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Two directions home

The roots of the UK’s housing crisis run deep. Two reports published last week agree on this much, though the conclusions they draw from looking back over the past 70 years of supply, demand, policy and price changes are quite different.

Last week Samuel Watling and Ant Breach of Centre for Cities published their report on “the UK’s four million missing homes”. It analyses historic housebuilding stats and finds that the alleged golden age of post-war mass housebuilding was not so golden after all. Housebuilding rates actually fell from 1947 onwards compared with the pre-war period, and the UK underperformed many other European countries in terms of building enough homes to keep up with population growth.

From this, Watling and Breach argue that the fundamental blight on UK housebuilding has been the 1947 Town and Country Planning Act, which established the role of local authorities in setting local plans, identifying land for development and granting planning permissions, rather than the decline in council housebuilding after 1980. They argue that under the auspices of the Act and its successors land supply has been constrained by measures such as Green Belt protection. Furthermore councils’ discretion in granting planning permissions means that even what is proposed in plans may not be permitted in practice.

Consequently, the report proposes planning reform as the key to unlocking faster and more affordable housebuilding, particularly in London and south east England where supply has fallen furthest behind demand and prices and rents have risen most. The authors’ favoured solution is a zoning system, which would establish frameworks for development in local plans (including in Green Belt locations with good public transport). They would then allow developers to build in line with those frameworks without needing additional permissions. The government had plans to move towards a zoning system, but those were dropped in 2021. Centre for Cities urges it not to water down the more modest reforms now included in the Levelling Up and Regeneration Bill.

The other report, entitled Reboot, was published by the Joseph Rowntree Foundation (JRF) the day after the Centre for Cities report came out. Written by a veritable housing supergroup comprising Rose Grayston and Toby Lloyd, formerly of Shelter and the No Place Left Behind Commission, and analyst Neal Hudson, whose insights plot an assured path through the marshes of UK housing market data, it too looks back to the 20th Century to understand the housing crisis of the 21st.

However, rather than foregrounding planning, Reboot focuses primarily on how policy has shaped markets and what this means as we enter our fifth downturn in 50 years. The authors observe that every downturn prompts a response that may deal with the immediate crisis but entrenches chronic problems more deeply. For example, Help-to-Buy equity loans helped revive housebuilding after 2013, but also added inflationary pressure.

The net effect, though the report does not use the term, is moral hazard writ large. Homeowners get all the advantages of house price growth in the boom years, and when the going gets tough governments take action to bail them out and prop prices up, so they soar out of reach of first-time buyers without rich families or lucky lottery numbers.

We are now nearing the end of what Reboot’s authors call the “decadent era” of growth since the mid 2000s, with London at the forefront both of house price deceleration and of slowing construction. The report considers what might happen next – from a rapid return to growth to a fully-fledged crash – and identifies four potential problems: housebuilding drying up as builders wait for the market to revive; an investors’ market where interest rates make life difficult for first-time-buyers but offer rich pickings for buy-to-rent; serious impacts on vulnerable groups, particularly heavily-leveraged recent London buyers; and the market freezing up as sellers, accustomed to rising prices, delay selling or downsizing.

Unlike the Centre for Cities report, which focuses on one big recommendation, Reboot offers more than a dozen, looking at short-term action to protect the vulnerable, medium-term measures to sustain supply, and longer-term action to remodel the housing market. The planning system is only incidentally discussed. Instead the authors look at incentives to implement permissions, flexible funding for affordable housing, better support for low-income homeowners and renters, heavier taxes on landlord investment, and even restrictions on who can buy homes in some “housing pressure zones”.

Reboot sees the value of home ownership, but also prompts deeper questions about what sort of housing market we want – or need. The gains from runaway house price growth are curiously intangible, only realised when downsizing or passing wealth between generations, while the damages done are all too visible. As the authors write, “We must recognise that a housing system beset by regular booms and busts does not meet the needs of the national economy or those seeking safe, secure, affordable housing. A more sustainable, equitable and economically efficient housing system must obviously be one in which house prices do not continue to rise much faster than earnings.”

There are things to argue with in both the Centre for Cities and the JRF reports. Deregulating planning on its own, without substantial investment, is unlikely to build the affordable housing London needs. Conversely, a nationalised property tax, as recommended in Reboot, would impose an unfairly heavy tax burden on Londoners (even if partially offset by the abolition of stamp duty).

However, both reports seriously address the housing crisis as a product of more than half a century of well-intentioned but sometimes self-defeating interventions and policies, rather than as some sudden phenomenon. They are contrasting in analysis, but complementary in conclusion. London needs both planning that will enable growth (including in the Green Belt), and markets that are less stacked against new entrants and poor people in general. Our politicians should not let this crisis go to waste. These two reports offer them a credible programme for action.

Originally published by OnLondon.

Levelling up – everything, everywhere, all at once?

On 2 February 2022, the morning the Levelling Up White Paper was launched, the Today Programme’s Nick Robinson was in West Yorkshire. Towards the end of the programme he interviewed Annie Trueman, who was studying music production at Wakefield College, prefacing his interview by saying that many young people wanted to stay in Wakefield but were unable to do so because it lacked a university. I’m not sure he got quite what he wanted.

Did Annie feel she had a future in Wakefield, he asked.

“If I wanted to go into music production, I’d probably move back to Leeds. It’s just a better scene, there’s more places to work.”

Robinson persisted. “What would persuade you that you could make your future in this city, rather than having to get out of it?”

“If there were more studios?” Annie pondered, as if responding to a slow learner. “I could build my own, but then realistically, how many people would come to Wakefield to record their music? They’d be more set to go to Leeds and other bigger cities.”

The exchange has stuck with me throughout the year since – a year in which “levelling up” has been much debated but not much advanced. Without dissing Wakefield – home of The Cribs – a big city like Leeds will always act as a more of a magnet for musical talent. In many ways, the music industry is the epitome of agglomeration economics – the ability of big cities to nurture productive clusters of expertise. Bands learn from each other; they swap musicians and ideas; they support and are supported by an ecosystem of recording studios, gig venues, musical instrument shops and drug dealers.

The discussion also highlighted some of the tensions at the heart of the White Paper. The government knows it wants to reduce “geographical disparities” but is less clear about how these should be defined or how this outcome should be measured. It professes belief in the power of cities as focal points for modern economic growth (proposing a “globally competitive city” in “every area” of the UK by 2030). But it also celebrates a poster in Teesside, offering “Stay local, go far” as its rallying cry, and decries the idea that in many parts of the UK, “if you want to get on you need to get out”. The kid in Hartlepool shouldn’t have to move to Middlesbrough, let alone to Newcastle or London, to pursue their dreams.

Two Prime Ministers later, Michael Gove is back in the Department for Levelling Up Housing and Communities, and “levelling up” has been supplemented by “everywhere” – one of Jeremy Hunts “Four Es”, and every bit as spatially vague as its predecessor. To borrow the title of the Oscar-nominated film, the government really wants levelling up to be Everything, Everywhere, All At Once.

I’m not sure this destructive ambiguity is sustainable or helps the government. The rows over the distribution of Levelling Up Fund money are a case in point. It is to be spread round the country because “everywhere” needs “levelling up”, and then the allocations are criticised for being awarded to a run-down garrison town in the Prime Minister’s (generally affluent) constituency, rather than spent on inner city projects in Birmingham. The government is stuck between economic and electoral logic – damned if they focus funding in a few places where it can really make a difference, and damned if they spread it more widely.

There is a way through this, but it requires a level of political courage the government has yet to show. The approach should be to say that the UK’s larger cities, including London, are the heart of the economy and will continue to be so. Towns and smaller cities can benefit from proximity, from commuting, from home-working and supply chains, but existing cities will form the foundations of future growth. Government will need to invest directly and swiftly in some significant new projects – such as Northern Powerhouse Rail – but should otherwise stand back, supporting city leaders in raising funds to build the infrastructure they need, just as they supported London in raising funds to build the Elizabeth Line and North London Line extension.

Pursuing these policies would not be obviously in the government’s short-term electoral interests. But their chances of winning the next general election look slim in any case, and a revitalised 21^st Century Conservatism cannot be founded only on the rural villages and declining industrial towns of the 20^th. Refocusing “levelling up” on the UK’s cities may not only be the right thing to do politically. It could even sow the seeds of an urban revival for a party that was once as comfortable and successful in the inner cities as in their suburban and rural hinterlands.

First published by OnLondon.

Re-do the Strand

Some cities do winter merriment better than others. They have the Christmas markets, they have the gluhwein, they have the blankets and hot chocolate outside ornate cafes. London is not like that. London’s winter life is interior: it’s the “the pubs and the bookies where you spend all your day”, as the Pogues’ Shane McGowan put it. All the more kudos then to the new Strand Aldwych public space scheme, which opened to the public last month.

Aldwych’s arc marks as abrupt a transition as any in London. To the west, Covent Garden and theatreland, to the east, universities, lawyers, consultants and bankers. It has a rich history – Aldwych was at the heart of the post-Roman city of Lundenwic – and fine buildings, including Marconi House and Bush House (birthplace and nursery of the BBC) and St Mary le Strand Church. But Aldwych and its hinterland can easily be shrugged off as an interspace, between the cities of London and Westminster, rebranded as Midtown or Northbank, identified by what it is not.

It was terrifying too. The traffic tearing round the gyratory made Aldwych and Strand a glorified roundabout, where pedestrians and cyclists risked their lives darting between buses and taxis. It was no place to linger.

The Strand Aldwych project is designed to change all that. In 2014 Northbank Business Improvement District, led by Ruth Duston, appointed research and urban design specialists Publica to rethink the public spaces on their patch, and then to develop the idea of reinstating two-way traffic on Aldwych, thereby allowing around 200 metres of Strand to be pedestrianised between Bush House, King’s College and Somerset House.

Traffic plans were refined, project boards set up, stakeholders engaged, options reviewed, visions workshopped, artists involved, traffic orders drafted, “meanwhile uses” planned and consultants appointed – including LDA Design – who led the Games-time and legacy landscape design of Queen Elizabeth Olympic Park – as lead designers of the new public spaces.

In 2020 Westminster City Council allocated funding for traffic rerouting and new public space. Works commenced in January 2021, with Strand closed to motor vehicles between Waterloo Bridge and Surrey Street from September of that year. From conception to opening the scheme took around eight years – lightning fast in London terms.

The new public space, which is (of course) “the size of a football pitch”, is divided into two by St Mary’s, an elegant early Baroque building whose vicar was enthusiastically welcoming visitors the afternoon I visited (and which has a ‘Sound and Light Installation’ explaining its history until the end of February).

Nighttime image of the public space from the east

To the east, between the King’s Strand Campus and Bush House, there are benches interspersed between flowerbeds and new street trees, and a slightly scruffy lawn in front of the church. A few cars and vans are still allowed in for servicing and for a hotel car park, with sliding bollards to control access. Watching these glide is hypnotic, though the paint scalps on their flanks suggest they have already encountered some over-confident drivers.

West of St Mary’s is a more expansive space in front of Somerset House formed of stripes and slabs of differently toned asphalts, feeling almost oversized. Tables and benches for summer carousing sit to one side – it will be interesting to see what rules will be applied – and spindly coloured chairs are bolted to the tarmac in a slightly awkward row, as if hanging around on the fringes of a teenage party. It is a stage waiting for a show and has been made big enough to accommodate temporary pavilions and installations.

But even on a grey January afternoon, with the temperature hovering close to freezing, these new spaces are busy. Students and workers sit around the church, chatting, smoking, eying phones and laptops. Cyclists weave between bollards (there has been some criticism of a lack of segregated cycle routes) and walkers saunter through the square with boulevardier relish rather than with the pace and momentum that drives most London journeys on foot.

Precise numbers are hard to come by, but I get the impression that the traffic rerouting took most of the budget. That is to say the landscaping, though well-designed, is functional rather than sumptuous. The flower beds and benches are edged by brown-painted steel, perhaps intended to look like costlier CORTEN from a distance, and most of the road surface is asphalt rather than stone paving.

This is not really a criticism. City centre spaces need to be robust and flexible rather than perfected and fragile, and Westminster City Council has already copped some criticism (including from Westminster Labour before they took over the Council in May) for spending money here rather than in needier parts of the borough. The expanses of tarmac can give these new spaces a bare look, more like the road they used to be than the public piazza they are becoming. However, the 45 new trees and 2,000 square metres of planting will soften them over time, as will more people spilling between the buildings as the days lengthen.

And I think they will come, drawn by temporary events and artworks such as Nick Ryan’s ‘The Voiceline’ – an audio installation drawing on 100 years of BBC archives – by new perspectives on previously half-glimpsed buildings and by the chance to watch the amazing gliding bollard show (or perhaps that’s just me).

The scheme creates a peaceful and breathable space, a pause on one of London’s major crosstown routes and an open-ended quadrangle for King’s College, though it is a shame that, unlike other London universities, the King’s campus remains sealed off from passers-by.

My only remaining kvetch, which has dogged me in almost every paragraph of this piece, is that there doesn’t seem to be a name for the space or spaces. ‘Strand Aldwych’ is the project, and ‘Strand’ refers to a longer road. Is this to be Strand Place, Bush House Plaza, King’s Court, St Mary’s Walk? We need a name we can complain about, adapt and eventually adopt, for this well-conceived and promising new piece of city.

First published by OnLondon.

Drifting back

After the turbulence of recent months, many Londoners will be hoping for a return to normality, albeit under the shadow of a cost-of-living crisis and a looming recession. But is the city’s office economy returning to pre-pandemic patterns of commuting and working, or have we settled into a “new normal” of hybrid working, empty office blocks and diminished city centre businesses?

London’s streets certainly seem busier, and on the days that they are running, so do London’s tube trains. This is borne out by Transport for London data: trip volumes have been increasing since the summer and now average around 80% of pre-pandemic levels. There are some spikes and dips to this trend, (such as Jubilee celebrations and bank holidays elevating usage, and strikes and heat waves reducing it), but Tube use is now just 20% below pre-pandemic levels.

There is a persistent rhythm emerging too. Weekends are still busiest, with nearly 90% of pre-pandemic trips. Monday, Tuesdays and Fridays are quieter with averages of 65-70%, and Wednesdays and Thursdays slightly busier with averages of 70-75%. However, since the beginning of September, the recovery in trip numbers has been particularly sharp around the City of London and Canary Wharf, suggesting that an increasing proportion of passengers are office workers, as opposed to leisure visitors or workers in other sectors.

Other figures confirm the impression of a gradual return to offices. Remit Consulting have been collecting data on office occupancy throughout the pandemic, based on access control systems (swipe cards and so on) from a sample of around 150 large office buildings in the UK. After advice to work from home was lifted at the end of January, office occupancy figures rose quickly to around 25% and stayed at that level throughout the summer, but since the beginning of October have climbed above 30%.

Remit estimate that “normal” office occupancy levels were 60-80 % before the pandemic, so 30% occupancy in fact equates to offices being around “half full” on the average day. Remit also have a more detailed breakdown by London office ‘submarket’ which shows West End offices back to around 42% average occupancy in October, with City and Docklands offices lagging behind.

Further west, in the SW1 corridors of power, offices are busier. When Jacob Rees-Mogg told civil servants to return to their desks in April, there was an immediate, but amusingly short-lived, effect on behaviour. Office occupancy leapt up from a departmental average of less than 50% of capacity, hitting 65% in mid-May, but had fallen back again by the end of that month.

Jubilee celebrations, summer holidays and industrial action kept numbers low over the summer, but occupancy has been back above 65% since the beginning of October. This is not far off pre-pandemic levels – though to be fair there have been an awful lot of ministers to clap in and out of Whitehall offices over the past few weeks.

While the higher levels of civil service return may reflect a tougher line from ministers, it seems that the return to offices has in fact gathered pace just as politicians and newspapers stopped demanding it. But it remains a trickle rather than a surge. Where do we go from here?

Many workers welcomed more flexible working, and are keen to retain its benefits. The survey commissioned by Kings College London this spring as part of their Work/Place project (on which I worked) found London workers embracing hybrid working patterns enthusiastically: 61% reported hybrid working, defined as working from home at least one day a week (compared to less than 20% before the pandemic). A further 13% worked only from home.

Workers expected the changes to stick too: 75% said they were “never going back” to a five-day week in the workplace, with three days a week at home the most popular option. The results of a second phase of the King’s survey (undertaken in the summer) are due to be launched at a joint event with Central London Forward next week, so we will have some idea of whether these views have shifted over time.

But there is a big difference between these workers’ expectations and those of employers. The UK-wide Business Insights and Conditions Survey found that the proportion of employers (weighted by employee numbers) planning to use home-working as a permanent part of their business model rose from 16% in October 2021 to 24% in May 2022. It was much higher in the ‘office-based’ sectors (professional, scientific and technical services, and information and communications) that account for around one in five London jobs.

However, in the latest wave of the survey (August 2022) that proportion appears to have started to fall across the board, suggesting that bosses may be becoming cooler about long-term home-working (a finding which seems to be mirrored in trends tracked by the WFH Project, a consortium of north American universities).

This gap between employer and employee expectations suggests that we have not yet reached equilibrium. Hybrid working certainly poses challenges – both for planned communication within and between organisations, and the “watercooler moments” of serendipity and casual interaction that form the foundations for corporate culture. Mixing digital and real-life interaction is tougher in many ways than the world of universal home-working during the pandemic.

Over time, new ways of working may diminish or overcome these challenges – through enhanced technology, or changes in culture or behaviour. Managers may tighten rules to ensure that teams can meet effectively and to prevent working from home becoming a perk for those with the privilege of controlling their own workflow (at the moment, it is overwhelmingly concentrated in more senior managerial and professional roles), or conversely to prevent a culture of office attendance and preferential treatment for those (mainly male) workers without caring responsibilities.

But as the recession bites, employers may feel emboldened to push for more presence in the office. There are already stories of companies such as Meta (formerly known as Facebook) retreating from the highly permissive approach they took during the pandemic, and some bosses may share Elon Musk’s views about home-working if not his cack-handed approach to employee relations. Even if returning to the office is not mandated, the threat of redundancy may boost presenteeism although, alternatively, tighter economic times may push employers to seek savings on property costs.

There may also be some polarisation: primarily remote working may become the norm in some sectors or companies, while being in the office becomes more established in others. The King’s College research showed that the biggest increase in home-working was among those who were already working from home at least one day a week before the pandemic.

Where more people are in the office, “fear of missing out” – on advancement, on collaboration, on gossip – may draw even more people in. Conversely, where online meeting and collaboration tools are the norm (perhaps augmented by periodic spells of intense in-person collaboration), employees will respond accordingly – not just in their daily habits, but in long-term decisions about where they live.

London’s office economy has not yet returned to its pre-pandemic state, but nor do I think it has settled into a “new normal”. Huge challenges for the real estate sector and the ecosystem of city-serving businesses remain, and some of these will be discussed at the King’s College/CLF event next week. But the future looks less bleak than it did during the pandemic, and any case for stripping back transport seems much weaker than it might have done even a few months ago. The debate about Crossrail 2 even seems to have restarted. Reports of London’s demise look to have been premature at best.

Originally published by OnLondon.

Spend spend spend!

The Chancellor of the Exchequer, Jeremy Hunt, is finalising his Autumn Statement against the backdrop of what Prime Minister Rishi Sunak has called a “profound economic crisis”. As the two men prepare to take decisions that will shape fiscal and spending policy for the rest of this Parliament and beyond, what are the public’s priorities on taxation, welfare and public spending, and how have these changed in recent years?

The National Centre for Social Research (NatCen)’s flagship British Social Attitudes survey has tracked views on public expenditure priorities since 1983. Cutbacks in taxes and spending have never been popular, but opinion has see-sawed between wanting to keep taxation and expenditure stable, and seeking an increase in both (see Figure 1 below). After the years of austerity, which saw cuts to many public services, the balance tilted towards increased tax and spending in 2016. While the gap has narrowed since 2017, this remains the majority position.

Figure 1 – Attitudes towards taxation and public spending, 1983-2021

These attitudes are reasonably consistent across the main political parties. Conservative Party supporters are more likely to favour keeping tax and spending as it is now, but there is very limited appetite for cutting both taxes and spending from any major party’s supporters. There is also a degree of consensus between different income levels, although modest and higher earners (those with a pre-tax household income of £30,000 or more) are those who – perhaps surprisingly – express most support for increased taxes and expenditure.

However, there are more striking differences between age groups (see Figure 2 below). Younger and older adults, who may be beneficiaries of higher spending on services such as education and health, are more likely to favour higher taxes and expenditure. In contrast, people aged between 25 and 54, who may be more exposed to higher taxes, narrowly favour maintaining current levels of taxes and expenditure.

Figure 2 – Attitudes towards taxation and public spending, by age group, 2021

The BSA survey does not specifically ask views about which public services could be cut, but has regularly asked about priorities for increased expenditure (see Figure 3 below, which shows only the most popular options). Education and health have consistently topped the list. The relative importance assigned to these services was perhaps reflected in government commitments to ‘ring-fence’ them from spending cutbacks in the years after 2010.

Figure 3 – Priorities for increased public spending, top 5, 1983-2021

This perceived protection may also explain why other services became a higher priority for survey participants in recent years – though support for more spending on health bounced back during the pandemic. The priority attached to more spending on police and social security benefits has increased in the past five years, and support for more spending on housing has trebled since 2000.

There are also party-political differences in priorities. Education and health are prioritised across the spectrum, but sharper differences can be seen in relation to other services (see Figure 4 below). Conservative Party supporters favour increased spending on police and prisons, support for industry, roads and defence, while Labour Party supporters focus on housing, social security, public transport and overseas aid.

Figure 4 – Top ten priorities for increased spending, 2021

There has also been a noticeable shift in which social benefits people prioritise (though our survey only asks this question every two years, so our most recent data in the Figure 5 below is from 2020). In 2005, 80 per cent of the population prioritised an increase in state pensions; in 2020 this had fallen to 55 per cent; this may partly be explained by the “triple lock”, which has meant increases in line with or above inflation in pensions since 2010. More recently, between 2018 and 2020, there was a rise in relative support for increasing child benefits and unemployment benefits, while support for increased disability benefits, which had risen sharply in the previous ten years, also fell back.

Figure 5 – Priorities for increased spending on benefits, 1983-2020

The Chancellor has described the preparations for the Autumn Statement as “decisions of eye-watering difficulty”. Our survey was undertaken towards the end of last year, before Russia’s invasion of Ukraine precipitated the current cost-of-living crisis. At that stage, survey participants expressed no more appetite for public spending cuts than they have in nearly four decades of the BSA survey.

On the contrary, our figures suggest that public opinion has noted the relative protection of old age pensions, education and health budgets over the past decade, and wants this extended to other services and benefits in the future – though precisely which other services and benefits should be prioritised is a matter for considerable debate.

Written for NatCen and first published on their blog.

Blowing hot and cold on climate

As international delegates and world leaders gathered in Sharm el Sheikh for the opening of the 2022 United Nations Climate Change Conference (COP27), UN Secretary General António Guterres told them, “We are on the highway to climate hell with our foot on the accelerator.”

This dramatic language, and the last-minute decision of UK Prime Minister Rishi Sunak to attend despite domestic turbulence, reflects a growing sense of urgency. Extreme weather has dominated headlines in recent months. In Pakistan, hugely destructive floods followed a summer of temperatures that reached as high as 50C. In Europe, heatwaves dried up rivers, and triggered drought warnings and wildfires.

Heightened public concern can be seen in the long-term findings of the National Centre for Social Research’s (NatCen) British Social Attitudes survey. Our most recent survey, undertaken in late 2021, found a sharp increase in concern about environmental issues. Forty per cent of participants said they were personally very concerned about the environment, and 21 per cent said the environment was one of the top two issues for the country as a whole. The comparable figures for 2010 were 22 per cent and eight per cent.

Over the same period, climate change has also risen in importance relative to other environmental issues. Forty five per cent of British people now see climate as the most important environmental issue, compared to 19 per cent in 2010. Nearly two thirds of people think that climate change is extremely or very damaging to the environment (compared to 43 per cent in 2010), and three quarters think it will, to some degree, be bad for Britain.

People also make the connection between human behaviour and environmental damage: 60 per cent now see climate change as mainly the result of human activity. While there are still some who debate its causes, the number of people who say the climate is not changing at all is now vanishingly small – only one per cent held this view in 2021.

But while there is growing consensus that climate change is real, damaging, and results largely from human activity, the figures are not wholly re-assuring for governments and activists trying to spur faster action, as we engage in what Guterres calls “the fight of our lives”.

Firstly, public concern has increased, but is not as heightened as the urgent tone of debates and deliberations in Sharm el Sheikh might demand. The environment may be a top priority for one in five people, but it ranks lower for everybody else: healthcare, the economy and education remain the top three issues overall.

Secondly, public support for possibly painful mitigation measures is limited. NatCen found around half the population was willing to accept much higher prices to protect the environment, but only 36 per cent were happy to see much higher taxes or their standard of living being cut.

That said, willingness to pay was much higher in 2021 than it was in 2010, when only one in four supported much higher prices. This may not be surprising when we recall the circumstances of 2010, when the world was still reeling from the financial crisis. In the UK, the coalition government had recently come to power with promises of a spending squeeze to come, a return to recession loomed and unemployment had shot up.

And that is the third challenge facing policymakers: the salience of environmental issues seems to be significantly affected by what else is happening. NatCen’s data shows concern about environmental issues and willingness to make sacrifices to address them rose from 1993 to 2000, fell back dramatically by 2010, before recovering lost ground by 2021.

A similar trend is visible in more frequently compiled datasets such as Ipsos Mori’s issues index, which tracks opinion monthly. The September 2022 Issues Index shows concern about environmental issues (“pollution/environment/climate change”) peaking in 2007, in early 2020, then again in late 2021 – just before Cop26 – when they were briefly topped the list of issues of concern.

But a year later, these issues had already fallen back to fourth place – behind inflation, the economy and the health service. Environmental issues are matters of growing public concern, but they are quickly displaced when economic or health crises begin to dominate – and they take time to climb back as those crises recede.

While there is almost universal acceptance of the reality of climate change, there is much less consensus about just how important it is, particularly when the long-term nature of its impacts and mitigations are weighed against the imminent threats of acute financial and public health crises. Like our politicians, the public’s inclination may be to sort out the short term first. There is also less agreement about how climate change should be tackled. Pricing mechanisms gain some support, but taxation and behaviour change are a lot less popular.

All of this suggests that politicians and campaigners still have work to do in hammering home the importance of climate change, not least at events such as Cop27, in embedding it as a priority in turbulent times, and in making the case for mitigating measures that may be painful, as well as those that offer opportunities for green growth, energy security and a better quality of life for all.

Written for NatCen and originally published by the i newspaper

Pod people

The wonderful Tim Williams, who I have known for about 25 years, invited me to be on the podcast that he presents for Grimshaw. We had a great chat. Here it is.

https://shows.acast.com/the-grimshaw-podcast/episodes/about-building-london

Yeah yeah industrial estate

“A good city has industry,” Mark Brearley writes in Made in London – From workshops to Factories, a handsome book co-authored with photographer Carmel King and journalist and curator Clare Dowdy.

It is a treasure trove, a glimpse into a London that is sometimes as much sensed as seen. King’s photographs show the almost luminous beauty and strangeness of the industrial processes taking place in the city’s backstreets and industrial estates, the rich variety of their products and the faces of the people whose lives are wrapped up in these enterprises.

Through these photographs and Dowdy’s interviews and company profiles you can learn about London’s silversmiths and stone-carvers, its brewers, bookbinders and ceremonial tailors, its makers of everything from umbrellas to chocolate truffles to glass eyes.

But Made in London is polemic as well as celebration. Brearley’s extended introduction argues that London needs to nurture not neglect its “city serving economy” of factories and workshops supplying everything from sandwiches and ready-meals to theatrical sets and ceremonial uniforms. These industries, “humdrum and hidden, but essential”, underpin London’s material economy – a counterpoint to the weightlessness of intangibles and traded services.

Brearley is a friend who I met when working for Richard (Lord) Rogers in Mayor Ken Livingstone’s Architecture and Urbanism Unit. He is an angular, usually charming, sometimes abrasive architect, whose interests in industrial estates, urban margins and slack spaces seemed, when I first met him, a world away from Rogers’s urban renaissance visions, though their perspectives actually proved great complements to each other.

Twenty years ago his campaigning could seem eccentric, even quixotic. Manufacturing in London was declining fast as production was dispersed across the UK or even worldwide. Industrial estates were brownfield sites in the making, their “legacy uses” awaiting enlightened developers. Manufacturing employment in London fell from 1.5 million in 1961 to just over 200,000 in 2001, and had halved again by 2017. Earlier this year Centre for London’s Industrial Land Commission found that 25% of the city’s industrial floorspace has been lost in the last two decades alone.

But Brearley persisted, both within the Greater London Authority and after its architecture team was disbanded by Boris Johnson as a freelance campaigner, an urbanism professor at London Metropolitan University and as part-owner of Kaymet – manufacturer of elegant (and pricey) aluminium trays. He has painstakingly assembled an inventory of manufacturing industry in London – numbering almost 4,000 businesses so far – walking the city’s messier streets and meeting the people who still earn their living through making things.

His campaign seems less eccentric now. Manufacturing employment has been growing by 2-3% a year since 2017, and the boom in online shopping has reignited demand for warehouse space in London – so much so that industrial land is becoming as valuable as residential land in some parts of the city. At the same time, while established large-scale industries have continued to leave, a revived interest in the culture of making – from wooden spoon-carving to craft ale-brewing – has inspired a generation of hipster-industrialists, while environmental and geopolitical factors place a premium on local production.

So London manufacturing is on the up. But Made in London also tells a tale of continued conflict and displacement, of “robust businesses, the workers of many minor miracles, confronted by developer and local government hostility, and forced to divert their energies into fighting expulsion from the city”. The book’s introduction points the finger at the city’s planners for trying to consolidate manufacturing into large, protected estates (“strategic industrial land”), and ignoring the potential for everyday industry – workshops, depots and yards – on each of London’s 600 high streets.

Brearley’s tone is characteristically emotive, even spikey, and he is sometimes too ready to assume bad faith motives on the part of local authorities (such as Southwark, which “lords it over” Old Kent Road, where his factory is located), rather than reflecting on the tricky and intrinsically conflicted process of managing land use and urban change. Faced with planning requirements for thousands of new homes and a net increase in industrial floorspace, some London boroughs face a genuine dilemma (even if clever design and management can help).

That said, it’s Brearley’s factory on the frontline, not mine, so he should be allowed his anger. And the passion he has brought to this subject for two decades, reflected in this lovely book, has served London well by shining a light on our city’s hidden workings and on their persistent vulnerability.

Originally published by OnLondon

Housing risks are multiplying

Fiscal, political and financial events are coming at us pretty fast right now, so it is easy to feel disorientated. But as the screech of U-turns fades and the smoke of burning policies clears, we already seem to be in a world that has fundamentally shifted from the stability of more than a decade of low interest rates.

Bank of England base rates, which have been below 1% for nearly 15 years, are already above 2% and some forecast they will rise as high as 6% next year (though expectations may be starting to fall, following the Chancellor’s latest statement). Mortgage rates have shot up too, with fixed-rate offers already jumping from 2% to more than 6%.

It is true that interest rate rises were already expected, but the chaos following the previous Chancellor’s “fiscal event” in late September means rises have been faster and sharper than most anticipated. What does this mean for the capital?

There’s not much good news, I’m afraid. Firstly, according to the Resolution Foundation, costs will rise sharply for those households whose fixed rate deals come to an end soon. A total of 5.1 million households nationwide – around 60% of all households with mortgages – have deals that run out before the end of 2024.

Londoners in this group will face the steepest rises, with average annual costs rising by £8,000. The capital has the lowest proportion of households with mortgages in England, but even so, there were around 1,000,000 mortgaged households in London in 2020, so around 600,000 of those could be facing a huge hike in the costs of their mortgages, assuming exit from fixed rate deals mirrors the national pattern. The impact will be selective but brutal.

At the same time, house prices are widely expected to fall – and to fall faster in London than elsewhere – as rising mortgage costs delay purchases or even force some sales. The top of the market is still booming, but there are dark clouds on the horizon. Some analysts have predicted London prices falling by as much as 12% by the end of 2024.

At first sight, this looks like it could be good news – at least for first-time-buyers, who paid an average of £440,000 for London properties last year. If those predictions of a 12% price drop were borne out across the market, this figure would fall to £387,000 by the end of 2024 and imply a (10%) deposit of £39,000 rather than £44,000. Together with the impact of Stamp Duty reductions announced in the ill-fated “mini-budget” – still standing at the time of writing, but anything could happen – this would reduce cash move-in costs by around £10,000.

But the impact of this possible saving would be rapidly wiped out by higher mortgage costs. The monthly cost of a 90% mortgage on a £440,000 property is around £1,777 on the basis of a 2.5% interest rate. If and when rates rise to 5%, even a £387,000 property would cost £2,036 per month – £250 more than now, and around two thirds of take-home pay for someone earning £50,000 a year.

For those buyers lacking the family wealth or savings to afford a deposit, falling prices and stamp duty cuts may help a first tentative foot onto the ladder. But the burden of those higher mortgage costs will soon wipe out those savings. Behind every silver lining, another cloud.

With a sharp fall in property values comes the threat of “negative equity”, a thoroughly unwelcome revival from the tail end of the last century. Negative equity – a term to describe when the value of a home is lower than the mortgage secured against it – was estimated to have hit around 40% of properties in London in the early 1990s.

A recent report by property analyst Neal Hudson suggests that a 20% fall in property prices would put 10% of London mortgages in the red. Again, the figure is higher than for other regions because prices in the capital have grown relatively slowly over the past five years, meaning recent buyers have had less chance to build up a buffer of equity.

Although negative equity is unpleasant and unsettling, it only becomes an acute issue if you are seeking to sell or remortgage a property. However, rising mortgage costs could force some sellers’ hands, particularly London’s newest buyers, who are those most stretched in terms of affordability and least cushioned by historically rising prices.

Private sector renters have it tough as well: rents are surging as landlords seek to pass on rising borrowing costs and as competition for properties intensifies, partly driven by a post-pandemic bounce. Some central London letting agencies already report more than 80 enquiries for each rental property, up from 16 in September 2019. As people delay purchases or – in a worst case scenario – see mortgaged properties repossessed, demand for rentals is likely to increase.

Something, you feel, will have to give. There will come a point when landlords will be unable to pass rising costs on to tenants or tenants will simply be unable to pay. Landlords may be forced to sell, as will some first-time buyers, which could feed a spiral of declining property values. Again, this has its attractions but raises the question of who will be able to buy when interest rates remain high?

London property prices may be overdue a correction (that is, a fall), but while interest rates continue to rise, it will be London’s private renters and first time buyers who will be most at risk of losing their home. Sadiq Khan has already renewed calls for rent controls and more funding for affordable housing as market supply stalls.

After the 2008/09 financial crisis a “mortgage rescue scheme”, administered in London by the previous Mayor, allowed housing associations to take a stake in properties to avoid repossessions. It had limited take-up in London and was closed early. But in a city that already has four times the national rate of homelessness, government action may again be needed to soften the blow.

Originally published by OnLondon.

There may be trouble ahead…

One of the grimmer expectations as sizzling summer gives way to apprehensive autumn is that we seem to be heading into a recession. But what sort of recession will it be? To paraphrase Tolstoy, even if all economic booms are alike, every recession is unhappy in its own way. How did London fare in recent recessions, and what could that tell us about the city’s prospects over the next couple of years?

1990-92 – from negative equity to currency speculation

The early 1990s recession technically ran from autumn 1990 to autumn 1991, though it cast a long shadow. It was triggered by rising inflation in the late 1980s, leading the government to put the Bank of England base rate up from around 8% in summer 1988 to nearly 15% in summer 1989 – nearly ten times its level today. Though the base rate came down steeply in the following years, it was still 10% in late 1991.

By this stage, the UK housing market was in freefall. Prices dropped by about 20% nationwide, and the fall was particularly sharp in London and the wider south east – around 30% between late 1988 and early 1993. A similarly sharp crash hit commercial real estate. The 1992 bankruptcy of Olympia & York, developers of Canary Wharf, was one of the most prominent collapses, throwing the planned Jubilee Line extension into doubt in the process.

The late eighties had seen a residential property boom, fuelled by right-to-buy, tax relief on mortgages and pretty lax lending criteria from banks. As prices plunged and mortgage costs rose, many new homeowners ended up with “negative equity” – property worth less than the debt secured on it. A study by economic geographer Danny Dorling estimated that around 40% of Londoners who bought homes in the late 1980s found themselves in this position – the highest rate in the UK. In some parts of east London, the proportion was more than 60%.

London’s workforce also suffered badly. In 1990 the unemployment rate in London was around 6.5%, the same as in Britain as a whole, but by 1994 it had doubled to 13% compared to 10% nationwide. Rates converged slightly in the following years, but London’s unemployment rate has stayed above the national level ever since. One analysis has suggested that factors driving higher unemployment in the capital included employers moving out of the city, high rates of closure in the manufacturing sector, and an increasing tendency for specialised sectors to recruit workers from outside the M25.

A curious turning point in London’s economic fortunes was reached in September 1992, when the UK was forced to leave the exchange rate mechanism (ERM), a precursor to the European single currency, which had required the government to use interest rates to maintain sterling’s value against other European currencies.

As speculation against the pound intensified, the government tried to compete with the speculators by buying sterling and by temporarily putting interest rates back up to 15%, before throwing up their collective hands and leaving the ERM. The value of sterling and interest rates then fell quickly, with the latter reaching 6% by the end of the year, and staying between 3% and 8% until 2008. With relatively low interest and exchange rates, the UK in general and London in particular suddenly looked like a great destination for overseas investment. The stage was set for the 15-year boom that followed.

2008-09 – from credit crunch to quantitative easing

The 2008-09 recession was very different in character and impact. The main trigger for the recession was the “credit crunch” – a sharp reduction in banks’ willingness to lend as they realised that many of them had bought high-risk subprime mortgages, which were starting to default. Because of the way these mortgages had been bundled up the banks didn’t even know how exposed they were. This screeching halt to a lending boom hit the housing market, with knock-on effects on consumer spending and confidence.

As concerns about unidentified “nasties” sent bank shares plunging (dragging the rest of the stock market with them), the government stepped in with a £500 billion programme of loans and guarantees to keep the money moving in the UK banking system. Interest rates – by this time set by the Bank of England – were also reduced sharply to try to return liquidity to lending, falling from 5% in April 2008 to 0.5% a year later. And, like other central banks around the world, the Bank of England also began to buy up government bonds, thereby injecting more cash into the economy for lending and investment (“quantitative easing”).

The immediate impact of the financial crisis was highly visible in London, and commentators expected this “white collar recession”, which had its roots in irresponsible lending by the financial sector, to hit London hardest. In September 2008, the collapse of US bank Lehman Brothers provided schadenfreude-fodder TV footage of stunned-looking bankers leaving their Canary Wharf offices with cardboard boxes of belongings. Immediate job losses in banking were substantial: GLA analysis identifies a net reduction of 30,000 in financial services in 2008-09.

But London proved resilient: overall job numbers in the capital fell faster than in the rest of the country, but also recovered more quickly. Unemployment peaked at 10%, but that was much lower than in 1993. House prices also dipped sharply, falling 15 per cent in London in the year to May 2009, but had recovered to their 2007 level by 2011, three years sooner than that happened in the UK as a whole. Asking “How did London get away with it?”, Professor Ian Gordon of the London School of Economics has observed that the recession affected different classes in different ways: lower-paid administrative and manufacturing workers took a heavy hit, while professionals and people working in service sector jobs supporting them saw much lower job losses over time.

One reason for this, Gordon suggests, is that the package of support provided by the government helped to revive professional services, particularly through diverting investment from bonds into property and shares. In addition, while London’s construction sector took a hit, both the London 2012 Olympic and Paralympic Games and Crossrail were major programmes of public works that sustained demand. It is, of course, arguable whether London’s rapid recovery from 2010, closely tied as it was to soaring property costs, was good for the city as a whole or has acted as a brake on productivity and equity – but that is probably for another day.

2022-?? – prospects for the capital

So, does the coming recession look more like 1991-92 or 2008-09? Worryingly for London, it may resemble the former more that the latter: interest rates and inflation are rising rather than falling (and GLA research suggests that Londoners face particularly high inflation). Private renters are already facing steep rises according to some reports, and London’s owner-occupiers may struggle when fixed-rate deals come to an end: average mortgage debt in London was about 60% higher than across the UK according to a 2017 survey, and the capital has many more borrowers with high loan-to-income ratios. Meanwhile, after a boom in demand for higher quality office space, rising interest rates and energy costs, alongside persistently high levels of home-working, are chilling the commercial real estate sector.

Furthermore, it is hard to see where new money will come from to reignite London’s economy. Quantitative easing has ended (indeed, the Bank of England is contemplating reversing the process), new transparency rules may make London a less favourable destination for (shady) foreign investors, and Transport for London is haggling with government to sustain services rather than gearing up to deliver new infrastructure.

However, for the moment, the economy still seems relatively buoyant. The number of jobs in the capital grew by around 100,000 between March and June this year, and unemployment is falling (even if, intriguingly, more people are dropping out the labour market than entering work). And London continues to top league tables of popular cities for business, from finance to tech (ironically, the sector that powered remote work seems particularly focused on office location).

London’s resilience can emerge from surprising places, as it did in the 1990s when recovery took root in places such as Hoxton and Shoreditch that had been been laid low by recession. There may even be shafts of sunlight behind the clouds. Nobody wants to see a return to negative equity, but a medium-term correction to commercial and residential property values might actually make London more accessible as a place to live and work.

There may be trouble ahead, but London still has the diversity of people and place, the heritage and culture, the transport connections and restaurants, that make it one of the world’s greatest cities. It may be politically and economically difficult to commit major investment in the capital, but the government should at least avoid damaging the social, housing and transport infrastructure that will enable London to lead national recovery after the recession.

First published by OnLondon.