Caption: Director of HR & Compliance, Gill Forrester, volunteering at The London Paralympic Games
There are many newspaper articles discussing the cost and benefits of a Financial Planner and at FMB we believe that the cost of our service provides substantial benefits to our clients!
As a Paralympic volunteer or as Lord Sebastian Coe calls us “Gamesmakers”, I thought it would be a good opportunity to carry out a cost/benefit analysis on the Olympics, London 2012.
Costs of London Olympics
There is the initial financial cost of building facilities, which may only be used to their full potential for a short time during games.
The investment is short term. Many facilities can only be used for the 3 week duration of the Olympics. After that there is a danger of ‘white elephant projects’ – facilities that cannot be effectively reused e.g. similar to the Millennium Dome.
It is estimated the cost of the Olympic village could cost up to £1billion. This is £1billion that cannot be spent on alternative investment schemes like transport and education in London.
The credit crunch means private sector investment has dried up. This increases the cost to tax payers. Government spending is already under strain because of the bank bailouts and recession. If the taxpayer has to step in, the Olympics will lose part of its £2.2bn contingency fund.
Benefits of London Olympics.
It provides jobs and economic activity; important in times of a recession, when the private construction sector is in a steep decline. Government spending can be seen as part of an expansionary fiscal policy.
Hosting the Olympics boosts the prestige of a country. It is a ‘once in a lifetime’ opportunity to provide a showcase to the world. Not everything can be reduced to simple accounts, (a good example of the non-monetary benefits).
Hosting the Olympics will provide a boost to tourism and travel to London, during the Olympics and hopefully after.
Building the Olympic park has helped to regenerate the east end of London this increases civic pride.
There is a lasting legacy of the Olympics. East London has new rail lines (Docklands Light Railway extension) and improved public transport, including the improved international rail station at Stratford. This helps to reduce congestion and increase productivity.
Many of the venues will be used after the event, e.g. the Olympic stadium will remain an athletic track. Other venues like the velodrome provide a much needed international standard track in the capital.
After the games, the Olympic park will partly give way to a legacy of more available homes, to help ease the London housing shortage and also provide a green space for the enjoyment of the public and the benefit of wildlife.
Encouraged participation in sport might make the UK have better fitness standards and less obesity, reducing the demand on health care.
I believe there are more benefits than costs. Personally, I’m glad we hosted the Olympics. Yes, it might end up costing the taxpayer a lot, but £1bn is less than 0.1% of total GDP.
It’s a once in a lifetime opportunity to host the most important sporting event on the calendar.
The Olympics may well make an economic loss in the short term, but does everything have to be ruled by profit making decisions?
People will say it’s better to spend the money on health care and education. I don’t doubt these are higher priorities. But, we spend over £80bn on health care every year. I don’t see why we can’t spend £1bn on promoting the Olympics as a one off event, (which might actually encourage people to be fit and therefore need less health care).
The London Olympics is something to be proud of in the current climate and I can honestly say I am honored to have been a part of the most well organized event that the country has put on for a great number of years, if not ever!