that the Olympic Games could cost British taxpayers up to 24 billion pounds taking into account costs including public transport upgrades and governmental operational spending.

Sky investigators calculated the costs using figures from freedom of information requests and public documents. But, several freedom of information requests were ignored, pending a possible thorough investigation into the London Olympics costs until after the Games.

Such reports come as the British economy has entered a double dip recession and British officials cannot stop instilling hope into British people as they repeatedly give out overwhelming news about the continuation of austerity measures.

Figures released by Britain’s Office for National Statistics show that the country’s Gross Domestic Product contracted by 0.3 percent during the first quarter of 2012, with Britain’s economic growth taking a 0.4 percent plunge during the last three months of 2011.

The latest figures also show that the British economy contracted by 0.7 percent in the second quarter of 2012.

The upbeat economic news heard every day in Britain is accompanied by warnings from the UK’s most senior civil servant, Sir Jeremy Heywood, that British people could face spending cuts until 2020.

Earlier in June, Heywood warned that the British people would have to grapple with the coalition government’s public spending cuts for a decade because only 25 percent of the necessary spending cuts were implemented by the time.

Moreover, a recent report published by Britain’s Office for Budget Responsibility in July said the country’s austerity program could be in place for the next fifty years

The London Olympics, which researchers believe are the most over funded Olympic Games event since Atlanta in 1996, was supposed to be a triumph at least for East London around the Olympic Park.

To this end, Britain’s Olympic Delivery Authority decided to work closely with the London Development Agency to clean and clear a previously neglected and contaminated area of East London to create an Olympic Park.

But, lessons could be learnt from the Greek economy and the Athens Olympics in 2004 at a time when the British government is severely cutting public spending to eliminate the country’s record peacetime structural budget deficit.

Facilities built up in Athens in 2004 are now decaying and their cost overrun of 60 percent significantly contributed to the current financial woes of the Greek people.

“The Olympics are a great sporting event, but they don’t work in cities that are already on the world’s map,” said Mitchell Moss, New York University Professor of Urban Policy.

Moreover, the heavy security costs of the Athens Olympics in 2004, about 90,000 pounds per competitor, were another major contributor to Greece’s subsequent debt crisis.

Rises in the London Olympics’ security costs have already raised concerns among British MPs as the Commons Public Accounts Committee warned that the games must not become a white elephant.

With more than a two-fold increase in the number of guards tasked with securing the London Olympics from 10,000 to 23,700, the total cost to the Public Sector Funding Package of venue security nearly doubled from 282 million pounds in 2010 to 553 million pounds in December 2011.

Only 271 million pounds have been set aside for venue’s security with another 80 million pounds being dedicated to building an 11-mile, 5,000-volt electric fence for the Olympic Village to become partitioned off from the wider city.

Meanwhile, any increase in land values would come as a further blow to the British taxpayer as the Olympic Village was sold to the Qatari ruling family’s property company in 2011.

The Olympic Village was to be financed by Australian developer Lend Lease, previously headed by David Higgins, the chief executive of the Olympic Delivery Authority until February 2011. However, after the 2008 financial crisis, private capital abandoned the project and Olympics organizers decided to fully nationalize the village.

Nevertheless, in 2011, London’s Olympic Village was sold to Qatar’s royal family in a deal that left British taxpayers 275 million pounds out of pocket.

With all their costs, the London Olympic Games are likely to leave ordinary Londoners, who are paying heavily for the events through council tax hikes, at a great loss while rounding up the funds for wealthy investors and financiers.