Has the Olympics delivered a £10 billion legacy so far?
19th Jul 2013
"What is a cynic? ... A man who knows the price of everything and the value of nothing", so goes the famous line. The other extreme however (according to Oscar Wilde) "is a man who sees an absurd value in everything, and doesn't know the market price of any single thing."
Back in the present day, the desire to place an economic value on everything possible appears little diminished. Prime Minister David Cameron caught the headlines today with the eye-catching claim: "A year on we have generated £9.9bn of economic benefit from Olympic-related activities."
It's thanks to a report released today by UK Trade and Investment (UKTI), which boldly states the £9.9 billion of economic value was realised "because of the Games and Games-time promotional activity". That's made up of £2.5 billion of additional foreign investment into the UK, £1.5 billion of overseas opportunities (such as work on the Rio 2016 games) and £5.9 billion more from selling promotional Olympics exports.
According to the report, the money will continue to roll in: by 2020 the estimated economic impact is being put at as much as £41 billion.
Except, as the BBC's Stephanie Flanders eloquently points out, even if the main estimate is close to the mark, it can't prove very much about the Olympics' role in generating the 'economic benefit', because no-one knows or has tried to work out what would have been generated in some of these areas if the Olympics had never happened. The redevelopment of Croydon, for example, might well have taken place to some extent without the Olympics - there's just no way to know.
The detailed modelling that's gone into making these estimates isn't available, but what's striking is that many who've attempted the same over recent years have come up with such varying estimates.
Back in 2005, PricewaterhouseCoopers forecasted that the UK's GDP would be boosted by £1.9 billion over the whole period from 2005 to 2016 - and only about £622 million of that referred to the post-Olympics period. Granted, this was made several years ago, and based on the outdated assumption that the Games would cost just £5 billion - not the final total of £9 billion.
Further still, Lloyds TSB made the case in 2012 that the Games would contribute £16.5 billion to the economy over 12 years - but only 30% of this (about £5 billion) was estimated to occur after the Games as part of its Legacy.
Another unfortunate estimate? It's impossible to tell. What's more is that the Centre for Cities last year, rather than attempt an estimate, instead explained:
"Even cost-benefit analysis only works in the short-term: in the longer term, isolating the direct impact of the Games is almost impossible. Interestingly enough this does not seem to stop studies from using this approach, which suggests that there are strong incentives to produce evidence that justifies hosting the Olympics."
It's easy to sympathise with the ordinary reader who's faced with all this conflicting information. The most glaring fact that breaks through the noise of estimates is that nobody really knows.