Dominic Lawson: Olympian-scale wastage that was predicted – and then ignored

A grotesque outlay was justified on the grounds that it would benefit tourism. But there was no evidence for it

There's a surprise: yesterday's edition of this newspaper had as its front-page exclusive the news that the London 2012 Olympic Games are set to lose the country billions of pounds of tourism revenue. Yes, I was being sarcastic. While the story is an important one, anyone who had investigated the experiences of recent host cities could have predicted exactly this outcome. Indeed, they did predict it. They were ignored by exactly the same New Labour ministers who, not satisfied by the £900m folly of the Millennium Dome, were determined on splashing out more than 10 times that amount in return for international political bragging rights over two sporting weeks of hyperventilated nationalism.

They justified this grotesque outlay of public finance (which, equally unsurprisingly, grew to four times the original bill of £2.4bn) on the grounds that it would bring a vast increase in tourism revenues. Thus, as this paper reminded us yesterday, Tony Blair had declared in 2005 that this would be "a once in an era opportunity for British tourism"; and his "minister for the Olympics", Tessa Jowell, had said two years later that "tourism will receive a £2bn boost".

Perhaps they believed this when they said it but, if so, that exonerates them only from lying, not from wilful ignorance: every piece of detailed research into the economic impact of the Olympics on host economies suggests that the event has been more of a curse than a blessing for the national tourism industry.

Some years ago, the European Tour Operators Association (ETOA) produced a study which concluded: "There appears to be little evidence of any benefit to tourism of hosting an Olympic Games and considerable evidence of damage." It added that predictions to the contrary by the politicians attempting to justify the outlay of their taxpayers' money "form part of a tradition".

The Greek government made identical assertions in the build-up to the Athens Games of 2004, as did the Australian government before it played host in Sydney four years earlier. Indeed, the managing director of Australia's Tourism and Transport Forum, later observing the many facilities around Sydney's Olympic plaza resembling a ghost town, wailed: "There's fewer tourists [in Sydney] five years after the Games than before... Where the bloody hell are you?"

As the ETOA report observed, there are good reasons for this apparent paradox: tourists are put off by the prospect of higher than normal hotel prices and of overcrowding, while the sort of people who travel to watch sport tend not to be interested in the theatre or other cultural attractions. This was always going to be a particular problem for London, it warned. A month ago, Andrew Lloyd Webber confirmed it: he said that West End bookings from tourists for this July and August were at just 10 per cent of their normal level, and that theatreland was "in for a bloodbath of a summer". He added that this was partly because "people can't get into hotels ... they've all put their prices up."

It turns out that this has been exacerbated by the London 2012 Games organising committee overestimating by a quarter the number of rooms that would be required for officials, media and sponsors. It has now handed back (how gracious!) 120,000 of the 600,000 nights it had booked for those assorted chums. Too late: millions of people had already made their summer holiday plans, which now do not include London.

The ETOA, perhaps smarting from the fact that its carefully researched warnings had been completely ignored by government, said this week that the shortfall in tourism numbers below normal figures would cost in the region of £3.5bn. Remember that most purchases by tourists are subject to 20 per cent VAT, and you can see that there is a substantial direct loss to the Exchequer and not just private businesses. Perhaps most irritatingly of all, the Queen's Diamond Jubilee celebrations would have provided an immeasurably cheaper incentive for foreigners to come and spend their money here in 2012 – but, of course, that event is not something we competed against other nations to host, and therefore did not excite our politicians.

Now you might reasonably say (although not in front of the sponsors) that the Olympics are about much more than making money. The last Government set characteristically hubristic targets for increased sports participation – "one million more people playing sport three or more times a week" – which it claimed would form part of the "Olympic legacy", while the Strategic Regeneration Framework required the "Olympic effect" to "eliminate the social and economic inequalities" between the six host boroughs and the rest of London within 20 years.

To this end, the event's guiding force, Lord [Sebastian] Coe, claimed: "The new sports venues for the Games will help to tackle serious lifestyle-related conditions such as childhood obesity, heart disease and diabetes."

So how's all that going? No other host city had increased sports participation as a result of staging the Games and, seven years after the then Government set its target, the number of people here playing no sport at all has continued to increase. Second question: if a fraction of the £10bn the state is spending on the Olympics had instead been allocated to preserving state school sports fields from being sold off, would that have had more of an impact in "tackling childhood obesity"? And a supplementary: if Coe chooses to justify his extravaganza on the basis that it is all part of the great fight against childhood obesity and diabetes, would he care to comment on the fact that two of the London Olympics' biggest sponsors, whose logos will be festooned across our screens throughout the event, are McDonald's and Coca-Cola?

It would be unfair to say that no one will benefit from the Games coming to London. The property pages have been producing articles forecasting great profits for those with London homes available to rent out during the two weeks of the event. The Department of Media, Culture and Sport last month revealed that it now required no fewer than 23,700 security staff to "protect" the Games – twice the number suggested at the outset: it has even been suggested by the Defence Secretary, Philip Hammond, that ground-to-air missiles would be deployed "if operationally necessary". So, good news for those whose business thrives on fear and alarm. Good news, too, for those staffing the London Docklands Light Railway, whose union leader, Bob Crow, managed to negotiate for them a £2,500 bonus in return for agreeing not to disrupt the Games.

But the best of all news is for the politicians and sports bureaucrats who committed us to spending £10bn on facilities for two weeks of running and jumping: they will have the grandest seats in the stadium entirely free, and will be chauffeured there in special lanes while the rest of the capital's inhabitants are snarled up in Olympic traffic jams.

Anyone who begrudges them that is clearly a killjoy, and not participating in the Olympic spirit.

d.lawson@independent.co.uk