London Olympics battered by economic crisis

Nothing is being left untouched by the world economic crisis, including the biggest sporting event in the world. As various companies directly linked with delivering the 2012 Olympics face bankruptcy or problems raising finance, the government has been forced to step in to cover the shortfall.

Chris Newby

The scale of the crisis has even led Tessa Jowell, the government's Olympic minister, to admit that had they foreseen this crisis they would not have bid for the Olympics.

There is no changing the deadline date for this project; and the government does not want a repeat of the Wembley stadium fiasco. In three and a half years time the various stadia and associated buildings will need to be ready.

US telecoms giant Nortel has pulled out of its contribution to the project after filing for bankruptcy. However the biggest casualty so far has been the company Lend Lease having to pull out of the construction of the Olympic village.

With its UK losses now totalling Ł225 million, it is finding it impossible to raise enough money to finance this work. The government will now be responsible for it, cutting into the Ł2 billion contingency fund that is part of the overall Ł9.3 billion budget.

Already nearly Ł1 billion of the contingency fund has been used up. The Ł355 million media centre will also be totally funded by government money as no private sponsors can be found.

The size of the Olympic village is being scaled down. Instead of 4,500 flats there will be just 2,800, with each accommodating six athletes instead of four, and with the kitchens being sacrificed. While the Olympic delivery authority (ODA) claims it will build the remaining flats after 2012 as part of the legacy, there are no guarantees.

To save money the ODA discussed moving the media centre into the Stratford City shopping centre development. Private consultants KPMG, brought in to look at this and other possible savings, could find none yet walked away with Ł200,000 for their 'services'.

As the government's financial responsibility increases it will no doubt attempt to get the money back from taxpayers in some way, or through further public sector cuts. Although greater public involvement gives less opportunity for private companies to profit out of the games, this should not be at the expense of public services.

Also there should be far greater direct democratic public involvement in these games through democratically elected community and trade union representatives on the ODA.

Scandalously, one place where cutbacks are not being made is in the salaries of the top ODA executives. The chief executive last year received Ł624,000. Board member Paul Deighton, a former Goldman Sachs banker, was paid Ł557,440 last year.

Compare this to the income of people in the area where the main stadia will be. In Newham 55% of children live in poverty, 35% of adults are unemployed on some estates and 9,000 people cannot afford to heat their homes properly.

The inspirational strike of the Lindsey refinery construction workers provides important lessons for workers on the Olympic site, especially on how to build a unified campaign to defend wages, terms and conditions. Companies on the site could attempt similar action in undercutting nationally recognised agreements.

One issue is the lack of apprenticeships. This is the largest construction project in Europe. It will employ 10,000 workers by 2010, with a further 8,000 being employed on the nearby Stratford City shopping development. Currently there are 3,000 construction workers employed on the Olympics site, yet of these there are only 8-10 apprenticeships.

Local Socialist Party members were recently involved in a successful public meeting aimed at laying the basis for a campaign to stop the Olympics project going against the interests of working-class people.

Many ideas came up, such as on linking up with the construction workers and on the need for cheaper, if not free, entry to the games for those on low incomes. There is also an important campaign to be run on the future use of the site after the Olympics.

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In The Socialist 17 February 2009:

Fight back now to stop job cuts