Olympic Games and Regeneration

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1 Olympic Games and Regeneration Standard Note: SN/SC/3742 Last updated: 7 February 2012 Author: Christopher Barclay Science and Environment Section The bid for the Olympic Games 2012 was based on a plan to regenerate a rundown area, rather than to use already existing facilities. This note discusses progress on regeneration and the legacy. Other relevant notes are: London Olympics 2012: Transport (SN/BT/3722) and Thames Gateway (SN/SC/3269). The 2009 Strategic Regeneration Framework set out an ambitious legacy vision that the communities who host the 2012 Olympic and Paralympic Games will enjoy the same social and economic chances as their neighbours across London. A February 2010 Greater London Assembly Committee Report called for ambitious targets for the employment of local people on construction projects. The Commission for a Sustainable London 2012 praised what had been achieved but noted that in relation to knowledge sharing and the future of the Olympic Park after the Games, there had been few commitments to back up promises. The National Audit Office report in December 2011 said that the Olympic Park Legacy Company was largely on track in its objectives. However, a few uncertainties remained. In 2012 the Government announced a transfer of responsibility to the Mayor, including approval of the Mayoral Development Corporation for the Olympic Park. This information is provided to Members of Parliament in support of their parliamentary duties and is not intended to address the specific circumstances of any particular individual. It should not be relied upon as being up to date; the law or policies may have changed since it was last updated; and it should not be relied upon as legal or professional advice or as a substitute for it. A suitably qualified professional should be consulted if specific advice or information is required. This information is provided subject to our general terms and conditions which are available online or may be provided on request in hard copy. Authors are available to discuss the content of this briefing with Members and their staff, but not with the general public.

2 Contents 1 Strategic Regeneration Framework, November Continued concern over the legacy, The Government describes the legacy for East London 5 4 Decline in the value of the Olympic estate, National Audit Office Report, December Mayoral Development Corporation approved, January Has the legacy been wasted? 8 8 Government transfers power to London Mayor 9 1 Strategic Regeneration Framework, November 2009 In November 2009, the host boroughs published the Strategic Regeneration Framework (SRF), along with a summary: The vision The SRF sets out an ambitious legacy vision that is unrivalled anywhere in local government: within 20 years, the communities who host the 2012 Olympic and Paralympic Games will enjoy the same social and economic chances as their neighbours across London. This is often called the principle of convergence. Achieving this will mean halting a century of social decline and instituting a pace of change that, in many cases, is two to three times the average London improvement rate. Achieving this vision is not simply a matter of social justice. The whole of London and the national economy will benefit from a reduction in economic and social inequalities. If the host boroughs are successful, significant numbers of families will see dramatic improvements to their lives and the country as whole will benefit from increased tax levies, a lower benefits bill and a new economic powerhouse contributing to the UK economy. The Strategic Regeneration Framework The SRF brings together the regeneration of the physical area of the five host boroughs and the socioeconomic regeneration of the communities who live there. It provides a strategic, cross-borough blueprint for improvement. It is not about asking for more funding. It describes what the five boroughs are going to do to make changes in people s lives as a result of investment in the Olympics, including opportunities for new jobs, better housing, a changed public realm, and huge economic growth. The SRF will work by improving the co-ordination and delivery of policies, including: Planning and delivering on a more strategic basis 2

3 Building links between traditionally separate programme areas where an integrated approach offers significant gains, such as health and housing Getting to grips with opportunities which have so far lacked a clear champion The SRF will influence all aspects of the regeneration of the host boroughs for the next 20 years and is flexible enough to be responsive to changing times while keeping a firm focus on the overall vision. To secure the SRF vision, by 2015 the host boroughs and their partners need to ensure: 120,000 more residents are in jobs 99,000 fewer residents have no qualifications at all 185,000 more residents have degree-level qualifications Approximately 21,000 fewer children living in poverty 1,800 more children achieve 5 A*-C GCSEs, including Maths and English An additional 155 million pounds is invested in the local public realm More affordable family homes are available Fewer people with a chronic health condition 25,000 more adults will do weekly physical activity 44,000 fewer people are affected by reported burglaries The planning foundations are laid for public and private investment that will lead to the creation of over 200,000 new jobs Next steps The five host boroughs are collectively responsible for ensuring a better future for their residents and know that more can be achieved by working together. They will need the active support of a wide range of government and non-government partners. The Secretary of State for Communities and Local Government, the Minister for the Olympics, the Mayor of London and the Mayors and Leaders of the host boroughs are all committed to the SRF and are working to reflect it in their plans and priorities. The first stage of the SRF sets out the issues facing the area, defines the approach to the physical regeneration of the region, outlines the targets for improvement in key deprivation indicators, and describes the next steps for all partners. It will be followed in March 2010 by a second stage which sets out further legacy benefits, the economic prospects for the sub region, and the detail of the first five-year action plan. 1 2 Continued concern over the legacy, 2010 In February 2010 the Greater London Assembly Economic Development, Culture and Sport and Tourism Committee published a report, Legacy Limited? A review of the Olympic Park Legacy Company's role. The Press Notice listed the key points: 1 The Strategic Regeneration Framework, November

4 Ambitious targets should be set for employing local people on the park after Currently only 4% of the construction workforce is made up of previously unemployed people from the local area. Thousands of new homes will be built on the park - these must be suitable for, and available to, local people not just wealthy people moving onto the park East London has lower levels of physical activity - the state-of-the-art sports facilities in the park must be made available for community use. 2 The Commission for a Sustainable London 2012 Annual Report for 2009 was impressed by achievements but had some reservations: The review, entitled Raising the bar, praises the work done so far by the ODA [Olympic Delivery Authority] and LOCOG [the London Organising Committee of the Olympic Games and Paralympic Games], the two main bodies delivering the London 2012 Games. The achievements to date of these two organisations mean that the London 2012 Games and venues are on track to deliver the sustainability objectives set out in the London 2012 Sustainability Plan. The Commission has been particularly impressed with the ground breaking work in the areas of food, waste and carbon. The Commission s in-depth reports into these areas are available to download The innovative work done by the ODA and LOCOG in these areas provides a further opportunity for UK business to benefit from the Games. If the knowledge and best practice from London 2012 is captured and consistently disseminated throughout the public and private sectors then it will help UK industries to become world leading in areas such as managing embodied carbon. Capturing this legacy of knowledge will be vital, especially as some of the delivery bodies begin to scale down their operations before or immediately after the Games. The ODA has started a programme to capture lessons learnt but it is important to do this across the whole London 2012 programme. In terms of the legacy for the Olympic Park the Commission looks forward to reviewing the revised Legacy Master Plan Framework later in 2010 and to seeing how the promise of the Olympic Park as a blueprint for sustainable living will be realised. With just over two years to go before the inspirational power of the Games moves to Rio, it is vital that the London 2012 programme continues to deliver. By the time the keys to the Olympic Park are handed over to Olympic Park Legacy Company in 2013, the Commission would hope that: The sustainability objectives delivered by the ODA will be common practice in the construction industry and mandatory for all major public sector construction The UK construction industry will have adopted targets for reducing embodied carbon impacts and will have clear guidance on how to do this A clear definition of blueprint for sustainable living will be developed for the Olympic Park, in terms of the standards expected of developers, the way in which people will live differently and how they will be encouraged to do so 2 GLA Press Release, Call to action amid fears for London s Olympic legacy, 16 February

5 Plans will be in place for the Olympic Park to become a zero carbon development area by 2016 Plans will be in place for substantial development of organic waste facilities in East London to supply renewable fuel for the Olympic Park and other developments There will be a step change in the major events industry that enables measurable and assured improvements in sustainability Athletes, officials, spectators and TV viewers will recall London 2012 as being distinctive for its sustainability. 3 BBC News reported the Chairman saying: We remain concerned about some of the broader legacy plans, where there have been a lot of promises made about the future of the Olympic Park and knowledge-sharing, but very few commitments made to back up these promises. 4 3 The Government describes the legacy for East London The DCLG website provides an overview: What the Olympic legacy means for East London The Games will physically transform this part of London putting in place improvements to infra-structure, as well as the Park itself, that will help drive renewal and regeneration in the area. It has replaced over 740 acres of polluted, low-grade industrial land and premises with: new sports venues a spectacular new waterside park a new village of 2800 dwellings an improved local rail network new state of the art utilities and over 100 acres of development land. These are added to an existing mix which includes: Stratford City (Europe's largest shopping centre) Stratford International (high speed passenger station) Canary Wharf The O2 arena and the ExCeL London exhibition centre. With Crossrail to follow in 2018, the business potential of the area will be transformed. It will place Stratford firmly on London's business map, as a metropolitan focus for sport, shopping, leisure and tourism and for international, creative digital and media business. 3 4 Commission for a Sustainable London 2012, Annual Report 2009, 24 May 2010 Concern over 2012 Olympic Park legacy promise, BBC News, 25 May

6 The Greater London Authority predict that over 30,000 new homes will be built in the wider Olympic area over the next 20 years, with more than 7,000 in the Olympic Park site itself. New and existing residents will have access to: one of the most spectacular urban parks in the world a new Polyclinic providing a wide range of health care services in one place Chobham Academy - a new all age academy and the new Birkbeck/University of East London higher education college improved rail access to all parts of London and beyond some of the best shopping and leisure facilities in London new sports facilities. Other important local town centres and open spaces, including Victoria Park, Hackney Marshes and Cutty Sark Gardens, are being regenerated and the water quality of the Lower Lee improved. The development of the Olympic and Paralympic Games has been used to provide jobs and training for local people, and programmes such as the Local Employment Skills and Training programme (LEST) are being rolled out more widely across east London. In addition, local boroughs, the Mayor, and other agencies, are working together more closely, with Government's support, on programmes to address the deep seated social disadvantage experienced by many of the local population. Educational attainment, skills, worklessness, crime levels, health disparities and life expectancy are all being targeted. Stratford and its surrounds The Stratford district of East London, as well as providing the main setting for the London Olympic and Paralympic Games in 2012, is also the focus of what is probably the UK's premier growth and regeneration programme. Stratford has been London's priority for regeneration and development for decades. The district has enormous development potential, and wider regeneration value, but was hampered by strategic problems (fractured land ownership, land contamination and overhead pylons) which left it blighted. It housed mainly low grade business, with modest employment value and growth potential. The Olympics provided the motivation to finally get a grip on this opportunity. 4 Decline in the value of the Olympic estate, 2012 The Sunday Times noted in January 2012 that a valuation of the Olympic park was dramatically lower than expected: The Olympic Park, intended to be sold after the games for up to 2 billion to repay the lottery and the Treasury, is worth less than 160m, according to an official valuation. More than 750m of public money was spent buying the land in east London for the Olympics. Ken Livingstone, then the London mayor, said during the acquisition that the park would be worth between 1 billion and 2 billion after the games. The valuation of the 500-acre site including the stadium, aquatic centre, press centre and development land values it at 138m if it was sold to one developer. It would be worth 157m if sold in lots. 6

7 One developer warned this weekend the park may require hundreds of millions of pounds for any regeneration scheme to work. "People don't seem to have yet realised that this park isn't actually worth that much and is potentially a huge drain on the taxpayer," he said. The 2009 Jones Lang LaSalle valuation, obtained by The Sunday Times, was commissioned to help officials assess the park's value. Among the assets valued in the report are the stadium at 39m, the aquatic centre at 28m, the press centre at 27m and development land for new homes at 26m. The valuation raises the prospect of a black hole in government finances. More than 675m is meant to be paid back to the lottery and more than 230m to the Greater London Authority. The valuation also raises questions about why the London Development Agency needed to spend hundreds of millions of pounds on land now worth a fraction of that. The agency says the costs included compensation and some land outside the park. 5 5 National Audit Office Report, December 2011 The National Audit Office Report, Preparations for the London 2012 Olympic and Paralympic Games: Progress report, 6 December 2011 records concerns over parts of the regeneration legacy 12 The Olympic Park Legacy Company is largely on track to deliver its objectives of appointing operators for the Park and venues, securing planning permission for 7,000 homes and selecting a developer for the first phase of housing, all before the Games. However, two venues continue to be problematic: Negotiations with a potential client to rent the 289 million Media Centre were unsuccessful. The Legacy Company promptly launched an open procurement to select a tenant to meet its target date of having a tenant agreed before the Games. Negotiations with the preferred bidder for the 438 million Olympic Stadium have been terminated. We have undertaken a preliminary review of the events leading to termination of those negotiations (Appendix Two). The Legacy Company is in the process of reopening the bidding process. 13 The prospect that hosting the Games would bring a legacy was a key element of London s bid, so the legacy is a vital part of achieving value for money. The Olympic Executive has, as recommended by the Committee of Public Accounts in July 2008, set in train work to evaluate the legacy. A consortium of consultants and academics will examine the costs and benefits of the 18 programmes that comprise the legacy portfolio, with an interim report due in The evaluation approach, as currently scoped, follows Treasury guidance. The evaluation approach does, however, face complex methodological challenges in identifying, capturing and quantifying the full costs and benefits of the programmes. 6 Mayoral Development Corporation approved, January 2012 On 18 January, the London Assembly approved the Mayoral Development Corporation to handle the Olympic legacy: 5 Olympic park loses 75% of its value, Sunday Times, 8 January

8 The London Assembly today unanimously supported the establishment of a mayoral development area in and around the Olympic Park. The proposal by the Mayor of London, Boris Johnson, will see the Olympic Park Legacy Company reformed as a Mayoral Development Corporation (MDC) with responsibility for the post-games development of the site. The plans will now go forward to Parliament for the formal establishment of the MDC. The corporation will have responsibilities that include planning decisions within its boundaries. London Assembly Deputy Chair Dee Doocey said: The Assembly has always believed that the most important benefit of hosting the 2012 Games is the opportunity to revitalise the East End of London. The creation of a Mayoral Development Corporation sets a clear structure to deliver that regeneration and places responsibility for it firmly in the hands of the Mayor. As we told the Mayor today, the Assembly is determined to see that the MDC operates in an open and transparent fashion that enables local people within its boundaries to have a substantial input into the future of their neighbourhoods. 6 7 Has the legacy been wasted? An article in the Evening Standard on 1 February 2012 referred to Anna Minton's book Ground Control. As Minton reminds us, the organisers of London 2012 have always compared the Games to the Great Exhibition of 1851 and the Festival of Britain of large, public-spirited celebrations with cultural legacies that we enjoy to this day. The trouble is, as she points out, the chance to provide a similar legacy for 2012 has been wasted. What was going to become a new 500-acre Royal Park will now be private land. What should have become affordable social housing will fall into the private rental sector. The Wellcome Trust, Britain's largest charity, offered to turn the Olympic Village into the "Silicon Valley of Europe", a research centre that would create 7,000 jobs. Sadly, the Olympic Park Legacy Company rejected the bid as it did not offer "value for money" for the taxpayer. A higher cash bid from a consortium led by the Qatari royal family was accepted instead - and now the site is likely to be sold off for the further enrichment of said royals. No one Minton speaks to sees a conspiracy. Instead, as the leader of Newham council complains: "There are too many agencies. There's no overall governance of this area that makes it coherent." (...) While the public purse has provided around 98 per cent of the Olympics budget, almost all of the infrastructure will fall into private hands after the Games. Then, as Minton writes, "a very substantial part of east London will be characterised by new private 6 London Assembly Press Releases, Assembly unanimously backs creation of Olympic Development Corporation, 18 January

9 fiefdoms accountable only to the blurred mass of quangos which are replacing democratically elected local government". 7 8 Government transfers power to London Mayor The Government announced that from April 2012, the Mayor of London would have increased housing and regeneration responsibility, along with more funding: In an historic settlement for Londoners, Communities and Local Government Secretary, Eric Pickles has today announced 3 billion of funding for the Greater London Authority for housing and regeneration in London. These responsibilities reflect the Mayor of London's new powers and have been transferred to the Greater London Authority following the Localism Act From this April, and in line with Government's commitment to decentralise power away from Whitehall, the Mayor of London - and not Ministers - will be accountable for the capital's affordable housing programmes including key development sites like the Greenwich Peninsula, and east London's Olympic legacy. The 3 billion funding supports the Mayor's four year commitment to build 55,000 affordable homes by March 2015, and to bring 45,000 existing social homes up to standard across London, as well as supporting the Mayor's plans for the Olympic Park. The current Olympic land and debt deal, first agreed in March 2010, will also be replaced by new receipt sharing arrangements for the Olympic Park to reflect the devolution of Olympic legacy to the Mayor and to protect the interests of the taxpayer. (...) Notes to editors 1. The London reforms in Localism Act 2011 will: devolve the activities of the Homes and Communities Agency in London to the Greater London Authority (in April 2012), including the management of London's affordable housing programmes abolish the London Development Agency and transfer its activities to the Authority (by 31 March 2012); and enable the Mayor of London to establish a Mayoral Development Corporation to oversee the long term development of the Olympic Park and surrounding area (by 1 April 2012). 2. The 3 billion for the Greater London Authority covers the spending review period up to and includes: 390 million resource funding; 1,941 million capital investment for housing; and 481 million capital investment for the transformation and development of the Olympic Park after the Games. This funding will be funded from the Department for Communities Local Government from existing resources for housing, Regional Development Agency closure and Olympic legacy. 3. The Greater London Authority will become responsible for all of the Homes and Communities Agency's land and property assets in London, with Department for Communities and Local Government continuing to receive a 50 per cent share of 7 Big business carries off the Olympic legacy, Evening Standard, 1 February

10 receipts from Greenwich Peninsula (the Homes Communities Agency's largest asset) reflecting the significant national investment in this site over the last 15 years. 4. The Olympic receipts sharing arrangement will enable: the Greater London Authority to fund any further capital investment in the Park and surrounding area, as well as cover the repayment of the residual debt the Authority will inherit from the London Development Agency; and National Lottery distributors to be reimbursed for their additional 675 million contribution to Olympic Public Sector Funding package. 8 8 DCLG Press Release, London to take control of its Olympic legacy, public land and funding, 6 February