In the warm afterglow of the Olympics, all the talk is of legacy. How can local communities benefit from the £9bn-plus invested in the Games? Will there be a positive economic impact from the Team GB feel-good factor?
The government, grappling with a double-dip recession, dismal borrowing figures and plummeting popularity, is hoping some of the stardust will rub off.
But one legacy it isn’t looking for is a debate about big government, outsourcing and the private sector – particularly one instigated by its own ministers. No sooner had the Olympic torch been extinguished than Philip Hammond waded in with news that, contrary to received Conservative wisdom, the private sector does not necessarily know best.
The defence secretary drew this conclusion from the deployment of the military – at vast public expense – to mop up the G4S security fiasco at London 2012.
Culture Secretary Jeremy Hunt agreed, saying the experience had made him ‘think again’ about the default use of private contractors – a view echoed by the chair of the Local Government Association.
All of which is deeply irritating for George Osborne, as he embarks on the next round of his drive to open up public services and shrink the state.
The chancellor’s Autumn Statement is likely to flag up deeper cuts – particularly to the welfare budget – and more supply-side reforms. The continuing bad news on the economy increases the chances of a cost-cutting early Spending Review next year.
Osborne argues all this is necessary because of a different kind of legacy, the one New Labour left behind. But as Philip Johnston argues in PF's September edition, politically this is perilous for the government.
With the coalition coming to blows over Lords reform and boundary changes, and ahead of the party conference season, there is little appetite among MPs for deeply unpopular small-state measures.
Meanwhile, the chancellor’s economic strategy is under fire from business, the International Monetary Fund – and, significantly, the economists who originally endorsed his deficit plan.
The government has heaped praise upon the better-never-stops resilience of our athletes, claiming it too needs a mandate to ‘finish the job’.
But as the clamour grows for a Plan B, the Treasury should take on board another training tip: pace yourself. Or to paraphrase John Maynard Keynes, when the terrain changes, change tactics.
Otherwise these Isles of Wonder risk turning into isles of ever more G4S-style blunders.
Judy Hirst is the deputy editor of Public Finance. This article first appeared in the September edition of the magazine
