To start to answer this question we need to remember that London is a popular city. Very popular. People, especially the young, the bright, and the affluent, flock here from all over Britain, and much further afield. Londoners are also a fertile bunch.  Their high birth rate alone will mean the city’s population grows by over a million in the next 15 or so years. These twin pressures stoke demand for housing.  The average home in London is already three times more valuable than those in the North. High property prices create trouble, especially for those not ‘on the ladder’, on low wages or on benefits. Some say the solution is for the state to reduce demand by moving chunks of the public sector to, say, Salford.  But London is already the least dependent region on the public sector, with almost 80 per cent of jobs in the private realm, and, certainly in the current economic gloom, a deflationary policy for the capital is scarcely plausible, especially as it seems to be the most resilient part of the country’s economy.  

Part of the solution must be to build far more homes on London’s ‘brownfield’ sites.

Bring on the Olympics.  Ken Livingstone saw the Olympics as a great chance to get huge public resources to transform the bleakest part of inner London, as part of his wider strategy to revitalize the east.  The 2.5 km2 site for the games, nestled between some of the most deprived areas in the country, was a cocktail comprising 2 parts small businesses, one part residents and wildlife and about 10 parts contaminated industrial backwash.  Turning it into a des-res location was always going to require a gargantuan effort.  And attaching to the Olympics delivered exactly that.  To the tune of about £11bn.  We Londoners need to remember that this was raised in the main from UK taxpayers and lottery card enthusiasts, and we should be grateful for their largesse.

Of the £9.3bn official Olympic budget a lion’s share has funded the building of the architecturally impressive venues and making the site work for the games themselves.  An additional £2bn or so was kept out of the official Olympic budget.  This was the London Development Agency’s budget some borrowed from the Treasury, for buying and clearing the land, cleaning it up and doing some early preparatory work, such as undergrounding the 50 pylons that blighted the area.  The rationale for keeping it off the headline budget was that the LDA would own a valuable asset and recoup its losses later on.  The remaining debts amount to £453m according to the London Assembly.

The institutional landscape has since evolved and now the Olympic Park Legacy Company, spun out of the LDA, and controlled in equal parts by the Mayor and government, owns the land. It will soon mutate into a Mayoral Development Corporation, to be run exclusively by the Mayor. The LDA is being scrapped in March but still holds the debts.  

To make a call on the overall value of the Olympics to London we need first to see what kind of deal the Mayor can strike with George Osborne about the remaining debts, and the rights to income generated by selling off bits of the Olympic Park, and second whether the park will become a desirable place to build homes and fulfill its promise, both socially and fiscally.  It is this latter aspect that rightly preoccupies the new owners of the park - because the test of Olympics against its initial promise is whether thousands of good homes are built in the area. The totemic, and distracting, issue of the main stadium tenancy, so poorly handled overall, is but a sideshow compared to these more fundamental issues. 

Bringing to life a massive inner London post-industrial wasteland will have enormous long-term benefits for London and the UK, yet the price tag has been extremely high.  Luckily for Londoners most of this has been borne by those living outside the M25.  So whether the Olympics will be worth it for the UK as a whole hangs in the balance, it will be for history to judge.  That the Olympics is a sure-fire good thing for London is beyond doubt.

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