Profits tax free, but games won't save Britain from recession

August 11, 2012
Scene from the London 2012 Olympics opening ceremony.

There have been outrageous abuses of power before and during the Olympic Games in London this year. These include a police attack on, and mass arrests during, a "critical mass" bike ride, the placing of missiles on civilian roofs despite protests by affected residents, and special “Olympic lanes” on roads whose use is limited those granted special permission by games organisers.

The overwhelming feeling in Britain appears to be national pride that such an Olympics was pulled off so successfully. Part of this is tied to Britain's sporting success at the games. (This is the reason why the British government has pumped tens of millions of pounds into sports such as rowing.) The "feel good factor" of the Olympics depends a lot on the success of the host nation.

The Olympics, as a huge event that everyone experiences at once, can give a feeling of commonality and leads to a temporary breakdown of certain aspects of alienation. My experience of the Sydney 2000 Olympics was exactly that ― strangers could speak with each other, public transport was free and the city felt "nicer".

It certainly compared starkly with events such as the 2007 APEC summit, during which Sydney became a virtual ghost town.

In this context, the idea that everyone from top to bottom is united by their nationality can be believed. This has been fostered from the very beginning, including in the much-lauded opening ceremony.

It is true that director Danny Boyle's show promoted the idea of an “inclusive nationalism”. Britain was promoted as a multicultural society that accepted diversity. It also took a veiled swipe at those seeking to destroy the National Health Service but this coincided with a loving tribute to the monarchy.

This was too much for many on the right. Tory MP Aidan Burley referred to it as “leftie multicultural crap”.

The right-wing Daily Mail, for its part, complained: “This was supposed to be a representation of modern life in England, but it is likely to be a challenge for the organisers to find an educated white middle-aged mother and black father living together with a happy family in such a set-up."

Its main purpose, however, remained a promotion of British pride.

Every major event at the Olympics has seemed to involve the camera panning to Prince William, Prince Harry, Kate Middleton, Prime Minister David Cameron or chair of the London Organising Committee Lord Sebastian Coe. They were cheering along with everyone else, creating an impression of shared interests with ordinary British sports fans.

Sometimes this crossed national boundaries. Harry was shown busting a lung in support of Usain Bolt, the most popular figure of the Olympics.

It was here where the elite coup occurred. The ruling elites are being lauded as they presided over an event that will see billions of public money being transferred to the biggest multinationals while the same elites are engaged in cutting billions from the most essential of services.

The Guardian provided the figures for the spending and overall, the public will have spent US$13.8 billion on the games. The private sector has contributed $3.1 billion ― $1 billion of which goes directly to the International Olympic Committee.

A lot of direct money for the games went to large building, legal and security firms. But the major sponsors such as Coca Cola and McDonald's expect to make a bonanza by associating themselves with the most popular event on the planet.

This expectation was supported by credit agency Moody's. It said in its report on the Olympics: “Overall, we think the Games are unlikely to provide a substantial macroeconomic boost to the UK during 2012. However, a number of individual sectors and credits look well placed to benefit from the short-term fillip that the Games should provide.”

The agency said: “Moody's expects that corporate sponsors will benefit most from the Games.”

As part of its bid for the games, the government allowed for all profits made from the event to be tax free. HM Revenue and Customs ― Britain's tax collection agency ― explained: “There is a temporary exemption from UK Corporation Tax and UK Income Tax for certain non-resident companies that engage in Games-related activities or provide services for the delivery of the London 2012 Games.”

After a public campaign against this tax break at a time of economic crisis, many of the largest companies declined to take it up. But many others will be taking full advantage.

The Guardian reported on July 18: “The new legislation also exempts foreign nationals working on the games in the UK from paying income tax on any earnings. That includes journalists, representatives of official games bodies, judges and the athletes themselves.”

That the Olympics aren't going to lift Britain out of a recession is clear. The Guardian reported on August 8: “The Bank of England's governor Sir Mervyn King hinted at further action to boost the ailing UK economy on Wednesday after the Bank slashed its 2012 growth forecast to zero.”

It is also becoming clear who will be made to pay for the games. Among others, it will be those with mental health problems. The Guardian said on August 7: “Total government expenditure on services is down by £150m, the first reduction since 2001”.

It said: “The Association of Directors of Adult Social Services (Adass) showed that in the past two years social care budgets had lost £1.89bn in funding.”

The Guardian reported on June 14 that even young kids inspired by the Olympics to play sport faced the effects of cuts: “In 2010 the education secretary, Michael Gove, threatened to axe £162m in ringfenced funding for a national network of School Sports Partnerships. In the wake of an outcry from athletes, pupils and opposition MPs, David Cameron ordered a partial U-turn, but the ringfenced funding was still cut by 69% and only guaranteed until 2013.”

But pointing out this ugly reality behind the hype is not easy, as the former lead singer of The Smiths, Morrissey, found out after he made critical comments.

He wrote in a letter to his fan club “I am unable to watch the Olympics due to the blustering jingoism that drenches the event. Has England ever been quite so foul with patriotism? The 'dazzling royals' have, quite naturally, hi-jacked the Olympics for their own empirical needs, and no oppositional voice is allowed in the free press. It is lethal to witness.

“As London is suddenly promoted as a super-wealth brand, the England outside London shivers beneath cutbacks, tight circumstances and economic disasters. Meanwhile the British media present 24-hour coverage of the 'dazzling royals', laughing as they lavishly spend, as if such coverage is certain to make British society feel fully whole.”

Morrissey, with a track record of controversy-generating comments (including, in recent years, comments marred by racism) predictably generated a huge social media backlash.

Hysteria notwithstanding, Morrissey managed to get to the heart of the matter (possibly for the first time in many years): these games having been a coup for Britain's ruling elite. They have done what Cameron wanted them to do ― provide a boost to the idea of an all inclusive “Britishness” in a time of austerity.

This is a contradictory phenomenon. A lot of the goodwill associated with the games is based on the sense of wanting to live in a real community, where there is less social alienation. But those of us in Australia can remember that it was not that long until the “goodwill” of the 2000 games had been transformed into the political elites unleashing a racist assault upon immigrants arriving in this country, most heightened with the arrival of the MV Tampa.

There have been amazing athletic performances at the games, some of which point towards the benefits of an inclusive Britain. Two of the most watched events in the games were gold winning performances by a Somali immigrant to Britain, Mo Farah, and the child of an immigrant, Jessica Ennis.

US writer Mike Marqusee pointed out: “I find no difficulty thoroughly enjoying the best of the competition without compromising for a moment a necessarily critical perspective on what the Olympic enterprise has become."

It is possible to both be thoroughly enthralled by Usain Bolt's athletic prowess and appalled that the political establishment are seeking to use those events and others to prop up a rule providing seemingly endless misery for the people of Britain and elsewhere.

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