The short version
- Chancellor John Healey will announce a £7 million fund for a comprehensive feasibility study on hosting the Olympics in northern England during his first budget statement.
- The initiative aims to assess costs, venue requirements, and economic benefits, building on previous assessments by UK Sport and support from Northern Mayors and former athletes.
- The announcement occurs as the government navigates high borrowing costs and manifesto pledges limiting increases to major taxes, with analysts debating the remaining fiscal headroom.
Chancellor John Healey is set to unveil a £7 million allocation in his inaugural budget on Wednesday, dedicated to exploring the viability of hosting the Olympic Games in northern England. This funding will support a full feasibility study aimed at determining whether the UK can successfully bid for the event in the 2040s. The move marks a significant step beyond earlier preliminary assessments, signaling the government’s intent to seriously consider a regional approach to hosting the world’s largest sporting event.
The proposal has garnered backing from Northern Mayors and prominent former Olympians, including Dame Laura Kenny and Dame Sarah Storey. Prime Minister Andy Burnham has emphasized the unifying potential of the Games, suggesting that hosting them in the North could generate excitement across communities rather than being confined to a single city. He argued that such an event would unlock opportunities for towns and cities throughout the country, fostering national pride similar to the sentiment surrounding London 2012.
The upcoming study will be conducted by the government in partnership with UK Sport, Northern Mayors, and British Olympic and Paralympic associations. It is designed to examine critical logistical and financial questions, including the types of venues required, necessary transport infrastructure improvements, and how different cities might share hosting duties. Crucially, the report will also evaluate the potential costs and assess the likelihood of a successful bid, providing a clearer picture of the financial commitment involved.
Historical data regarding the economic impact of the Olympics presents a mixed picture. A 2013 report by UK Trade and Investment estimated that London 2012 boosted the economy by £9.9 billion through new contracts, sales, and foreign investment. However, this figure was met with skepticism from organizations such as the Federation of Small Businesses and the National Institute of Economic and Social Research. The Conservative-Lib Dem coalition government had previously estimated the cost of hosting London 2012 at £8.9 billion, highlighting the substantial financial stakes involved in any future bid.
The announcement comes at a time of significant fiscal pressure for the Labour government. Healey has acknowledged that government borrowing costs are at historic highs, complicating efforts to balance spending commitments with economic stability. The Chancellor faces constraints imposed by manifesto pledges not to raise income tax, National Insurance, or VAT. Additionally, the government is adhering to self-imposed fiscal rules established by former Chancellor Rachel Reeves, which prohibit borrowing for day-to-day public spending and require debt to fall as a share of national income by the end of the parliament.
Analysts are divided on the amount of fiscal headroom remaining for new initiatives. The Office for Budget Responsibility calculated a £23.6 billion buffer in March, but this figure is expected to have shrunk due to rising interest payments on debt. KPMG estimates the buffer may have fallen to £12 billion, while the Institute for Fiscal Studies suggests it could be around £20 billion. Higher inflation might increase tax revenues, potentially offsetting some of the increased borrowing costs, but the uncertainty remains a key factor in budget planning.
Beyond the Olympic feasibility study, the budget is expected to address several other economic measures. Speculation suggests Healey may raise taxes on the banking sector, which has reported strong profits, either by increasing a surcharge on profits or adjusting the bank levy. Details regarding the Your First Home scheme are also anticipated, with eligibility thresholds reportedly adjusted to £110,000 outside London and £140,000 in the capital to include more professionals such as teachers and nurses.
Other potential measures include making online retail platforms responsible for collecting taxes owed by traders using their services, with proceeds potentially used to cut business rates for high street shops. While changes to Capital Gains Tax have been ruled out, questions remain regarding fuel duty and energy bill support. The government has previously frozen fuel duty, but Healey has not confirmed whether this will continue. Meanwhile, household energy bills are forecast to rise significantly in January, prompting speculation about targeted assistance for households on benefits.
Sources behind this briefing
Go to the original reporting
- BBC News↗Plan for Northern Olympics to get £7m in Healey's Budget
- BBC Business↗What is the Budget and what could be in it?
