London Olympics: How have the last seven years treated Newham?

The borough of Newham has yet to see that many gains from hosting the Olympics.

The Olympics were sold, both in the bid to the IOC and in the promise to Britons and Londoners, as games of regeneration. This may have been over-ambitious from the start; Olympics which turn a profit are rare. For every Atlanta 1996 or LA 1984, games which turned a slim and not-so-slim profit, respectively, with the help of massive commercialisation, there are ones like the 1974 Montreal games, which left the city in debt to the tune of CA$1bn and took 20 years to pay off.

Nonetheless, in 2005, in that day of euphoria between winning the games on the sixth and the London bombs bringing the city crashing down to earth on the seventh, Jack Straw told the House of Commons that:

The games will transform one of the poorest and most deprived areas of London. They will create thousands of new jobs and homes. They will offer new opportunities for business in the immediate area and throughout London.

A new study, performed jointly between Elizabeth Finn Care and the LSE, aims to see whether the 2012 Games will live up to the lofty promises made about them. The research looks at the borough of Newham, within which much of the Olympic park, and the stadium itself, is situated, and although the full results won't be available until August 2013, preliminary results have been made available already.

Straw's focus on jobs and homes isn't reflected quite so well on the ground. Despite the megaproject being constructed on its doorstep, as well as the opening of Westfield Stratford City, the largest inner-city shopping centre in Western Europe, Newham was hit harder than the rest of London by the recession. Unemployment increased by 44 per cent in the borough, from an already-high base of 13.7 per cent; the city as a whole started from 8.8 per cent unemployment, which then increased by just over a fifth.

Employment may be down amongst residents, but employers are up; the borough saw an increase of 6 per cent in the number of enterprises over the period of 2008 to 2011, even while England was seeing a 4 per cent decrease.

When it comes to homes, there has been an ongoing decrease in council housing stock since 2005, from 22,992 down to 17,547 by 2012, and that offset by the increase in housing association stock, which rose by just over 2,200 to 13,065 homes. That situation at least is expected to improve markedly after the Olympics are through, when the Athlete's Village is converted 3,000 more local flats.

While more jobs and more homes are unabiguously good, there are other measures which resist an easy value judgement. Private rents in Newham remain much lower than the London average, and particularly low when compared to other Olympic boroughs. The mean monthly rent for a two bedroom property in the borough is £833, compared to £1196 in neighboring Tower Hamlets; but for the residents of Newham that news is obviously something to celebrate, even though it is assuredly an indicator of the borough's continuing poverty. Similarly, the increase in house prices in the borough has been a tenth of that London-wide; the average house is worth 3.5 per cent more than it was in 2005, but across the capital that figure is 32.5 per cent. Again, a mark of the continued problems the borough is having, but also a sign that, unlike many boroughs in the city, the children of Newham stand a chance of being able to live in the area they grew up in.

The lead researcher, LSE's Professor Anne Power CBE, agrees, saying:

We should be glad there are parts of London where prices are still modest... what we're trying to do [in improving the quality of life in Newham] is not displace people.

It is very easy to identify a borough with an geographical area – that is, after all, what they are – but improving Newham must mean more than just building homes for wealthier people to move into. The real test of the success of the Olympics will be if the people in Newham in 2005  are still there in 2013, and better off for it.

The Olympic stadium and the Orbit thing. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty Images
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There are risks as well as opportunities ahead for George Osborne

The Chancellor is in a tight spot, but expect his political wiles to be on full display, says Spencer Thompson.

The most significant fiscal event of this parliament will take place in late November, when the Chancellor presents the spending review setting out his plans for funding government departments over the next four years. This week, across Whitehall and up and down the country, ministers, lobbyists, advocacy groups and town halls are busily finalising their pitches ahead of Friday’s deadline for submissions to the review

It is difficult to overstate the challenge faced by the Chancellor. Under his current spending forecast and planned protections for the NHS, schools, defence and international aid spending, other areas of government will need to be cut by 16.4 per cent in real terms between 2015/16 and 2019/20. Focusing on services spending outside of protected areas, the cumulative cut will reach 26.5 per cent. Despite this, the Chancellor nonetheless has significant room for manoeuvre.

Firstly, under plans unveiled at the budget, the government intends to expand capital investment significantly in both 2018-19 and 2019-20. Over the last parliament capital spending was cut by around a quarter, but between now and 2019-20 it will grow by almost 20 per cent. How this growth in spending should be distributed across departments and between investment projects should be at the heart of the spending review.

In a paper published on Monday, we highlighted three urgent priorities for any additional capital spending: re-balancing transport investment away from London and the greater South East towards the North of England, a £2bn per year boost in public spending on housebuilding, and £1bn of extra investment per year in energy efficiency improvements for fuel-poor households.

Secondly, despite the tough fiscal environment, the Chancellor has the scope to fund a range of areas of policy in dire need of extra resources. These include social care, where rising costs at a time of falling resources are set to generate a severe funding squeeze for local government, 16-19 education, where many 6th-form and FE colleges are at risk of great financial difficulty, and funding a guaranteed paid job for young people in long-term unemployment. Our paper suggests a range of options for how to put these and other areas of policy on a sustainable funding footing.

There is a political angle to this as well. The Conservatives are keen to be seen as a party representing all working people, as shown by the "blue-collar Conservatism" agenda. In addition, the spending review offers the Conservative party the opportunity to return to ‘Compassionate Conservatism’ as a going concern.  If they are truly serious about being seen in this light, this should be reflected in a social investment agenda pursued through the spending review that promotes employment and secures a future for public services outside the NHS and schools.

This will come at a cost, however. In our paper, we show how the Chancellor could fund our package of proposed policies without increasing the pain on other areas of government, while remaining consistent with the government’s fiscal rules that require him to reach a surplus on overall government borrowing by 2019-20. We do not agree that the Government needs to reach a surplus in that year. But given this target wont be scrapped ahead of the spending review, we suggest that he should target a slightly lower surplus in 2019/20 of £7bn, with the deficit the year before being £2bn higher. In addition, we propose several revenue-raising measures in line with recent government tax policy that together would unlock an additional £5bn of resource for government departments.

Make no mistake, this will be a tough settlement for government departments and for public services. But the Chancellor does have a range of options open as he plans the upcoming spending review. Expect his reputation as a highly political Chancellor to be on full display.

Spencer Thompson is economic analyst at IPPR