Sunday, 18 September 2016


Redeveloping council estates has become a popular way for boroughs to build more houses in London, where land is at a premium, but it is a high-wire act, conducted over a shark tank, with volleys of custard pies being hurled from the sidelines.

Build at too low densities and the numbers won't add up; go too high and you create a lumpy enclave out of keeping with its surroundings. Spend too much buying out existing residents and you kill the business case; spend too little and you will have to resort to compulsory purchase. Build too much market housing and you're accused of driving poor people from their homes; build too little and you won't make enough to cross-subsidise more affordable housing. Offer too little to developers and they won't take on the risk; offer too much and you look like an easy touch.

One of London's largest such schemes began to wobble on Friday, when the Secretary of State turned down Southwark's Council's application for a compulsory purchase order to enable the demolition and redevelopment of the Aylesbury Estate, planned to increase total housing numbers from 2,700 to 4,000.  The scheme has been intensely controversial, with accusations of 'social cleansing', occupations and forcible evictions providing a stormy backdrop to the slow-grinding legalities of planning and public enquiries.

It is hard to avoid boggling at the politics of a Conservative minister seemingly siding with anti-gentrification protestors against a major development scheme promoted by a Labour council. Is this a sign of the May government's commitment to helping the poorest in society? Is this dismissal of the public-private partnerships that have dominated public projects for so many years another sign of the 'end of liberalism'?

You can imagine Conservative spin doctors savouring some of these interpretations, but the politics of this decision are probably fortuitous rather than intentional. The process of confirming (or not) compulsory purchase orders is a quasi-judicial one, made on the basis of an inspector's report and carefully worded official advice, not for political positioning.

And, when you look a bit deeper, the decision is a very conservative one.  It was not the rights of council tenants that were the central consideration, but eight remaining leaseholders, owners of property bought under right-to-buy legislation.  The compensation offered to them was judged to be inadequate, and their human rights likely to be breached if their homes were requisitioned. It was actually the very conservative defence of private property rights, and the Conservative policy of selling off council housing, that has knocked the project off course.

Wednesday, 24 August 2016

Sadiq's first 100 days

[Published in The Guardian, 15 August 2016]

Sadiq Khan’s first 100 days in office - officially marked today - have given an indication of the character of his mayoralty. There has been none of the drama of Ken Livingstone’s 2000 triumph against the Labour party machine, and his subsequent battle against partial privatisation of the tube. Nor has there been the chaos of Boris Johnson’s 2008 election, with deputy mayors arriving and departing with a regularity that would be the envy of many London commuters.
Instead, Khan’s arrival in office has been marked by a careful approach to appointments (taking care over these was Johnson’s parting advice to his successor) and astute leverage of the mayor’s public profile while the City Hall policy machine begins to grind through its rusty gears.

Launching a mayoral programme takes time, especially if you haven’t inherited much from your predecessor. Ken Livingstone, for whom I worked as private secretary for his first year in office, didn’t implement congestion charging until 2003 - three years after he was elected - with the Olympic Bid and London Plan following the next year.

In 2008, Livingstone wanted to return to office to implement free bike hire and collect the Olympic Flag from Beijing, but Boris’ election victory meant that these became his projects. By contrast, Boris knew he wasn’t coming back in 2016 - some would say he mentally checked out some time earlier - and left the cupboard pretty bare.

Khan has more than 200 manifesto commitments, and it has taken him time to appoint a team to focus on implementation, wrestling with the complex and only marginally coherent selection of agencies, strategies and duties that the mayor has accreted since 2000.

His appointments include a core group drawn from the campaign, including his chief of staff, David Bellamy, and policy directors Nick Bowes, Jack Stenner, Leah Kreitzmann and Patrick Hennessey. Observers describe them as a tight team who have worked together for a long time. There’s virtue in the familiarity and trust this engenders, but the experience of previous mayors suggests that not every campaigner can easily make the transition to administration.
Alongside them, Khan has appointed deputy mayors like Justine Simmons, James Murray, Val Shawcross, Sophie Linden and Jules Pipe. These are hardly household names, but are well known and generally well respected in London government circles. The mayor has also brought in outside experts, such as Rajesh Agrawal, tech entrepreneur and deputy mayor for business. The last few appointments are due to follow imminently, and the Centre for London has argued that they should include a chief digital officer to lead digital transformation across London government.

The mayor has made early announcements on air quality, which will be a priority area for action alongside housing, economic development, culture and social cohesion. The next big policy milestone will probably be in the autumn, when Khan sets out his vision for the new London Plan (which is unlikely to make it through its tortuous formal process, including public consultation and an ‘examination in public’, until 2019), and the other strategies that sit underneath it.

New rules on housing will be a big focus, and there are already background murmurings that Sadiq risks being boxed in by commitments on affordability. Some of these murmurings come from housebuilders and developers - and they would say that wouldn’t they? - but there clearly is some nervousness as the market feels the chilling effects of the post-referendum slowdown.

Meanwhile, the mayor’s team are focusing strongly on land held by Transport for London, which has the double challenge of needing to generate income to compensate for reduced government grant during a fares freeze, as well as meeting the mayor’s affordability policies.

But it is Brexit that has dominated the mayor’s first months. Khan moved straight from the mayoral campaign to the remain campaign, and since the referendum result has become the voice for London’s pro-EU majority, arguing for London to have a seat at the negotiating table, reforming the London Finance Commission to seek more local control of taxes, and broadcasting the message that #LondonIsOpen to the world.

It is easy to dismiss campaigning and public appearances as froth on the serious business of governance, but in the fraught days of summer 2016, the mayor of London’s role in leading his nine million citizens is perhaps as important as providing them with services, initiatives and strategies. These will need to follow in time, and there are huge challenges ahead for London, but the mayor has made a sure-footed start.

City Traders

[Originally published in London Essays, June 2016]

At seven o’clock on a drizzly April morning, Canary Wharf is just coming to life. Bankers, brokers and lawyers stream up from the station, ready for a new day of trading and deal-making. But in a low-slung yellow building just north of the gleaming towers, the working day is nearing its end.

Inside Billingsgate Market, traders in long white coats and wellington boots are chatting among themselves as they start to hose down their stalls. Polystyrene boxes packed with seafood glisten under bright fluorescent lights. The market is not as busy at it was earlier but customers still circulate: trade suppliers are keenly comparing prices and quantities alongside a diverse selection of retail browsers – a couple of Orthodox Jews, a Coptic Christian priest, Chinese families, bearded foodies.

There’s fish here from all round the British Isles: from Aberdeen and Grimsby, Brixham and the Shetland Isles, Whitstable and Lowestoft: coley and cod, sea bream and salmon, tiger-striped mackerel and scallops in the shell. Other stalls specialise in ‘exotics’ – species of fish from faraway oceans, many of which I have barely heard of, let alone eaten: redfish, milkfish, catfish, kingfish, needle fish, barracuda, croaker, tilapia, frozen breezeblocks of squid.

Billingsgate, which moved to Docklands in 1982, is the biggest fish market in the UK; 25,000 tonnes of fish a year, almost 100 tonnes a day, pass through on the way from sea to plate. Lorries arrive from 9pm until the starting bell rings at 4am, bringing seafood from UK fishing ports, from airports, from the cargo docks where frozen fish from the South Pacific and Indian Ocean is unloaded. The consignments are split between the 98 stands in the centre of the market and the 30 shops that line its edges, or sent to a freezer store the size of a football pitch at the back of the market.

Billingsgate is one of London’s five wholesale food markets. The Western International Market at Southall, New Covent Garden at Vauxhall, and New Spitalfields at Leyton all supply fruit and veg; Smithfield meat market remains on its historic site in Farringdon. Three of these – Billingsgate, New Spitalfields and Smithfield – are operated by the Corporation of London, which was granted exclusive rights to operate markets around the City of London in 1327. The Corporation estimates that their three markets handle nearly 900,000 tonnes of fish, meat, fruit and vegetables every year, and turn over nearly £1bn (though traders are cautious about disclosing precise figures that might lead to rent rises).

London’s streets may never have been paved with gold but they were always dotted with market stalls and filled with food. Shifting patterns of food production, trading and consumption have shaped the city, as much as struggles between church and state, nobles and merchants, industry and commerce.

London’s place names tell this story: Milk Street and Bread Street; Pudding Lane, where the Great Fire of London started; Eel Pie Island. Sometimes the old names have been erased: Old Fish Street no longer runs down to Billingsgate; and More London (the development by London Bridge that includes City Hall) eschewed the waterfront walkway’s old name, Pickle Herring Street – a salty reflection of Bermondsey’s history of food processing – opting for the stately The Queen’s Walk instead.

Meanwhile, London’s markets have been transformed. In London: the Biography, Peter Ackroyd describes the street market that formed the spine of the medieval City of London. You can trace the route down Cheapside today, from the bloody shambles of livestock and butchery at Smithfield, outside the city walls at Newgate (near the end of Holborn Viaduct today) to Poultry (the name is self-explanatory) and Cornhill, where vegetables, meat and fish were traded from what would later become the Royal Exchange, the foundation of London’s stock market. South of the Royal Exchange, on the banks of the Thames, Billingsgate was so ancient that the origins of its name are unknown, though it was granted a charter in 1400.

Until the Thames was overwhelmed with industrial and domestic waste, eels and other fish came directly from the river: as the city grew, the River Roding at Barking became home to Britain’s largest fishing fleet. There are records of a fleet at Barking from the 11th century, as Andrew Summers and John Debenham set out in London’s Metropolitan Essex. By 1700, boats would venture to Iceland, and by the 19th century the fleet was 200-strong, their catch cooled by ice harvested in the winter from flooded marshes. From 1850, decline set in, as the railways made remote northern ports quickly accessible by land, and street names like Whiting Avenue are all that preserve the memory of Barking’s seafaring heyday.

The arrival of the railways was pivotal for London’s food supply and urban development. Beforehand, most of London’s food was grown on its doorstep. In 1796, Daniel Lysons’ survey of the suburbs estimated that there were 5,000 acres (the same area as the Royal Parks) of market gardens within 12 miles of the metropolis, plus 1,700 acres of potato fields and 800 acres of fruit trees. Barges brought manure from London’s stables to feed the soil and returned food to the city’s markets. Ackroyd writes of “cabbages from Battersea and onions from Deptford, celery from Chelsea and peas from Charlton, asparagus from Mortlake and turnips from Hammersmith”.  The railways untethered London’s growth from its geography by dramatically extending supply lines: the population was no longer constrained by the availability of food within a few miles of the city, and the market gardens of the suburbs could make way for housing.

One walled market garden, between the City and Westminster, served the convent and abbey at Westminster. Covent Garden was seized by Henry VIII in the dissolution of the monasteries and granted to the earls of Bedford. In the following century, the 4th Earl began developing the land, with Inigo Jones designing the arcaded piazza and St Paul’s Church – a prototype garden suburb for prosperous Londoners. For a period the area flourished, but in time, Roy Porter writes, “the fruit and vegetable market also operating in the square sapped its smartness and the aristocracy quit, migrating to Mayfair”.

Covent Garden slid into seediness, but the fruit and vegetables market flourished particularly after 1666, when the Great Fire destroyed the City’s markets. In Victorian times, with new market halls in place, the market boasted 1,000 porters. In 1974 the market relocated to Vauxhall, after an epic battle between conservationists who wanted to preserve the old buildings and the Greater London Council, who proposed a comprehensive redevelopment in the worst traditions of 1970s car-based urbanism.

Every Day But Christmas, Lindsay Anderson’s 1957 documentary about Covent Garden, begins late at night in the fields of Sussex, where lorries are loaded with lettuces, mushrooms and roses, and set out through the darkness to London. The film records the quickening tempo of the market, as vegetables arrive, then flowers, then porters and customers (including London’s last female market porter and last flower girls, successors in trade to Eliza Doolittle), then cleaners and scavengers. The streets are a jumble of lorries, pallets and people.
Illustration by Lucinda Rogers
Illustration by Lucinda Rogers

There’s a calm interlude in the film, between the unloading and the stacking of the produce and the arrival of the customers, where the market workers retire to a café for a break – a cigarette, a cup of tea and a bacon roll. They are not the only nighthawks in the café. The camera lights on a group of gay men, chatting and shooting nervous glances at the camera (we are still 10 years away from the partial legalisation of homosexuality), and fixing elaborate coifs. Narrator Alun Owen intones archly: “Not everybody in Albert’s works in the market. Some of them, you wonder where they come from.”

Market workers would have been less naïve. Before London’s current redefinition as a 24-hour city, markets also stood out as permissive places, where the loud and the louche mingled with the traders who kept the city fed. As well as being a place of butchery and executions, medieval Smithfield was the location of St Bartholemew’s Fair, a notorious three-day debauch that ran for 700 years before being suppressed in the 1850s. In modern times, too, markets and nightlife enjoyed a curious co-existence: as in the Meatpacking District in New York, Smithfield and Vauxhall became hubs for clubbing, away from the potentially censorious gaze of London’s daytime population.

20 years ago, says David Smith, Director of Markets and Consumer Protection at City of London Corporation, wholesale markets looked like a spent force, a relic from a pre-modern era. Supermarkets were establishing their own supply chains and their own warehouses on the edge of London; the wholesale markets’ niche would only become narrower. In 2002 and 2007, reports recommended the slimming down of London’s markets, proposing that Billingsgate and Smithfield be closed and their business consolidated to New Spitalfields and/or New Covent Garden.

These plans foundered in the complexity of legislation and commercial interests, but then the wholesale trade experienced a revival: today, the Corporation’s markets are fully occupied and returning a small surplus. Three factors threw the markets a lifeline: one was London’s phenomenal boom in dining out, encompassing everything from opulent Michelin aspirants to inventive street food pop-ups. A city whose food had traditionally served as the butt of other people’s jokes became one of the world’s great dining destinations.

Another factor was immigration: supermarkets work at scale but the choice they offer is heavily circumscribed. ‘International food’ aisles have been outpaced by the growth in specialist suppliers of everything from Chinese greens to curry leaves to Polish sausage to pomfret. At Billingsgate alone, ‘exotics’ are now reckoned to make up 40 per cent of turnover. New Londoners have revitalised the city’s markets as well as its cuisine.

The third factor was a change in food-buying culture and a resurgence of middle-class interest in authenticity and provenance. The markets increasingly operate at the edge of mainstream consumption, providing specialities for minority cuisines and exquisite ingredients for epicureans, as well as acting as a secondary market for produce that is just a little too gnarly and imperfect for the supermarkets’ exacting aesthetic standards.

But the irony of London’s voracious appetite, for land as much as for food, is that the city is forever devouring its edge, driving markets and other food services further from the centre. Rational planning pushed Covent Garden, Billingsgate and Spitalfields out of central London, narrowing their focus to wholesale trade and relocating it to fringe industrial areas, but today these locations – alongside the massive redevelopment of Vauxhall, next to Canary Wharf’s new Crossrail Station and at the edge of London’s Olympic Park – are far from peripheral. Yesterday’s remote trading outpost is today’s property hotspot.

The City of London Corporation’s Markets Committee have asked for another strategic review, and at Billingsgate rumours of relocation abound. Moving to New Spitalfields is still discussed as one option, but space there is short; relocation to a new facility in Barking is another possibility. Meanwhile, at New Covent Garden (currently owned by central government), a joint venture is in place to build a new 500,000 square-foot market, together with 3,000 homes and 135,000 square feet of offices.

Curiously, the market that feels most secure is Smithfield, which has occupied the same site for the best part of a millennium. As London grew around the livestock market, Smithfield became increasingly controversial, not just for what one Victorian campaigner described as the “cruelty, filth, effluvia, pestilence, impiety, horrid language, danger, disgusting and shuddering sights” of the market itself, but also thanks to the chaos caused by driving animals through the narrow streets. A new cattle market was opened in 1855 in Islington, and Smithfield was re-established as a meat market, with carcasses delivered by underground railway.

The 42 traders at Smithfield today have successfully battled against redevelopment, the most recent proposal for which was rejected in 2014, following a public inquiry. The now-disused General Market, alongside Farringdon Road, is earmarked for the relocation of the Museum of London, but the Victorian East and West Markets and the 20th century Poultry Market are all listed, severely limiting the scope for profitable redevelopment, especially once the costs of relocating traders are taken into account.

The possible future for London’s wholesale markets is not simply survival or displacement. Markets could become re-absorbed by the city in their new locations, rediscovering the mix and urban quality that was lost in rezoning. The plans for Vauxhall Nine Elms Battersea see New Covent Garden as an essential component of local character, and include proposals for a new ‘Garden Heart’ of workspaces, with a ‘Food Quarter’ of specialised shops and restaurants alongside it.

The story of London’s wholesale markets is rich in anomaly. Trading animal carcasses and crates of fish on the doorstep of Europe’s leading financial centres is certainly a surprising use of prime real estate. But the markets’ survival should be celebrated, as should their continuing capacity for re­invention. In a city endlessly seeking novelty, variety and traceability in its diet, wholesale markets make visible the sinews and circulatory system of consumption, and draw a line connecting medieval trade in beasts, fowls and fish with the complex assets and derivatives that are bought and sold in financial markets today.

Monday, 28 March 2016

Crossed wires on paying for infrastructure

In giving the green light to the next stage of planning for Crossrail 2 in the 2016 Spring budget, the Chancellor has taken the right decision for London and the UK. Transport for a WorldCity, the National Infrastructure Commission (NIC) report published a few days before the budget, powerfully made the case that Crossrail 2 is vital for sustaining economic vitality. The NIC estimates that the capital could pay for more than half of the £33 billion cost. But the detail of how London pays its share goes to the heart of our antiquated and hopelessly dysfunctional local government finance regime.

Ever since the Jubilee Line extension was built in the late 1990s, boosting land values so much that these could have paid for the project three times over, governments have wrestled with dilemma of big infrastructure: the costs fall on the public purse, but many of the benefits (and in particular property value uplifts) accrue to the people and businesses who are most directly affected.  Property owners who pick the right numbers in the infrastructure lottery get a windfall at others’ expense.

As public spending has tightened in recent years, the search for clever ways of funding big projects has become more and more intense.  Money borrowed for the Northern Line extension to Battersea will be repaid through developer contributions and ringfenced business rates, and commentators have suggested that Crossrail 1 was only spared the axe in 2010 because 60 per cent of its costs were met by Londoners and London businesses.

The Crossrail 2 package proposed by Transport for London follows the Crossrail 1 pattern by loading most costs onto London’s businesses and property developers. 18 per cent of the costs would be met from future fares and property deals; 20 per cent would come from a supplement on business rates (about a five per cent increase in the tax bill for most larger businesses); and 17 per cent would come from a Mayoral community infrastructure levy on new development. 

But householders get off very lightly.  Only 1.4 per cent of the cost of the project would come from council tax, specifically from rolling forward the Olympic precept that Ken Livingstone introduced in 2006 (memorably comparing it to the cost of a Walnut Whip for the average household every week).  The precept currently adds £20 per year to the average ‘Band D’ household, around 1.5 per cent of the annual bill.

So where’s the problem?  London’s booming businesses and rapacious developers get hit with the tax bills, lightening the load on ordinary citizens.  This may look like good news, but given the state of London’s property market, this funding package would do almost all the wrong things.  Charging an additional community infrastructure levy will threaten developers’ bottom line, which could just as easily result in delayed development, raised sale prices, or reductions in other social benefits like affordable housing, rather than in reduced profits.  And higher business rates may be reflected in higher prices or slower wage growth, or may even push businesses away from London.

Modest London-wide council tax increases, on the other hand, will do nothing to capture the increased desirability and value accruing to homeowners, particularly those nearest the new rail lines, who will get the mother of all free rides (one possible exception being Chelsea, where affluent residents are protesting against a new station).  In fact, Crossrail 2 may make matters worse for Londoners struggling to get on the housing ladder, pushing prices even higher in the districts that it opens up.

So the Crossrail funding package proposed for London could increase the costs of doing business in London, and hike the value of property, creating an unearned and largely untaxed bonanza for those living nearest stations, and pushing prices further our of reach for everyone else.

As the NIC report points out, the package proposed is constrained by the scope and structure of taxes raised locally.  TfL are working with what they’ve got. As the London Finance Commission pointed out in 2013, London’s council tax bands have not been revalued since 1993, when £320,000 defined the top tier of property values, rather than representing a bargain, £200,000 below the average house price. 

Regular (perhaps annual) revaluation would be fairer, allowing tax rates to be better tailored to the real values of homes and to capture some of the benefits that new infrastructure brings to home-owners in the shape of rising house prices.  If new infrastructure dramatically increased values, council tax would reflect this, and a proportion of the new tax revenues could be top-sliced to repay money borrowed to pay for the investment in the first place.

The obstacles to council tax revaluation have been seen as practical as well as political.  Practically, the exercise would be complex and call for careful callibration, but we shouldn’t make too much of this.  The technology we use to track property values has changed out of all recognition since 1993.  When anyone can check the value of their property against the local market with a few clicks of a mouse, a revaluation would not require a new Domesday Book.

There would be winners and losers, and political controversy, but these problems aren’t insuperable.  Transitional reliefs would be needed, as might measures to allow tax to be deferred so that cash-poor owner-occupiers were not forced to move by sudden tax hikes.  And Labour’s proposed ‘mansion tax’, a far blunter instrument than recalibrated council tax, did not do the party too much damage last year in London, the city that would have been hardest hit.

Other taxes could help to fund infrastructure too.  Stamp duty and capital gains tax do actually reflect rising property values, though they only kick in when property changes hands, and in the case of capital gains tax they do not apply to people’s main residence.  Nor are these currently available to the Mayor or the London boroughs, though the Government could at the very least extend the principle it applied to the Northern Line extension by allowing the Mayor to repay borrowing using tax revenues that would normally go directly to Whitehall.

In times of continuing austerity, booming London will have the devil of a job convincing the rest of the UK, let alone the Treasury, that it deserves massive public subsidy for infrastructure, however much other regions actually benefit from its growth.  London is booming, and should pay its fair share.  But without more comprehensive devolution and more control over its taxes, the capital will struggle to secure its future prosperity.

Friday, 22 January 2016

In the valley of the shadow of Blackstar

Listening to David Bowie's Blackstar, the weekend it was released, I pondered how unusual it was to hear an album devoid of context or explanation.  No interviews, live performances, chat show appearances, just a 40-minute album and the echo chamber of critics' assessments. It was exhilarating but slightly disorientating.

24 hours later, of course, all that had changed.  Rather than being stripped of context, the album was suddenly overwhelmed, freighted with news of its creator's death, a death that had been anticipated throughout the recording process, though surely never expected to follow so swiftly after the album's release. 

The fact of Bowie's terminal illness is not so much a black star as a black hole, threatening to draw in and annihilate everything in its orbit.  Just as Station to Station is Bowie's 'cocaine album', The White Album is the Beatles' 'break-up album', or Here My Dear is Marvin Gaye's 'divorce album', Blackstar will forever be Bowie's 'death album'.  It will be the one thing, the only thing, that everyone knows.

That's understandable but a bit of a shame.  It risks painting David Bowie as Grandpa Simpson, stalked by death at every turn (a simile that is really an excuse to show one of my favourite clips).  

But Blackstar is actually one of the best (the best, in my current view) of Bowie's late albums - rich and rewarding repeated listening.  There seem to be playful references to the First World War, 1984, nadsat, the Titanic, polari, and sly humour, even in Lazarus, where Bowie sounds like he is relishing the bathos as he intones, "I was looking for your...ass."

And a morbid tone is not unusual, for Bowie or other rock stars in their autumn years.  There's plenty of death in The Next Day, released in 2013: "Here I am, not quite dying" begins the defiant chorus of the apocalyptic title song, and the elegaic Where Are We Now? picks up the theme as Bowie walks the dead through the streets of Berlin.  Bob Dylan went through what sounded like a terminal phase in the 1990s. Time Out of Mind, recorded when he was 56, was stuffed full of references to mortality ('Trying to get to heaven before they close the door', 'It's not dark yet, but it's getting there', to pick two).  Since then, Dylan has moved on, and his more recent albums spend less time contemplating his own death, and more time gleefully planning his enemies' (see Paid in Blood on Tempest). And the dour tone of REM's 1992 Automatic for the People gave rise to endless rumours that Michael Stipe was terminally ill.

None of which is to belittle the sheer weight that impending mortality brings to bear on Blackstar, nor the unparalleled achievement (which sounds wrong, but I can't immediately think of a better word) of releasing something so complete so close to death.  But it's far from the whole story in an album that sounds by turns doleful, cryptic and almost indecently celebratory.

Friday, 27 November 2015

Cuts back

[First published on Municipal Journal blog, 26 November 2015]

Yesterday's Autumn Statement came at a challenging time for London. The capital's growing population is facing spiralling house prices, and putting pressure on infrastructure and services - from homelessness and social care to transport.

The Chancellor’s housing announcements took centre stage. The London Help-To-Buy scheme will raise the equity loan available for new homes from 20 to 40 per cent, reflecting the limited impact of the scheme in London to date. But the long-term impact on affordability is more questionable.  If the scheme does not stimulate extra supply it will merely inflate a house price bubble. 

The Chancellor also extended eligibility for shared ownership.  Applicants will no longer have to meet locally-set criteria of living or working in a particular area or profession, and the income cap will be raised to £90,000 in London. But as Centre for London’s recent report Fair to Middling observed, the model doesn’t work for everyone; social rent, affordable rent and other forms of low-cost housing are also an essential part of the mix.

We don’t yet know the detailed allocations for local government in London, but the cuts appear to have been a lot less severe than many feared.  The Chancellor boasted that cash expenditure by local authorities would be as high in 2019/20 as it is in 2015/16, but real terms spending will nonetheless fall by seven per cent over the four years, and will drop sharply over the next two years before recovering. 

It could have been a lot worse - many were forecasting real terms cuts of 30 per cent or more, but the continued squeeze will not be easy, especially coming on top of the five lean years that saw London boroughs' spending falling by around 28 per cent in real terms.  As Centre for London's analysis of the last round of cuts Running on Fumes showed, London boroughs have been resilient in coping with austerity to date.  Over the next four years, the quest for efficiency savings will continue, and front-line services are unlikely to escape unscathed.

But the headline figures mask a quiet revolution.  Revenue support from central government will fall from £11.5 billion to £5.4 billion over four years.  The balance will be made up by retained business rates and council tax, forecast to rise from £29 billion to £35 billion over the same period (the figures do not take account of plans for full business rate retention).  Many will welcome this devolution of fiscal responsibility, but questions of distribution and fairness will loom ever larger, as poorer boroughs, facing greater demands on services, struggle to grow their business tax base, and hesitate to impose permitted council tax rises to support social services. 

Major London capital projects receive a boost: funding for the 'Olympicopolis' cultural and educational complex in Stratford has been announced (again), and the Government will bring land at Old Oak Common under single control.  Further east, the extension of London Overground to Barking Riverside will enable higher quality development of one of London's longest-delayed sites, and investment in Ebbsfleet infrastructure should support the realisation of the new 'garden city' recommended by Centre for London.

One of the most dramatic changes is to Transport for London’s funding.  Alongside pledges of an £11 billion in capital investment, the revenue grant that makes up 6 per cent of TfL’s annual costs will be phased out, saving £700 million by 2019/20.  TfL will be expected to make up the shortfall through efficiency savings, through increasing fares (another blow to London's modest earners), or by generating revenue from the land it owns across London.  This land has long been eyed as a potential source of housing; with TfL’s budget under pressure, the incentive will be to maximise value.  Expect some fiery discussions about tenure mix and commercial value.

Friday, 9 October 2015

Bringing it all back home

[First published on CityMetric, 7 October 2010]

The pathway to local government devolution is rocky, with surprises waiting round every corner. Just when we had got used to the asymmetric "city deal" model, and to a deafening silence on fiscal devolution, the chancellor unveils another surprise – full devolution of business rates to local authorities.

This measure, recommended by the London Finance Commission in their 2013 report, is good news for London and other local authorities, a tentative first step away from the centralised funding model that came in with Council Tax. There are still details to follow, and there will doubtless be all sorts of devils lurking in them, but the starting point will be each local authority retaining all the business rates it collects, with a corresponding reduction in central government grants.

Grants will then be frozen, so any increase in business rates from local growth will be retained by the local authority; any reduction will hit budgets. This creates an incentive to promote business growth (though it would be hard to find a councillor who didn’t already want more businesses on his or her patch).

Councils will not have unfettered power to vary the level of business rates charged locally. They will be able to give discounts as an incentive to attract or retain businesses, but will only be allowed to increase the rate charged locally in limited circumstances (essentially, for infrastructure investment, in consultation with local businesses, and in places where there is an elected mayor – the approach that part-funded Crossrail).

Commentators have observed that, if London continues to grow faster than other UK cities, further measures will be needed to rebalance taxes between the regions (which risks undermining the incentives). But London also presents a microcosm of this challenge in itself, as a result of its pronounced split between central business districts and residential suburbs, many of which have significant proportions of poor people.

London has some of the biggest tax generators in the country but also some of the areas with biggest concentrations of need. If there was no equalisation in place, some London boroughs would be able to fund their services with huge surpluses to spare, while others would be among the most underfunded in the country. Research by Local Government Chronicle suggests that City of London, Westminster, Hillingdon, Camden, and Kensington and Chelsea would be the five best-funded councils in the country; Lewisham, Waltham Forest and Haringey would be among the worst-funded.

While the equalised starting point would level the playing field on day one, the mayor’s infrastructure plan suggests that growth will continue to be spread unevenly between boroughs, with central London gaining most ground. All other things being equal, therefore, outer London councils would gradually lose funding while inner London councils would gain.

Outer London councils might try to remedy this by aggressively cutting local business rates to attract more businesses. But even assuming it was successful, this "race to the bottom" would quickly create conflicts with the assumptions of the London Plan and Transport for London’s strategy, which assume a hierarchy of business districts.

The end point of this approach, making London into 33 self-sufficient local economies would not just go against decades of policy, but would fly in the face of London’s status as a world city. To paraphrase Engels, you cannot have capitalism in one borough.

Alternatively, and as suggested by the Finance Commission, London boroughs and the GLA will need to find a new way to allocate funding, so that the boroughs with most businesses share the proceeds of growth with the boroughs that house their workforce. The GLA and London boroughs have strengthened their ties in a number of ways already; perhaps fiscal devolution will push them to take their relationship a step further, and open a joint account.