2012 London Olympics will provide a lasting legacy

It says a lot about the current mood that a seven-year-old report is suddenly being seized upon as evidence that the bid was a mistake. But an Evening Standard investigation into whether the Olympics are likely to bring benefits discovered that a lot of work has been carried out recently to address the question. And far from being downbeat, new studies indicate the rewards may be substantial.

No one can be sure, of course, and Professor Stefan Szymanski, an economist at Cass Business School, said the 2002 report was "an inconvenient truth". He said: "The justification for bidding should have been based on evidence placed in the public domain. Instead key evidence was suppressed or ignored."

Olympics minister Tessa Jowell denied this. She told the Standard that the study had always been available and it was only one of three the Government commissioned. The other two — one by PricewaterhouseCoopers and the other by a leading economist — were favourable. Ms Jowell said: "The strategy was always to seize the opportunity and that is what we are doing. This is the biggest construction project in Europe on what, not very long ago, was a contaminated, depressing wasteland. People say there would have been regeneration anyway. Yes, but not for many years."

One of the studies commissioned by the Government before launching the bid was carried out by the accountancy firm PricewaterhouseCoopers. It estimated that London alone could gain £5.9 billion between 2005 and 2016. The third study was carried out by an economist, Professor Adam Blake. He reported that overall benefits could total £1.9 billion.

The Standard asked Professor Blake if he still held that view. "Things have changed, of course," he said. "The budget has gone up considerably but there almost certainly will be benefit. It's hard to quantify but in money terms the most obvious rewards will probably come in the tourism sector.

Then you have infrastructure and facilities which would not have been built without the Olympics. I estimated there was an 85 per cent chance of a positive outcome. That may be a little lower now and unforeseen events can change everything. But overall the chances of benefits from the Games are good."

How the Olympics might impact on the four main sectors

TOURISM

Visit Britain recently commissioned a report to try to estimate what benefits the tourist industry might reap from the Games. By analysing data from major sporting events held around the world in the past 15 years, it was calculated that Britain — and especially London — would receive a huge influx of visitors not only during the Games but for years afterwards. The potential gain is £2.34 billion for the UK with £1.85 billion going to London. Ken Kelling at Visit London said: "A potential global audience of four billion will see London on TV. The message we want to get out is that there is a lot more here than the sporting venues."

SPORTING LEGACY

At a combined cost of almost £900 million the aquatics centre, athletics stadium and velodrome will endow the East End with two 50-metre pools, and the velodrome has a bright future if the Manchester track is anything to go by.

Britain's 26 Olympic and 20 Paralympic sports will also feel a 2012 dividend. Around a third of them have already gained a "legacy" in the shape of new or improved facilities.

It is on the pledge to transform a nation of couch potatoes that ministers may face disappointment as previous host cities have struggled to deliver any lasting increase in mass sports participation. Tory shadow Olympics minister Hugh Robertson said: "Successive raids on the National Lottery to fund construction mean that the commitment of getting more people playing sport is unlikely to be realised."

This note of caution has been echoed elsewhere. The Evening Standard launched a campaign for a "sports legacy" this summer amid concerns that the claimed knock-on benefits of the Games to community sport were being overloooked.

REGENERATION

At the heart of London's regeneration ambitions is the Olympic village, where a £450 million funding shortfall has raised an immediate threat to the prospect of a legacy of thousands of much-needed homes. The original plans envisaged 4,500 flats which, after the Games, would be available for Londoners. But with a sinking property market and scarcity of funds the final total could be as low as 2,700.

Property experts say the flats will cost £350,000 each to build but may be worth only £200,000 on the open market. They are being built, however, and chairman of the Olympic Delivery Authority, John Armitt, is upbeat: "As well as new sports venues we are delivering new open space, cleaning miles of waterway, creating new transport links, thousands of new homes and education and healthcare facilities."

The regeneration cost is, at today's estimates, around £6 billion, more than half the Olympics budget. If Mr Armitt's calculations are correct, London will be left with £4.5 billion of lasting benefits.

ECONOMY

Almost a year ago, Lloyds TSB issued a study it carried out which suggested the UK stood to benefit from a £21 billion boost to the economy, with London and the South-East getting the lion's share, nearly £9 billion.

Colin Stanbridge, chief executive of the London Chamber of Commerce, said business was already benefiting. There is £6 billion worth of work on Olympics projects and more than 650 companies have already won more than £2 billion in contracts.

"We are still confident there will be huge economic benefits," Stanbridge said. "Given the present circumstances I can't think of a better way to promote London."

Additional reporting: Matthew Beard