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Property taxes need reform, but changes must be fair to Londoners

Britain’s domestic property taxes are in a terrible state. Council Tax bands are still based on house valuations made in 1991, and the 30 years since then have seen huge variations in house price growth between different places and properties. Stamp Duty is a tax raised on people when they move house, which has the effect of gluing up the property market and of encouraging people to stay for longer in homes that are too big or too small for them. What can be done to change this unsatisfactory situation? And what might the implications be for London of any major reforms that might be tried?

One idea that has been gaining currency in the run-up to the budget is flat rate property taxes, with home-owners paying a set proportion of their property’s value each year. Research by WPI Economics suggests that a tax of 0.48% of values could generate enough revenue to replace both Stamp Duty and Council Tax. And the Fairer Share campaign suggests that such a tax would leave 76% of UK households better off.

Property value taxes have a lot to recommend them (as do more ambitious proposals, such as land value taxes, and more modest reforms, such as new Council Tax bands). They are a lot more progressive than other taxes: Council Tax for the most expensive properties is only three times the rate it is for the cheapest properties, whereas property prices can vary by a factor of more than 100.

There would be issues with implementation: for example, transitional measures would be needed to avoid “cash-poor” owners of larger houses being hit by such a dramatic hike in taxes that they might be forced to sell in a hurry. But there’s a bigger problem for London. Levying property value taxes nationally at a flat rate would represent a massive shift of the tax burden onto London from the rest of the UK. The Fairer Share website suggests that communities outside London would pay £6.5 billion less in property taxes. As their proposal is intended to be fiscally neutral overall, that means London would pay £6.5 billion more.

Such a shift may have populist appeal at a time of “levelling up” (though maybe not for the many Conservative MPs in London and the south east whose constituents would suffer), but it ignores the fact that Londoners are as much victims as beneficiaries of high house prices. Incomes in London are higher than in the rest of the country, but they are much closer to the average once housing costs are taken into account. And low-paid Londoners, who earn little more than counterparts elsewhere, are already particularly squeezed: London has the highest rates of child poverty in England.

Adding £100 a month to Londoners’ tax bills (in line with the “capped” Fairer Share proposals) would drag incomes in the capital below the national average, even before other costs of living were taken into account. On top of that, Londoners will be struggling in the wake of a pandemic that has hit the capital hardest: in December 2020 London had seen the steepest rise in benefit claims of all the UK’s nations and regions, and had the second highest rate of claimants (after the West Midlands).

There is still a case for tax reform, and the budget would be a good opportunity to announce a careful review. But, as the London Finance Commission (set up by Boris Johnson and reconvened by Sadiq Khan) argued, this should take place on a regional basis, not through nationalising local taxes. The overall fiscal flows between different parts of the country could be preserved (perhaps with a review every few years to take account of how different regions have prospered), while different regions could set property taxes that reflected the specifics of their housing market – with different Council Tax tiers, flat rate taxes, or exemptions and discounts applied to reflect local economic circumstances.

And this is not to argue against London paying a fair share to the rest of the UK. London’s taxpayers made a net contribution (taxes minus public spending) of nearly £40 billion in 2019. And that’s fair: London has more productive businesses, high-spending tourists and rich residents – or at least it did in pre-pandemic times. But squeezing the capital further, as the UK struggles to recover, would look extractive, blinkered and self-defeating rather than fair.

[First published in OnLondon, 28 February 2021]

Will sex save the city?

Ah, the romance of urban economics and human geography!

In a thread of tweets last month, global cities guru Richard Florida reflected on the future of clustering, the force of agglomeration that brings industries and people together in cities. Looking at advances in remote working during the pandemic, he suggested that location may become less important in future for industry clustering than for talent clustering. HQs may locate where CEOs want to live, even if that is not an urban centre, but talent will continue to cluster in selected locations. In his words, “young folks will continue to be drawn to cities for a combination of thick labor and more so mating markets.”

Bloomberg columnist Noah Smith reached a similar conclusion pondering whether the changes triggered by the pandemic will enable workers to escape the overpriced grasp of ‘superstar cities’. He sees access to labour markets and office productivity as easier to replicate in a world of remote work, but is less sure about the informal knowledge spillovers that form the dark matter of agglomeration. And he thinks the social value of cities would be even harder to replace, particularly for young people seeking “bars, music venues, fun social events, lots of potential friends in their age group, and — probably the most important piece — opportunities to meet romantic partners.”

So will sex save the city? Cities have always cast their net wide, gathering young people (or at least those with the means) to meet and match up – from the aristocratic dances of “the season” in the eighteenth and nineteenth centuries, to the graduate convergence that sees a net flow into London of 25,000 people aged 20-24 in a normal year.

For all the features about the frustrations of dating in big cities, and despite the rising role of dating apps, restaurants, bars and workplaces still play a pivotal role in bringing many couples together. For all of those, cities offer a ‘thicker market’ – more opportunities and more choice, particularly for gay people or people from other minority groups who are more likely to be gathered in the big urban areas. And meeting up with your perfect online match is easier if they are a tube ride, rather than a flight, away.

London’s employment, entertainment and dating offer has drawn young people from across the world for years, but its short-term outlook looks pretty challenging right now. The restaurants and bars are closed, the theatres and nightclubs are silent, and the flows of people that animate the city are stilled. As reflected in Arup’s recent report for the Greater London Authority (and in Centre for London’s reports), London’s core has seen some of the sharpest slowdowns in activity of any city in the UK or comparator cities abroad, and London as a whole has seen the UK’s sharpest spike in unemployment and highest levels of furlough.

GLA research published in October estimated that lost tourist and commuter expenditure in the Central Activities Zone would be £13 billion in 2020. This loss of custom has hit London’s hospitality and cultural sectors particularly hard. Arup estimate that the West End arts and culture economy shrunk by 97% in 2020.

Moreover, while the UK’s vaccinations are a huge success story, the appearance of new strains of coronavirus means that an imminent big bang re-opening of London to international tourists, students and business visitors seems unlikely. But that will change over time; global travel will rebound, even if not this year. As I write, snow is turning to sleet outside, gusting around in a bitter easterly wind. As ever in the depths of winter, summer seems almost inconceivable, but we all know it will come.

The challenge is not to give up on London’s hospitality and cultural industries, magnets for the people who come to London to work, to study, to innovate, to make friends and more, as well as for those who visit for conferences or holidays. Confusing short-term sickness with long-term viability risks becoming a self-fulfilling prophecy, if we let the infrastructure of the city’s sociability decay.

This means that more support is likely to be needed this year – to sustain what is hard to replace, to allow space for new growth, and to address long-term problems such as housing quality and affordability – so that London can continue to play its role as the UK’s gateway to the world. When we emerge from the other side of this crisis, young people will once again be drawn to the possibilities and freedoms that cities can offer. London needs to be ready to welcome them back.

[Published in OnLondon, 14 February 2021]

Book Review: Red Metropolis by Owen Hatherley

Owen Hatherley’s book springs from an honourable impulse – to rescue London from lazy stereotyping as an elitist hothouse of privilege, distant from the more authentic social and economic struggles of the northern cities. He aims to rekindle pride in London’s rich heritage as a radical trailblazer of social progress, and for the most part he succeeds.

Hatherley’s previous books have covered everything from the ersatz urbanism of Blair-era ‘regeneration’ projects, to the communist architecture of eastern Europe, to the commodified nostalgia of Cameron’s austerity years. Most recently he has focused his gaze on London (he is also editor of the fascinating Alternative Guide to the London Boroughs, published by Open House last year). A self-described communist, Hatherley began writing Red Metropolis in December 2019, and describes the book as an “attempt to write myself out of the feeling of numb horror” caused by Labour’s defeat in that month’s general election.

Red Metropolis is a work in three acts, focusing in particular on London’s perennial housing crisis and on public housing, one area of social welfare that has consistently had a local dimension. The first part traces the history of London County Council (LCC) from the messy politics and patchy administration of the late 19th Century to 1965, the second records the ascendancy of the New Left in the Greater London Council of the 1980s, the third looks (sorrowfully) at the record of the three mayors of London since 2000.

The LCC took over from the unelected Metropolitan Board of Works in 1889, and for nearly twenty years, under a shifting “progressive” leadership comprising liberals and various left groups that would later merge into the Labour Party, was a pioneer of municipal socialism. Directly employed labourers built council housing in the Boundary and Millbank estates, which Hatherley praises for their “high-quality materials, urbanity and spaciousness”, and the LCC’s borough allies (including Battersea, where John Archer, the first Black mayor of a borough, was elected in 1913) built smaller-scale schemes such as the Latchmere Estate.

The Progressive alliance faltered and the Conservatives dominated the LCC for the next 25 years, but by the 1920s, the Labour Party had begun to build a power base (particularly in the “Five Red Boroughs” – Battersea, Bermondsey, Deptford, Poplar and Woolwich). In 1922, Poplar councillors, led by George Lansbury withheld rates from the LCC in order to fund social programmes, arguing that it was “Better to Break the Law than to Break the Poor”. Thirty were briefly jailed in an episode which is a precursor to the 1980s rate-setting protests and the legal challenges to the GLC’s “Fares Fair” policy.

Poplarism stirred up persistent debates within the Labour Party between advocates of constitutional change and those seeking more direct action. Herbert Morrison, who dominated the London Labour Party from the 1920s, and led the LCC from 1934 to 1940, was a vociferous opponent of the latter approach. Morrison has been a controversial figure in left politics, at times criticised (like his grandson Peter Mandelson) for his focus on “electability”, but also for his model of ‘bureaucratic nationalisation’, with professional managers in control rather than workers themselves.

Hatherley is more generous in his assessment. Even though 1950s schemes such as the Alton Estate are more to his taste architecturally than the “staid and stiff brick tenements” of the 1930s, he argues that Morrison prefigured the post-war settlement by offering free healthcare, building housing, schools and parks, and by establishing London’s own nationalised transport board, and also praises the sometimes-maligned Abercrombie plans that were developed in the heat of the War. Like Robert Moses in New York, Morrison remade his city, and made plenty of enemies along the way.

LCC puritanism – they built estates without pubs and Morrison wanted lidos closed at night to stop “people fucking in them” –was roundly rejected by the “New Left” leadership of the Greater London Council in the 1980s. Hatherley brings to life the carnivalesque egalitarianism of County Hall under Ken Livingstone, its corporate wood-panelled corridors thronging with punks, Rastafarians, gay rights activists, artists, radical feminists and communards. One of the ironies of the past 30 years is how the anti-racist and gay rights campaigns led by the GLC, which led to vitriolic tabloid attacks at the time, have become entirely mainstream, while its economic programmes, such as the “People’s Plans” for reindustrialisation of London’s docks, look positively quaint.

The importance attached by the New Left to community-based politics and participation above all things led, Hatherley argues, to its rejection of Morrisonian housebuilding programmes. Partly as a result of this and partly because the city was still depopulating through the early to mid-1980s, the Livingstone-era GLC built little housing and what it did build was often “twee and flimsy” – pockets of suburban semis that can still be seen dotted around inner London. The antipathy towards grand schemes led to renowned architects such as Neave Brown in Camden and Ted Hollamby in Lambeth being pushed out of their local authority jobs. (In another nice irony, the communist Hollamby went on to work at London Docklands Development Corporation, the epitome of Thatcherite laissez-faire urban policy).

Despite this, Hatherley sees the GLC’s record as a “social democratic Paris Commune” as a guiding light for the Corbynista left in 2015-19: “so successful was it that London’s governing body had to be abolished out of existence.” But he identifies a wider legacy too: the GLC’s focus on cultural policy was foundational to London’s 21st Century character, and its abolition in 1986 alongside the ‘Big Bang’ of financial services deregulation, helped define the politics and economics of London today.

Hatherley is less impressed with – and I think less fair to – the three Mayors in City Hall since 2000. He gives Ken Livingstone and Sadiq Khan some credit, for transport projects and policies in particular, but excoriates all three for their failure to tackle London’s housing crisis. In particular he sees them as in thrall to a faustian pact with private sector developers to build affordable housing through Section 106 agreements, designed to mitigate the impacts of new development and to reflect the value created by the grant of planning permission. This approach, he argues, has fanned London’s red-hot property market, encouraged speculation by landlords, and widened inequality in the capital.

The narrative is powerful, but some details are smudged. Hatherley writes that Livingstone failed to define what “affordable housing” meant; but the 2004 London Plan gives broad definitions, and supplementary guidance published in 2005 goes into some detail in defining “social”, “intermediate” and “low cost market” housing, and specifying in what proportions these should be built. He says that the 2012 Olympics resulted in more social housing being lost than was built; but even the social housing provision in the Olympic Village (around 700 homes), exceeds the number that were lost at Clays Lane, the housing co-op that was demolished on the north of the site. And he damns Sadiq Khan’s efforts with faint praise, saying there has been “some encouragement” of councils to build housing; but Mayors need to agree affordable housing funding with national government and Khan has allocated £1 billion of the capital grants he has secured to councils to build 11,000 social rented homes.

But these and a few others are errors of detail. The central accusation stands, against the local government leaders who did deals with private developers as well as against the three Mayors themselves. In recent years the “cross subsidy model” of affordable housing provision, which has also been adopted by councils themselves as well as housing associations, has come in for increasing criticism: it requires rising prices to work, so fuels the pressures that it seeks to address, and creates an industry of opaque and gameable viability assessments.

What else could the Mayors have done? Housing was explicitly excluded from their functions until 2007 (the GLA was designed to have minimal overlap with borough powers), and control over capital grants for affordable housing was only handed over in 2011. Restrictions on councils’ ability to borrow against their rent rolls in order to build have also only been relaxed in recent years. Hatherley reports Alex Salmond suggesting that Ken Livingstone should have demanded the right to charge more Council Tax on the wealthy to build more social housing, but the right to reform Council Tax was in the Scottish Parliament’s gift from the outset. It was never on the table for London. Two reports from the London Finance Commission, under Boris Johnson and Sadiq Khan respectively, have sought more powers over property taxes for London but been studiously ignored.

The approach of the mayoral administrations could also do with some interregnal context. The abolition of the GLC (and other metropolitan counties) came near the high point of conflict between central and local government. As Thatcher was replaced by Major, more centrist borough leaders such as Haringey’s Toby Harris built consensus with businesses and across party lines – until 1995, there were separate membership organisations for Conservative and Labour boroughs. The 2000 version of Ken Livingstone was as much part of this détente as John Major and Tony Blair were. Even bust-ups such as the London Underground public private partnership were about the nature of private sector involvement in the running of the Tube, not the principle of it.

Red Metropolis is an informative, lively and punchy read, at once optimistic about London’s possibilities and angry at its realities. Hatherley brings to it his perceptive and humane architectural sense (equally damning of both the “chilly Piranesian grandeur” of County Hall and the “grub-like” City Hall), an ear for a quote, and an eye for the curiosities and ironies of London’s evolution. The captions under artless urban photographs (by the author and Daniel Trilling) provide a wry running commentary on the text, and on the persistent gaps between rhetoric and reality.

Hatherley closes by observing that, unlike the 1980s when the left captured Labour municipalities across the country but remained shut out from the commanding heights of the party, the Corbyn years saw the party’s leadership shift sharply to the left, without this being reflected in councils, which generally continued to be run by pragmatic/compromised (delete to taste) centrists. Even those, such as Haringey and Newham, that saw leadership changes during the “Momentum years” have failed to implement the Poplarist programmes that Hatherley would like to see.

The final pages argue, uncontroversially, for more devolution, for decentralisation of government and for more openness to international examples, as well as for an end to growth and a more confrontational attitude towards central government. He believes that London government can acquire powers by staking claims – “Better Break the Law than Break the Poor” still. This is a high-risk strategy, though it did recently work when Mayor Boris Johnson decided to sack the Metropolitan Police Commissioner without the power to do so or reference to the Labour Home Secretary.

Red Metropolis is a salutary reminder of the sense of possibility that can and should infuse London politics, despite the conflicts and compromises that governing a city of nine million people involve. If London is in Henry James’ words “only magnificent”, this magnificence is partly the result of the striving and the strife so well described in this book.

[First published in OnLondon, 8 February 2021]

Losing my religion – or how I learned to start worrying and distrust the news…

As the waves of Covid19 have ebbed and flowed over the past 10 months, I have become more and more fixated on the data that chart their course. Every afternoon, I check if the daily case, hospitalisation, death, and now vaccination numbers have been updated. I look at the curves, at regional patterns, at the maps that enable me to zoom in to my neighbourhood, and those where family and friends live. Every week I look out for the ONS infection survey, and for other surveys like the Imperial REACT study and the Kings College London’s ZOE symptom tracker.

Why am I doing this? I’m not sure it’s healthy behaviour. I am not an expert in interpreting epidemiological data; and much of the time I learn very little. The problem is that I find myself believing less and less what the government or most media outlets are telling me. I see a headline proclaiming that the lockdown is having no impact, even as cases are falling across the country, then another telling me the opposite 48 hours later. The next day a paper tells me that a new strain of coronavirus is more deadly (albeit with sly quote marks), while another news outlet tells me the question is still open. The government cautiously suggests there is some evidence that lockdown is having an impact, when their own data show that case numbers have fallen by a third since the beginning of January.

At one level, this is not really surprising. The pandemic is a complex phenomenon, and its progress is the product of imperfectly understood pathology and the unpredictable behaviour of wearied humans, which is further complicated by delays of weeks between actions and effects. Different data may point in different directions, and reasonable people may disagree on interpretation.

But I worry that a lot of disagreement is not reasonable, but partisan. Online, the debate is polarised between presumed ‘covid deniers’ and alleged ‘lockdown lovers’. Passionate intensity reigns, and good faith arguments seem thin on the ground. When in early January I pointedto some limited evidence that case numbers seemed to be falling in the parts of the south east England that had been locked down since mid-December, I was corrected (rightly) for looking at case numbers rather than positivity rates (though the trend was sustained, so I was right even if accidentally), but I got the feeling that my real error was being on the wrong side of the argument, that I was suspected of trivialising the illness, or making a point for or against lockdowns.

So far, so Twitter. But the mass media are not much better. Rather than trying to offer level-headed analysis, some papers seem wilfully optimistic, others determined to find the clouds behind every silver lining. And Government, along with a BBC that has increasingly operated as state broadcaster during the crisis, seems to issue statements and information based primarily on their likely effect on behaviours, rather than on their accuracy.

I have mixed feelings about all this. I can actually understand and to some extent support the ‘behavioural’ approach taken by the government and the BBC. The last thing we need now is irrational optimism leading to reduced compliance with government restrictions. Even George Orwell saw the value of propaganda in war time; and if the enemy today is complacency and lockdown fatigue, then we cannot be surprised if the government uses every means to keep it at bay.

But this approach has shaken or even corroded my faith in institutions (a faith that may have been too blindly given in the first place). I have always listened to politicians through a sceptical filter, but that filter is now applied to scientific advisors, academics and BBC journalists. Hearing them, I no longer simply expect to become better informed, but at some level suspect that I am being played, that the aim of the communication is behaviour modification (“a call to action” – or more likely inaction, these days) not enlightenment.

Scepticism may be healthy, but when faith in institutions is eroded, all sorts of wild flights of fantasy can take its place. To paraphrase a quote attributed to GK Chesterton, when people stop believing in institutions, they don’t believe in nothing, but can believe in anything. Behaviour change communication may be entirely benign in intention, but it also risks fuelling conspiracy theories and sweeping distrust of experts.

Meanwhile, I go back to the data, clicking on the charts every afternoon, trying to keep both optimism and pessimism in check as the pandemic rolls grimly on.

Against declinism

Jointly with Mark Kleinman

[First published on Kings College London blog (also at Centre for London blog and OnLondon, w/e 24 January 2021]

London enters 2021 in a very different mood, not just to last year, but to much of the zeitgeist of the last 30. There were fireworks on the Thames on new year’s eve, but no crowds were watching in the streets and parks. The mood of the impressive light and sound show was one of resilience and solidarity, rather than unbridled confidence. As with the opening ceremony for the 2012 London Olympic Games, praise for the National Health Service took a central role, but the tone was less celebratory than seriously grateful.

London has suffered badly, both from the health and the economic impacts of the pandemic, as can be seen in The London Intelligence Economic Tracker. As we write, the NHS in London and throughout the UK is again straining under pressure. The emerging labour market evidence shows a particularly severe downturn in London. The Greater London Authority (GLA) Economics team report that the number of workforce jobs fell 3.8% (229,000) in the capital between March and September – a far greater fall than for the UK as a whole, at 1.8%. They go on to say that while in the earlier stages of the pandemic, there were only modest changes in headline labour market statistics relative to the large falls in activity, this has changed more recently, with large movements in London’s unemployment rate. In the three months to October, the unemployment rate rose a record 1.2 percentage points to 6.3% in London – the largest quarterly rise since the series began in 1992. Only the North East region has a higher current unemployment rate than London, at 6.6%.

As we hobble through the next few months, bigger questions are being asked about the future of cities and of London in particular. Will the “urban age” of big cities leading global trade and growth return? Or does the future lie in more dispersed and fractured economic activity, as globalisation falters, global travel slows and/or the benefits of agglomeration are outweighed by the convenience and safety of working from home?

The debate has been growing in recent years about whether we have reached “peak London”, whether the city’s phoenix-like recovery from post-war deconcentration and urban flight has run out of steam. Like waves of pandemic infections, the turning point of cities’ fortunes are more easily visible after the event: nobody really expected London to start growing again in the mid-1980s.

Population growth has been slowing in London over the past three years. Moreover, recent analysis of Labour Force Survey data by Michael O’Connor and Jonathan Portes suggests that London’s population could have fallen during the pandemic by as much as 700,000 – a huge turnround. And consultants PwC recently forecast a 300,000 person decline by the end of 2021. These are only estimates and projections, and of course much of this change might be temporary. Will 2020 prove to be a blip, reflecting the extraordinary circumstances of the pandemic, or will it be another inflection point like 1987?

The latest demographic projections issued by the GLA in November 2020 forecast a return to growth – though at a slower rate than the past decade, when London’s population grew by almost 90,000 every year. Their “central projections” anticipate growth of around 50-70,000 people per year instead, with the next two years at the lower end of this scale. This would lead to a potential population of around 11 million by 2050 (compared to just under 9 million in 2019).

Population growth is driven by two factors: migration and natural increase. In the year to mid-2019, London’s population was estimated to have increased by 54,000. This consisted of net of 77,000 people to London from overseas, net movement of 94,000 people from London to the rest of the UK, and a net increase of 71,000 people from the balance of births and deaths.

The GLA’s central projection assumes that international migration will be suppressed for the period to 2022, but will then bounce back to average 95,000 (net) every year. The GLA’s expert panel felt that on balance, future reductions in migration are more likely than increases. However, they advised against discounting the possibility of higher levels of international migration, pointing to the resilience of international migration; the possibility that new immigration rules may result in foreign nationals settling in London for longer, and potential reductions in emigration rates of UK nationals in post-Brexit Europe.. The projections also suggest that net domestic migration to the rest of the UK will return to around 100,000 per year by 2030. So most of the projected growth will be fuelled by resurgent natural change (births minus deaths), which has fallen since 2010 but is forecast to stabilise at around 60,000 per year. London will continue to see a rapid churn in population, but its growth will be fuelled from within.

Similarly, the GLA project continued economic growth over the longer term. Their economic projections anticipate contraction and jobs losses in 2021, followed by recovery in 2022, with economic output (GVA) exceeding the 2019 peak by 2022, and the number of jobs in 2022 just reaching the peak of three years earlier. Beyond that, the implication of GLA and other forecasters’ cyclical and trend analyses is for the London economy to resume previous levels of growth, both in output, and perhaps to a slightly lesser extent, employment.

How credible is this? London’s position as a leading global city has taken a hit from Brexit and the UK’s management of coronavirus, but the city is still in a potentially strong position, with strengths in tech, green innovation, financial and business services, education, arts and culture. London needs to remain open and inviting, through immigration policy but also through nurturing and restoring its wounded cultural and hospitality sectors – the “soft power” foundations of its global appeal. The UK as a whole will continue to need London, as a driver of economic growth, for its fiscal contribution and as its gateway to the world. Brexit, and the UK’s potential isolation outside the major trading and economic blocs, makes London’s role more rather than less important.

How much does the government understand this, and will it commit to the infrastructure and other support needed for London to continue to grow? The signals are mixed: national planning policy is now focused on concentrating growth in cities, and the government’s latest algorithm envisages London building more than 90,000 homes every year – many more than the Mayor’s London Plan proposes, the GLA’s projections would imply, or that London is actually building at the moment.

Given this expectation, and the economic importance of London and South East, you would expect the government to want to invest in the capital’s infrastructure. But worryingly, in the National Infrastructure Review last November, the government suspended support for Crossrail 2, the next phase of major transport infrastructure investment in London, beyond safeguarding work. As Alex Jan has commented, Crossrail 2 is “pretty integral” to the London Plan, though all major infrastructure projects have their ups and downs – Crossrail 1 was first mooted in the 1970s, with roots in the Abercrombie Plan of 1944. Government commitment to “levelling up” regional imbalances in the UK is welcome, but this should not happen by starving the capital of much-needed public investment.

We will not know for some time whether short-term population and economic decline are temporary diversions or longer-term redirections of London’s future. We do not know whether 700,000 people really have left London over the last year, or whether and how quickly they may come back. And we do not known how far recovery from the crisis could see some rebalancing of activity within London and the wider South East. We know, in short, that there are still a lot of unknowns.

But public policy should shape the future rather than just responding to it (a core proposition of Centre for London’s London Futures programme), and governments should be wary of drawing conclusions about long-term trends from short-term disruptions. London’s potential for growth should be nurtured so that the city can work better for all its current citizens, as well as the two million more who could arrive in the next 30 years, and so that the capital can support recovery across the UK.

Reheating London’s hospitality industry

[First published in OnLondon, 29 December 2020]

After Boris Johnson’s election victory in December 2019, some of his supporters heralded the approach of another “Roaring Twenties”.

With hindsight, it was an unfortunate analogy, for the 1920s boom followed the devastation of World War I and an influenza pandemic that killed 50 million people worldwide. But the comparison has stuck, and as we look nervously but hopefully into 2021, even sober-minded think tanks such as the Resolution Foundation are deploying it, predicting a boom in deferred expenditure, particularly in the hospitality sector, once vaccines have enabled social mixing to return to something like normal.

Anecdote bears this out, as those friends who are still in work discuss which restaurants and bars they will visit – we are all planning to get “lit up in London”. But the capital’s hospitality sector is a lot more than the subject of lockdown fantasies. Over the last ten years, employment in the sector has grown by 40%, which is faster than any other apart from professional services, IT and communications.

This growth is driven by and supports London’s global role. Spending by overseas visitors forms a major chunk of London’s exports, and it is London’s cultural offer – from nightlife to galleries to restaurants – that helps the city to retain its position at the top of global surveys, such as this year’s Global Power City Index, published by Tokyo’s Mori Memorial Foundation. Hospitality isn’t the froth on the top of “serious” sectors, such as financial and business services. It is foundational to them.

And as we lose the advantages of access to the European Single Market, these “soft power” assets will assume ever more importance in bringing the world to London, enabling us to play our part in “Global Britain” – another phrase that has taken a battering in this year of mutating viruses, lockdowns and travel bans.

But hospitality has been hit hard by the coronavirus crisis. The sector accounts for around 25% of current furloughs (compared to less than 8% of jobs), and has seen the most substantial job losses of any industry. And the outlook is grim: recent national surveys suggest that almost 30% of pubs and bars are pessimistic about surviving into the spring. London’s pubs and restaurants had a particularly tough year, with visits to the city centre dramatically reduced even during the summer period of relaxed restrictions.

As ever, the situation is complicated by Brexit. London’s hospitality sector is particularly reliant on foreign workers, with overseas nationals comprising around 50 per cent of the workforce. New immigration rules will make it far harder to employ foreign nationals in hospitality. Managers and a few specialist roles such as chefs are classified as “skilled” and therefore eligible for work visas but, bar staff, waiters, baristas and other hotel and kitchen staff are not.

Furthermore, the coronavirus crisis appears to have triggered the type of exodus that many were predicting (but failed to materialise) after the EU referendum in 2016. More than 700,000 people born outside the UK (around 500,000 from the EU) left employment between the first and third quarters of this year, according government surveys. Most appear to have left the country (or at least the survey sample) entirely. They may be biding their time until London re-opens, or they may stay away.

So, come the great unlocking, London’s hospitality sector may be in the unhappy situation of experiencing business closures and labour shortages at the same time – just as the city is trying to renew its global appeal. There may be an opportunity here for unemployed young Londoners to pick up the slack. But that is likely to put – long overdue – upwards pressure on wages and working conditions, which may in turn threaten the viability of pubs and restaurants facing higher food costs and already financially scarred by the coronavirus winter.

London will re-open, and its restaurants and bars will once again buzz with life, as they fill with people from across the city, the nation and the world, underpinning London’s status as a global meeting place. But recovery will be tough for the hospitality sector, and it could need almost as much support as during the long winter of coronavirus closures.

Good advices?

[First published in Local Government Chronicle, 24 November 2020]

Choosing the right advisors is one of the most important decisions that political leaders make, as recent Downing Street dramas have illustrated. This is perhaps particularly true for the mayor of London, who unlike the prime minister or a council leader does not have the support of a party group, but only the watchful eye of a scrutinising London Assembly.

So, alongside City Hall’s expert staff, mayors need mates; their own people who can advise and represent them in such a huge city. The mayor of London can bring in 12 appointees, and the ways in which the three mayors to date have appointed and worked with their teams have been indicative both of their strengths and their weaknesses – as detailed in London’s Mayor at 20, a collection of essays, analyses and interviews looking back over the past two decades of the capital’s mayoralty.

When Ken Livingstone was elected in 2000, he came with a gang of advisors who had worked with him for many years – from the Greater London Council, from activism since then, from his parliamentary office. Most had worked with him when he had decided to run as an independent following Labour’s bungled attempt to fix candidate selection. Within weeks of his election, Ken had advertised posts as ‘policy advisors’, and many of these were filled by familiar faces.

The team were all broadly from the political left, albeit from different denominations; Simon Fletcher, Ken’s chief of staff and former parliamentary researcher, brokered agreement on priorities and positioning. The mayor used to describe advisors such as Neale Coleman, John Ross, Jude Woodward and Lee Jasper as being like ministers – with full authority to represent his views. The team was consistent through Ken’s two terms, with the mayor showing loyalty (and damaging his 2008 re-election campaign) when advisors became embroiled in newspaper allegations of cronyism.

Unlike his predecessor, Boris Johnson had no deep roots in London politics, and had only been an MP since 2001. There was no gang waiting in the wings when the ebullient loner was elected in 2008. Nick Boles, then Conservative MP for Grantham and founder of the Policy Exchange thinktank, worked with the new mayor to appoint deputy mayors.

The initial tranche proved shaky: one was prosecuted for fiddling expenses, another was found to have fabricated his CV, and a third senior advisor made comments on race issues that led to swift resignation. Tim Parker – a corporate restructuring guru appointed as chief of staff and first deputy mayor – left when it became clear that there wasn’t the scope or appetite for the application of his specialised skill set, and that Boris wanted to take decisions as mayor rather than acting as a media-friendly figurehead.

Other appointments were more stable, some becoming long-term Johnson allies. Munira Mirza, deputy mayor for culture and education, followed Johnson to Downing Street, as did chief of staff Eddie Lister, who is now temporarily filling the same role at 10 Downing Street. Lister, and Simon Milton the former Westminster City Council leader who preceded him at City Hall, took a relatively light-touch approach to policy co-ordination, leaving other deputy mayors, such as Stephen Greenhalgh, Kit Malthouse and Isabel Dedring, with space to develop policy positions, but also giving a looser sense of direction than under Livingstone.

If Sadiq Khan drew one lesson from Boris’s wobbly transition, it was not to make appointments too quickly. His deputy mayors were appointed painstakingly over his first six months in office. Senior local government figures such as James Murray and Jules Pipe, former mayor of Hackney, were appointed alongside former GLA officials Justine Simons and Shirley Rodrigues, and external figures such as human rights barrister Matthew Ryder, shadow transport minister Heidi Alexander and former Home Office special advisor Sophie Linden.

These appointments have been carefully judged, but the deputies are not close to Sadiq and his decision-making in the way that Ken’s were, or eventually Boris’s became. Less prominent are the inner circle of advisors who agree policy positioning: chief of staff David Bellamy, director of policy Nick Bowes, and communications and external affairs directors Leah Kreitzman, Paddy Hennessy and Jack Stenner.

The London mayoralty is an unusual role: it can be a springboard or a dead-end; it suits loners and mavericks, but requires constant coalition-building; it gives extensive powers of patronage and appointment, alongside singular accountability. It is a job to which the incumbent is elected alone, but not one which any mayor could hope to carry out alone. Appointing advisors and deputies is an early but critical decision, requiring trust and judgement. For a political loner like Boris Johnson it is a fraught business, and one that has given him a rocky start both as mayor of London and as prime minister.

City Hall – from glass testicle to white elephant

[First published by OnLondon, 3 November 2020]

So farewell then, City Hall.

I remember a conversation in early 2000, soon after I started working in the “transition team” that set up the Greater London Authority (GLA). We didn’t have a Mayor of London yet, but – as I explained loudly to someone in a noisy nightclub – I just really, really wanted to work in City Hall, the sloping glass blob by Tower Bridge that has housed the GLA for the past 18 years. On the site of Pickle Herring Street’s warehouses and wharves, looking north to London’s commercial heartland and east to the capital’s future, City Hall would be a very modern HQ for a very modern strategic authority.

While these shiny new headquarters were being built, London’s new Mayor and Assembly spent their first two years in Westminster’s Romney House, a former hotel that had been requisitioned by the government during World War II, and had served as a dumping ground for departmental detritus since then (and has now been converted into flats). Then, after a formal opening on 23 July 2002 by the Queen (“Your new building, which is so clearly based on ideas of openness and accessibility, will provide an exciting forum for Londoners as your debates ebb and flow”), we moved in.

Openness and accessibility may have been part of Foster and Partners’ design (alongside the government’s instruction to keep a cap on the new Authority’s staff numbers), but these features fell from favour in the aftermath of the 9/11 attacks in New York. Risk assessments were quickly undertaken and an awkward metal detector arch installed by the reception desk. The need to pass through this quickly killed off the idea of citizens being able to drift in from the sunken Scoop outside (which looked like it was purpose build for the skateboarders who security guards so assiduously chased away) into the lower ground floor café.

Security also killed off the rather romantic notion of the ramp above the Assembly Chamber, a slighter echo of Berlin’s Reichstag dome (designed by the same architects and completed in 1999), as a vantage point for citizens to watch new civic democracy in action. Not only was this quickly written off as dangerous (on account of angry firefighters, taxi-drivers and pigeon-feed sellers as much as terrorists), but walking on the ramp was so clattery that even GLA officers were banned from it during meetings.

The Chamber itself is a fine lofty room, which has been used in The Apprentice, for politics programmes and in James Bond films. But with the dead air of the ramp above it, the space it occupies is out of all proportion to its use. Monthly questions to the Mayor attract a smattering of journalists and school children, but other committee meetings are rarely that well attended.

And the real debates and decisions do not take place in the Assembly, but in the Mayor of London’s office (and the offices of his advisors) under the sloping glass eaves of the eighth floor. Ken Livingstone, who had derided the designs as a “glass testicle”, insisted on individual offices for his advisors “for all the plotting they need to do”.

Assembly members had individual offices too, but all staff – from the chief executive down – were in open plan desks arranged around the edge of the building, all uniformly grey to avoid any contrast with the bright yellow walls that the architects had chosen for the building’s core, to enhance the night-time profile it projected over the Thames. Meeting rooms with minimal natural light were clustered around the other side of the core, or buried in the even gloomier basement.

But for all its flaws – from leaking panes of glass and draughty entrance lobby, to the hassle of never knowing whether you would be waiting 15 minutes at security – City Hall had a public face: the lower ground floor café offered the opportunity to bump into the Mayor, Assembly members, GLA staffers, borough leaders and anyone else involved in policy in London. London’s Living Room, on the top floor, is a panoramic party venue – surrounded by a balcony with views over Tower Bridge, the City of London, and the sweeping railways and estates of Southwark. And though the building was clunky and cheaply-finished, it did feel like a place of power.

It is hard to argue with the £60m savings that will be realised by moving the GLA to The Crystal, an equally idiosyncratic building in the Royal Docks, or with the potential to accelerate redevelopment of one of East London’s most complex but isolated locations. But it is also hard not to worry that the move will diminish the GLA, making it just a little more marginal to the lives of Londoners.

Zones of interest – the Planning White Paper and London

[Published by Centre for London, 29 October 2020]

The government’s ‘Planning for the future ’ White Paper, on which public consultation closes this week, is a bold statement of intent at a time when many of us are confused about planning for the Christmas holidays. It sets out a radical agenda for reforming town planning — to speed the process up, to get more and better homes built, to make community involvement more meaningful. But how will it work in London?

Read our response to the consultation

The proposals amount to a rather British hybrid (aka ‘fudge’) between zoning-based systems where rules are set up front for what can be built where, and the more discretionary system we have now, where decisions are taken on a case-by case basis, albeit in the light of local and national policy. It proposes that the whole country will be divided into areas for growth, areas for renewal and areas for protection, with automatic planning permission for new developments that fall within the rules for growth areas, and a greater role for discretion in the other categories.

The government will set housing targets for each council, will issue a national ‘design code’ allowing for local variation, and will introduce a standardised levy on the value of new development, to pay for affordable housing and other local infrastructure. Councils will allocate land to the different categories, develop local design codes and zoning rules (eg, on mix of uses), consult local people on these, collect and spend the new infrastructure levy, and take any decisions still required.

There’s a lot of potential in these proposals. They won’t solve London’s housing problem on their own, but they could help. Greater planning certainty could diversify the market and speed up building, and there’s a huge problem of public trust that earlier engagement could help with.

But the White Paper is deafeningly silent on how all this applies to London, and implies too many powers being drawn into the centre and not enough being left to local democracy. Given the government’s challenge to the Mayor’s draft London Plan, and the strings attached to bailouts of Transport for London, you could be forgiven for seeing this as another area where devolution is being rolled back by ministers that see city mayors as an irritant at best. Government officials insist this is not the case. In fact, they say, London’s two tier planning system, housing targets and network of opportunity areas are the type of approach being pushed more widely.

But the detail does need fleshing out, as Centre for London’s response to the consultation argues. If London is really to accommodate the number of new homes that the government’s new calculations suggest (more than 90,000 each year), this will need more radical approaches to working across South-East England and/or a long-overdue review of the green belt.

And the roles of the London Plan, borough plans and associated design codes will need to be very clear if ‘upstream’ community engagement is to have strong enough teeth for local people to feel that they can shape growth and urban change where they live, without debating every building. This will also have to mean strengthening controls on ‘permitted development’ conversions of commercial buildings, which are creating some horrid and pokey flats around the capital (though the government has made the positive commitment that national space standards will now be applied to such developments).

The new proposed ‘infrastructure levy’ for affordable housing and other costs will not generate enough funding on its own to build all the affordable homes London needs. But, along with zoning, it should help to bring more builders into the market by creating more clarity up front, and reducing the haggling and costs involved in securing permission.

If the changes are implemented, it will redefine the role of borough planning officers. More zoning-based systems will require more up-front work on masterplans and public consultations and maybe less management of individual planning applications. Given the cuts that planning departments have seen in recent years and the shortage of skills in these areas they are already facing, this will have to mean more money, at least for a transitional period.

But the big question is whether the reforms will be followed through. The proposed centralised approach to setting housing targets and the higher targets that this would generate for the South East has scandalised many home counties MPs (though many seem to miss the fact that the numbers generated by the ‘mutant algorithm’ will be modified to reflect constraints on capacity). And picking apart and restitching the complexities of planning, without generating uncertainty for developers and councils as the UK enters recession, will be a big challenge. But 1947, when the Town and Country Planning Act became law and put in place the planning system we have today, was a testing time too.

Can the Centre hold?

[Published by Centre for London, 9 July 2020]

Central London can seem curiously friendless in political debates – too metropolitan for national politicians but not resident-focused enough for local and regional authorities. But Central London’s economic recovery is essential to the capital and the UK as a whole, and it is currently exposed to a unique and highly toxic cocktail of risks.

London’s Central Activities Zone (the core commercial and office districts of the West End, the City and their fringes) makes an outsized contribution to the national economy: recent Centre for London research indicated that it generated 10 per cent of national economic output in an area covering just two per cent of London.

But the area’s importance extends beyond the dry data of economic output. Central London is the anchor of the UK’s tourist industry, and the epicentre of the mix of shops, restaurants, museums, clubs, bars, universities and theatres that sustains the UK’s soft power, drawing international students, businesses and workers year after year. Global London is the heartland of Global Britain.

In previous crises, central London has sometimes suffered, but bounced back. In the early 1990s recession, inner London lost manufacturing and manual jobs and saw sharp rises in unemployment, but by the middle of the decade, the service sectors were growing in compensation, with vacant commercial premises in areas like Shoreditch taken over by a new generation of start-ups. And after 2009 employment growth hardly faltered, as central London’s economy was buoyed by quantitative easing and international investment, and emerging sectors such as cultural industries and fintech began to grow as traditional financial services employment stalled. This resilience has bred resentment in other parts of the UK – some of it perhaps justified – but London’s success as the UK’s gateway to the world has been a force for good.

This time it could be different. London’s city centre emptied out faster and deeper than other UK urban centres when lockdown started at the end of March, partly reflecting the higher proportion of jobs – predominantly higher paid professional and office worker jobs – that could be undertaken from home. Lower paid workers in hospitality and retail also stayed home, but mainly on furlough in the short term – many will be wondering if they have jobs to return to. Anyone who has been into central London recently will have noticed how empty its streets remain, while life returns to more residential neighbourhoods.

The question of how many workers will come back to central London offices, and how quickly, is still an open one. For every elegy to the end of the office, there is an equally confident hymn to the social and productivity benefits of teams working in the same place, the spillover and innovation benefits nurtured by proximity. But it does seem that the lure of central locations may be diminished for some employers.

This storm might be weathered on its own, but combining a reduction in office workforce, with a sharp slowdown in domestic and international tourism, and a public transport system with heavily constrained capacity could be deeply damaging. Central London needs people, the throng of workers, shoppers, residents and tourists. Its retail, hospitality and cultural industries serve and entertain the world; they cannot survive on the area’s 330,000 residents alone. The tax breaks and discounts announced by the Chancellor yesterday may be a boost to neighbourhood pubs, cafés and restaurants across London, but they won’t bring crowds back to Zone 1 on their own.

Weakening central London’s visitor and commuter economy as a result of short-term shutdowns and slow resurgence over the coming months could store up deeper problems in the future, permanently undermining London’s soft power and global reach – the things that bring students, tourists and investors to the UK in the first place – as well as endangering the viability of the district that accommodates 40 per cent of London’s jobs.

So central London is particularly at risk, and damage to its economy could reverberate across the country. What can be done?

The first thing is to enable people to get back to central London as quickly as is compatible with managing the risks of coronavirus resurgence. At the height of the epidemic, Londoners were told to stay away from public transport, and that message has struck home. Now that face masks are mandatory, and infection rates much lower, a cautious return to public transport should be encouraged – not least as evidence from international studies and modelling of the spread of the virus in London in March indicate that public transport is not a major source of outbreaks. As Andrew Adonis has suggested, staggered working hours, clarity on cleaning standards and a change of messaging from the Mayor could all help bring people back into central London.

Getting people back on the tubes and buses will help, but will not be enough to make up for the loss of tourism and potential loss of workforce. It is likely that more targeted help will be needed, in particular for theatres, gig venues and other performance spaces. The West End accounts for 60 per cent of annual revenues for UK theatres, so allowing it to wither would be a body blow to the industry nationally.

The government’s new support package will help support cultural institutions while live performance is limited, but distributing cultural vouchers across the country could also play a part once theatres and other venues start to re-open (perhaps following the approach being tried out by Andrew Lloyd Webber). ‘Helicopter culture’ would be a gift in tough times to UK audiences, while drawing people back into city centres across the country, where attending a play or performance could be accompanied by food, drink and even shopping.

A return to public transport and support for entertainment might help sustain London’s centre as the virus recedes and tourism revives, but there will inevitably be shops, cafés and pubs that fail, and office space that is surrendered as firms reconsider their spatial needs and their employees’ appetite for remote working. There may be a case for allowing some growth in residential development: central London’s residential population has grown sharply in recent years but is still way below what it was in the 1930s. However, all the logic of business clustering, and the sunk costs of decades of infrastructure investment, argues that London should sustain a strong business core.

Rather than surrendering London’s business core, boroughs, the Mayor and government should work together on incentives to enable new enterprises to flourish, as they did in previous recessions. While rents are falling – and being linked to turnover in many cases – business rates are anchored to rental values from 2015 and so remain prohibitively high in many parts of central London. In the long term, business rates need reform, but in the short term, tax breaks for start-ups could include business rate discounts or holidays, and capital allowances for investment in office and shop fit-outs – an enterprise zone for the city centre.

Getting cross about central London – the crowds, the tourists, the prices, the pollution, the bustle – is a pastime that most Londoners can normally share with people across the country. But diluting its punchy and sometimes chaotic vitality would be a tragedy for the whole nation. London will bounce back in the long term, but may need some help over coming months as it faces a perfect storm of challenges.