Brexit, xenophobia and left strategy now

Guest post by Jamie Gough

originally written in July 2016

The economic consequences of Brexit are dire. But for the left a far more serious problem thrown up by the referendum and the vote to Leave is what it shows about longstanding working class consciousness regarding ‘immigrants’, and how the Leave campaign has shifted working class opinion further to the right.  For left strategy this should be the crucial concern. This aspect of Brexit is therefore what I focus on in this note.

In England and Wales the majority of the working class (in the everyday rather than Marxist sense) voted for Brexit. Many Remain voters, of both right and left, have seen this as a sign of a deep, inherent xenophobia and racism amongst British-born working class people, or as evidence of their inability to understand economic questions.  I wish to argue, to the contrary, that the white working class Brexit vote was a logical coping strategy in the circumstances, that is, given the political economy of Britain over the last forty years and its present configuration.  Correspondingly, the vote was not based in xenophobia and racism as such, though these gave it expression, but rather an opposition to further net immigration because of its perceived impacts on access to jobs, public services and housing.  This view, however, blames another section of the world working class and thus removes culpability from capital and capitalism.  The left can change this economic view and challenge xenophobia only by leading a struggle based on a different economic strategy, one which opposes capitalist austerity, proposes measures which benefit the majority of the population materially, and which breaks through in practice the mystifications of capitalist value relations.

Explaining popular consciousness requires going beyond a description of dominant ideologies; analysis of discourses in themselves cannot explain their hold on people’s imagination.  Rather, we need to see them as part of praxis, the unity of material practice and consciousness.  Widespread ideas – ideologies – do not arise simply from discursive interventions; they develop over long periods through lived experience.  Thus my focus is on everyday life and its structuring by political economy and class relations.

I use a pragmatist approach to how people choose their behaviour, including its moral aspects: that these are not a simple and direct result of their intrinsic personal interests, but are rather framed within materially-feasible strategies whether personal or collective.

The view that immigration is the problem rather than neoliberal capitalism is, in Marxist terms, based on appearance rather than essence.  However, in the Marxist approach, ‘appearance’ is not mere illusion or mystification, but is rather rooted in materially-based social relations.  This is a further reason for my emphasis on working class coping strategies.

The vote to leave and its motivations

The majority of the working class in the everyday sense, standard classes C2, D and E, in England and Wales, voted for Brexit.  The majority of classes C1, B and A voted to remain. (I will use the term Working Class (capitalised) in the Marxist sense, meaning all those directly or indirectly dependent on wages over their lifetime.  This includes the majority of standard classes E to B and some of A.)  Classes C2, D and E appear to have voted to leave mainly on three bases.

(i) that ‘immigrants’ are to blame for lack of jobs, poor wages and conditions, inadequate public services and lack of good affordable housing;

(ii) that the state –here represented by the EU– is incapable of ameliorating these conditions and in fact makes them worse;

(iii) a generalised nostalgia for better times.

Below I examine these three motivations in turn.  For each I discuss some differentiations and nuances of the motivations, and then analyse their construction.  I argue that these views have been produced by forty years of neoliberalism and the failure of social democracy and socialists effectively to challenge it.  These working class views, in turn, now support and reinforce neoliberalism.  A key question for the left is therefore how to challenge and change these views, the subject of my final section.

(i) Blaming the ‘immigrants’

Opinion polls during the referendum campaign, and vox pop reports such as John Harris’s pieces in The Guardian, strongly suggest that the main reason that working class people voted for Leave was that they believed that this would reduce immigration to Britain and thereby reduce competition for jobs, public services and housing.  Three complexities need immediate consideration.

First, the term ‘immigrant’ in this context is a vague and elastic term, a ‘chaotic conception’.  Exiting the EU could indeed reduce the number of EU citizens coming to Britain.  However, the hostility to these (overwhelmingly white) EU citizens seems, for many, to have spilled over into hostility to black Britons (the vast majority of whom are of course not immigrants from anywhere) and to refugees from the Middle East (as featured in UKIP’s notorious poster, and the Mail and Express’s naming of refugees as ‘European’ migrants).  This is evident from the attacks that have taken place since the referendum result, which have been not only on Poles and Rumanians but also on black people and people perceived as ‘Muslims’.  The Leave campaign and the vote were articulated not only by xenophobia but also racism.

A second complication is that the vote for Brexit was as strong in localities and regions of Britain with very few EU migrants and black people as it was in those with many.  British-born people in the former areas were not faced with local competition from ‘immigrants’.  Their votes to Leave, however, can be simply explained if one assumes that they have a national rather than local interpretation of the economy: jobs, public services and housing are short at a national scale because of the millions of immigrants in Briton as a whole.  This national view is hardly surprising in an economy which has been highly integrated since the 16th century.  We should not lose sight, however, of the hostility to immigrants in areas where there are many EU citizens, such as those working in agriculture and food processing in East Anglia.  The slave conditions under which East Europeans are employed there appear to British-born working class people, who have decreasing number of these jobs, as caused by the immigrants.  A similar point could be made about the huge Brexit vote in outer east London where there are many recent migrants both white and non-white, as well as many black Britons.

A third complication is that some black working class people voted for Brexit, apparently using the same argument as whites: immigrants are competition.  This suggests that the real racism which articulates the view of many whites is underlain by economic competition common to the whole working class irrespective of ‘race’ or nationality.  However, the very poorest areas in England and Wales mostly voted Remain, in part because of the vote of BME people.

British working class hostility to immigrants is, of course nothing new.  In the 19C many English workers were hostile to Irish immigrants, in the late 19C east London trade unionists were hostile to east European Jewish migrants, and in the 1950s and 1960s immigrants from the Caribbean and south Asia were met with hostility and exclusion.  In the last few decades, surveys of British working opinion have consistently shown high levels of hostility to immigration.  In the last ten years, this feeling has been ably articulated and exploited by UKIP (Ford and Goodwin, 2014).  While UKIP won only one seat in the 2015 general election, it is now the second party in the majority of Labour-held constituencies.  It has many local councillors, concentrated in the poorest areas.  In these areas UKIP’s rise has been aided by street actions and attacks on Muslims by fascist groups such as the EDL and BNP (Rotherham, close to where I live, is a case in point).  The hostility to immigrants underlying the working class Leave vote therefore has a strong historical basis.  The referendum campaign and result, however, have reinforced and articulated this sentiment and projected it into national politics with a virulence, which is perhaps unprecedented in British history.

A theoretical starting point for me is a pragmatist view of justice and social practice (Gough, 2010).  Most political discourse, including on the left, proceeds on the basis that social actors have ‘interests’, determined more or less by their existing lives, on which their political views and values are based.  The task of political parties is then to promise to meet some of those interests – a ‘consumer sovereignty’ view of politics.  But ‘interests’ have no meaning outside of a feasible means of achieving them (thus everyone in England might want to live in a pretty cottage in the Lake District, but this is a meaningless interest).  So in examining social values and views, we need to look at what feasible strategies are available for people to achieve them.  The feasibility of the strategy depends on the social-political situation and the resources and power that different social groups have within it.

Working Class strategies

What are the underpinnings of the competition between workers articulated by nationality and visible difference?  Here, we need to step back and consider the most basic relations of capitalist society as such (in all times and places), the position within this society of the Working Class (Lebowitz, 2003), and the consequent strategies available to workers to improve their lot.  There are three basic strategies to maintain or improve employment and consumption positions available to Working Class people in fully-capitalist societies (Gough, 2010):-

(a) The liberal and neoliberal strategy

This is to compete with other workers for given jobs, public services and housing.  The supply of these things in liberal ideology is determined by market forces which are not susceptible to political influence.  This competition is therefore a zero sum game.

Workers’ competitiveness can be developed in two modes, respectively individual and collective:

(1) First, cultivating the competitiveness of the individual worker or their household against all others.  This is done by making one’s labour power better for potential or actual employers, through for example working hard, ingratiating oneself with the boss, or through undertaking training.  It can be done through an individual’s cash within housing markets or even in accessing better public services.  This is the ‘aspirational’ or ‘entrepreneurial’ individual beloved of neoliberal ideology.

(2) A second mode of competition is to compete as a group: to unite with others constructed materially and ideologically as ‘the same’ against groups constructed as the Other; the Other is to be excluded, through essentially political means, from jobs, public services and housing.  This divide can be based on gender or age.  It can also be based on ethnicity, nationality or ‘race’.  The history of capitalism internationally is depressingly replete with examples; indeed, one can say that this type of competition between workers has been and is the rule rather than the exception.  This mode of competition is, however, in contradiction to the fundamental wish of capital to have free access to the entire world working class, to render all labour power abstract – abstracted, that is, from social distinctions like gender, age, nationality, ‘race’, ethnicity or religion.  The dominant group of workers thus has to use political means, acting against a ‘free’ labour market, to carve out or maintain their privilege: sometimes trade unions controlled by the dominant group (men, whites, etc) imposing discriminatory agreements and practices on employers, sometimes the state (for example immigration controls, or white citizens’ influence over local authority housing or housing markets).  In this sense, this strategy is against liberalism and neoliberalism by restricting the ‘free’ labour markets desired by capital.  But it also reinforces liberalism and neoliberalism by weakening the solidarity of the Working Class as a whole and consequently its ability to resist capital.

(b) The social democratic strategy

Workers actively collaborate with capital, partly mediated by the state, to construct a more productive economy, better quality public services and a better housing stock.  This is pursued partly within workplaces, firms and industries, with workers receiving respect and decent wages and conditions from the employers in return for active commitment to the labour process.  The influence of workers here is often, though not always, through trade union representation.  It is pursued partly through the state: substantial levels of taxation of capital, and good quality public services which benefit both capital and citizens.  The housing market, and property and land markets more generally, are strongly regulated by the state, and forms of cooperative and social housing play a major role.  Social democratic parties, whose electoral base is the working class, play an important role in the state. This strategy, in sharp contrast to the liberal ones, involves collective organisations of the Working Class.  But these collective organisations do not aim to fight capital, but on the contrary to collaborate with it for shared aims.  ‘Efficiency’ and ‘fairness’ go hand in hand.

(c) The socialist strategy

This proceeds through struggle by collectives of workers against capital, and against the state to the extent that it expresses the logic of capital.  Better jobs, public services and housing are to be obtained either at the expense of capital, through greater controls over capital, or through public provision. These collectives include trade unions, social movements, residents’ groups, one-issue campaigns and socialist parties.  These collectives initially emerge from local associations and local concerns.  The latter may adopt sectionalist and exclusionary politics (a2 above).  But they may also develop towards increasing inclusion through socially –and spatially– wider practices of cooperation; and if they do, they become more powerful and effective.  This class strategy is based on the premise that competition between workers, (a), is a zero sum game.  It also notes that social democratic strategy leads to highly uneven benefits to workers (socially, spatially) which are, moreover, vulnerable to capitalist crises whether at the workplace, local, national or global scale.

It might be added, parenthetically, that in the history of capitalism there are two other strategies used by workers to secure their livelihood: migration from Europe to the colonial settler countries; and a strategy of ‘self sufficiency’ of the household or a small community, an anarchist utopia, either on cheap rural land or in cheap housing in the city.  But these two strategies obviously offer nothing to the contemporary British working class.

Working Class strategies in Britain since the 1970s

How does this analysis help us to understand the referendum campaign and result, in particular the appeal to so many people of opposing ‘immigration’?  Here one needs to consider the period since the 1970s during which neoliberalism has become dominant.

Socialist practice was strong in Britain from the late 1960s until the mid-1980s: trade union and workplace actions, social movements, collective struggles over public services and housing.  But since the defeat of the miners’ strike in 1985, these struggles have been much weaker, with the partial exception of ecological struggles.  Crucial in this evolution has been the deepening rule of value in the Marxist sense.  Workers have accepted wage cuts and job losses because the firm is not making sufficient profits.  Public spending cuts have been accepted because the fiscal deficit ‘has to be reduced’ and the public debt ‘has to be paid off’. The invisible nature of surplus value has enabled corporations and the rich to hide their rapidly-increasing wealth, extracted from the working class, and to remove it from states’ taxation.  Thus the idea of opposing capital has appeared increasingly unrealistic.  In consequence, the ideals of solidarity across the working class have been weakened, and new generations have hardly encountered them.

Mild social democratic government interventions have appeared in partial opposition to neoliberalism, responding to Working Class dissatisfaction and also to contradictions of neoliberalism for capital.  Since the 1970s, there have been innumerable local economic interventions of a mild social democratic character.  When Major replaced Thatcher after the poll tax revolt and Tory tensions over the EU, he steered slightly to the left during his 1990-7 tenure (Council Tax, ‘community-led and holistic’ urban programmes).  The New Labour government of 1997-2010 introduced a large number of social-democratic measures: the minimum wage, Sure Start, area-based poverty programmes, devolution to Scotland and Wales, the English Regional Development Agencies, Regional Spatial Strategies, Local Strategic Partnerships, and neighbourhood empowerment.  But these were hobbled by their feeble funding and by their neoliberal integument.  Urban programmes were applied in a spatially selective way, so that most poor neighbourhoods got little or nothing.  Where neighbourhoods benefitting from urban funding had large BME populations, white people in the same locality sometimes perceived this as favouritism towards BME people, exacerbating racist sentiment (Bradford was a notable example).  Devolution to neighbourhoods tended to exacerbate competition within the working class.  At any rate, many of these programmes were abolished by the coalition government in 2010.  Blair’s promise of ‘stakeholder capitalism’ appeared to offer something to workers, but proved a chimera.  The Working Class in recent decades has therefore had little encouragement to rally behind a social democratic strategy.

The decreasing credibility of socialist and social-democratic strategies among the Working Class has left only liberalism.  Most people are pragmatic rather than ideological in their approach to economic questions, and liberal strategies have increasingly appeared as the only feasible ones, by elimination of the others.  The individualistic approach, a1 above, has appeared feasible for the middle class and some of the upper working class, the ABC1s.  But it has held no promise for the rest of the working class.  Training, self-advancement and self-promotion are useless in an economy of deskilled, low paid casualised jobs.  Public service cuts cannot be got round by going private.  House purchase is impossible.  Thus the anti-immigrant strategy, a2, becomes the only apparently feasible one for the C2DEs (Worth, 2013).  This suggests a reason for the pattern noted earlier, that ABC1s mainly voted Remain while C2DEs mostly voted Leave.  Both groups are seeking to compete with other workers for jobs, services and housing; but whereas the ABC1s can aim to compete as individuals, many C2DEs can see no option but to compete by nationality and ‘race’.

To be sure, the economic-political strategies available to Working Class people are not the only cause of working class xenophobia and racism.  The media, not only the notoriously rightwing press but also the main TV channels, has for the last 40 years kept up a continuous stream of anti-immigrant, anti-refugee and blatantly racist ‘stories’.  In the Sun, Mail and Express these completely dominate coverage of politics (column inches, front pages), with the direct implication that ‘immigrants’ are the dominant cause of people’s problems.  This line of propaganda was reprised by the stars of the Leave campaign, with the chorus of the Sun, Mail and Express fortissimo.  The impact of this propaganda is not, however, an independent ‘factor’ in creating anti-immigrant sentiment.  Messages from the media and politicians are not indifferently and passively absorbed by people; a message is powerful to the extent that it chimes with people’s views based on their own personal and collective strategies.  In this case, anti-immigrant propaganda from above had resonance with the strategy of excluding immigrants developed by working class people themselves from their perceptions of the alternatives.

(ii) Working class anti-statism

Opinion polls suggest that the Leave vote was partly based on disillusionment with the state (in which I include all spatial scales of the state), with government, with the politicians and with their acolytes and ‘experts’.  The Leave campaign’s slogan, ‘Take back control’, and its attacks on ‘the establishment’ and ‘experts’, can be understood as appealing to this anti-state sentiment.  This disillusionment had two notable effects within the referendum debate.  First, the EU itself, qua a level of the state, was regarded as either useless or malignant.  Secondly, mainstream politicians and functionaries, both British and international (Lagarde, Obama, EU prime ministers et al.) who argued for Remain were simply not believed.

This disillusionment was, like the hostility to immigration, a product of 40 years of neoliberalism.  Neoliberalism has had two distinct effects here.  First, neoliberal ideologues have consistently preached that the state is an obstacle to prosperity.  The state should be reduced not only quantitatively (taxation and spending) but also qualitatively, in regulating, coordinating and guiding.  The Leave campaign drew strongly on this ideology, in pointing to the supposed financial costs to Britain of EU membership, the EU’s supposed profligacy, and the EU’s ‘bureaucracy’ (read laws and regulations) which allegedly strangles business with red tape.  The Remain campaign was too much itself enmeshed in this anti-state ideology to point out that many EU regulations are beneficial to workers and the environment, or to the benefits of EU regional funds to poor regions in Britain.  It presented the benefits of EU membership solely as the single market in goods and services, that is, absence of state regulation of trade.

Secondly, and more importantly, forty years of neoliberalism in Britain have seen both national and local government (and in a minor way, the EU) unable to protect jobs, public services and affordable housing.  After decades of such failure, despite endless promises to do the opposite, a reasonable conclusion is that the state is useless for Working Class people (Gough and Eisenschitz, 2006: Ch.5).  The chronic broken promises and outright lies of politicians which are required by neoliberal government have added further fuel to this fire.  The result is a generalised contempt for the state and its representatives.  The EU referendum gave working class people an opportunity to express this contempt.

Interestingly, several recent referenda in Britain concerning local and regional government have demonstrated the same anti-state attitude.  The New Labour government held a referendum in the North East of England to set up an elected regional government, something never previously existing in England.  Despite the North East being chosen for seeming to have the strongest regional identity and anti-Westminster feeling, the proposal was heavily defeated.  Surveys of opinion showed that a major reason was that people didn’t want yet another level of the state, with its attendant expense and bureaucratic meddling.  Similarly, most of the referenda in the North and Midlands to set up mayors in cities have been defeated, in contrast to the positive vote in middle-class dominated Bristol.

In short, if the state fails over forty years to protect their living standards then working class people, given the opportunity, will minimise the levels of the state ruling over them.  This is a crisis, among other things, of the legitimacy of the state.

(iii) Nostalgia – but for what?

Voting in the referendum was strongly differentiated by age: across the classes, young adults voted to Remain while middle aged and older people voted to Leave.  This suggests that  motivations were based not only on the current political and economic situation but also on life time experiences.  The reaction to the result from many Leavers, ‘we’ve got our country back’, suggests nostalgia for an idealised good society in the past.  On the part of older white working class people, this nostalgia seems to focus strongly on a real or fantasised mono-ethnic society and culture.  Some white people in localities with a now large BME population express this as ‘no longer feeling I belong here’, feeling excluded by visible expressions of BME cultures (Ford and Goodwin, 2014). This has obviously fed into ‘anti-immigrant’ sentiment.

This nostalgia for a white past needs some analysis, however.  The implied historical time period – better times in the postwar boom, deterioration since the 1970s – suggests that the positive feelings about the earlier period may been grounded in its greater prosperity, better public services and far better housing supply: the (imagined) period of mono-culturalism correlates with better economic and social conditions for working class people.  The sense of loss of ethnic-cultural homogeneity may then stand in for anger about deterioration of material life, particularly as the former is easily visible whereas the latter is molecular and obscure.  Similarly, the nostalgia for a white Britain has a strong element of loss of neighbourhood community.  But the latter is largely a product of long term tendencies in social life in capitalism, deepened by neoliberalism with its individualisation of the Working Class, longer hours of waged work for those that have it, and deterioration of public services (for a more nuanced argument, see Gough and Eisenschitz, 2006: Ch 6, sections 1-3).  These considerations direct us back to political-economic strategies.

Implications for the left now

The Labour Party, at least since Blair, has had a de facto strategy of substantial immigration to Britain, both of skilled workers (to meet endemic and chronic skills shortages) and of semi-skilled and unskilled labour (to fuel the expanding low wage sector and further reduce wages and conditions in it).  The party leadership, aware of working class opposition to immigration, has never spelt out this strategy, and has orchestrated pieces of political theatre to demonstrate that it is keeping out immigrants, especially refugees.  Many backbench Labour Party politicians have been more forthright, calling for more barriers to be erected to immigration, at least of non-skilled workers.  Even before the referendum result was known, leading Labour politicians were joining in this refrain, and since the referendum this idea has spread on the left.

Many on the left argue that stronger restriction of immigration would have little, or negative, impact on the jobs, services and housing available to working class people.  As a short to medium term prediction, I am rather dubious about this; it may be true in some localities and regions, but it is probably not true in others.

Others on the left, including Jeremy Corbyn and the far left groups, argue that freedom of movement of the world’s workers is a right, all the more so at a time when capital (money, productive, commodity) has unprecedented freedom to move between countries.  I agree with this argument.  Anti-racist campaigns, led by BME people but involving whites wherever possible, are vital: to welcome refugees and migrants, against restrictive immigration laws and procedures, against police racism and deaths in custody, against racial or ethnic discrimination in employment and housing, and against media racism.  But my analysis above shows that, unless they are convinced of a socialist economic strategy, many working class people will reject the Open Borders argument.  I have argued that the hostility of most working class people to immigration is not primarily based on ideology or discourse, even longstanding imperialist racism or the poisonous propaganda of the Tory press.  It has been adopted as a survival strategy by many working class people because socialist militancy, social democratic reforms, and individual aspiration and enterprise have failed to deliver the goods, whereas on the surface of things restriction of immigration promises to deliver.  There is no chance now that they will be shifted from this view, and from the clutches of UKIP and the fascists, unless they become convinced that a different political economic strategy is feasible.

An essential task of the left in fighting xenophobia is therefore to develop struggles against austerity and for decent jobs, public services and housing (Worth, 2013).  To the extent that even limited victories are won, more people can be convinced that this is a viable strategy for dealing with their problems.  In other words, to make a socialist approach of solidarity and collective good hegemonic in the working class, a long period of struggle around concrete material issues will be needed.  These struggles can gradually demystify the rule of value: the ‘need’ to reduce the fiscal deficit; the ‘impossibility’ of taxing corporations and the rich; the ‘greater efficiency’ of private firms than the public sector; the imperative of the profit rate and payment of dividends by industrial and commercial firms; and ‘competitiveness’ through absolute surplus value.

As to the anti-state sentiment in the working class, socialist strategy argues for a greater role for the present state: higher taxation of corporations and the rich, expanded public services and social housing, greater regulation of business, public ownership of (at least) utilities, and public investment in green infrastructures and housing.  Since all of these are demonstrably beneficial for the Working Class, it is feasible to overcome the anti-statism which neoliberalism has bequeathed.

My argument that anti-immigration and anti-state sentiment is based on working class people’s real experience, and that these reactionary viewpoints can be overcome through class struggle, corresponds to Marx’s view of bourgeois ideology and its critique (Critique of Political Economy; Capital, Vol 1, Ch 1; Geras, 1972; Ollman, 1993).  Workers’ view that they need to compete with others to improve their lot, is both illusory and real.  Illusory because it cannot substantially and in the long term improve material conditions; real because there are real social processes involved —labour and housing markets, the capitalist labour process, government budgets— which encourage competitive behaviour.  Marx’s critique set out to show the deep social relations— exploitation, indefinite capital accumulation, uneven development— underlying these appearances.  But he also argued that this critique is academic unless realised in concrete, material class struggles, which can begin to challenge and put in question the fundamental social relations of capitalism (Colletti, 1972).

 

References

Colletti, L (1972) Marxism: science or revolution?, in Blackburn, R (ed) Ideology in Social Science, London: Fontana/Collins: 369-377

Ford, R and Goodwin, M (2014) Revolt on the Right: explaining support for the radical right in Britain, London: Routledge

Geras, N (1972) Marx and the critique of political economy, in Blackburn, R (ed) Ideology in Social Science, London: Fontana/Collins: 284-305

Gough, J (2010) Workers’ strategies to secure jobs, their uses of scale, and competing economic moralities: rethinking the ‘geography of justice’, Political Geography 29 (3) 130-9

Gough, J and Eisenschitz, A with McCulloch, A (2006) Spaces of Social Exclusion, Abingdon: Routledge

Lebowitz, M (2003) Beyond Capital: Marx’s political economy of the working class, 2nd edn, Gordonsville: Palgrave Macmillan

Ollman, B (1993) Dialectical Investigations, New York: Routledge

Worth, O (2013) Resistance in the Age of Austerity: nationalism, the failure of the left and the return of God, London: Zed Book

I would like to thank the many friends who have sent me comments on an earlier version of this piece.  I would particularly like to thank Rory Rowan, Paul Usherwood and Maureen Roshier for ideas which I have tried to integrate into my argument.  JG

This was originally written as a ‘blog post’ but without a blog on which to be posted. It then appeared on a Verso blog with the introduction: In the latest in our series of blog posts which aim to critically analyse the Brexit vote and it’s implications, James Gough, Senior Lecturer in Town and Regional Planning at the University of Sheffield, examines what the racism and xenophobia of parts of the British working class means for contemporary left strategy. [link: Jamie Gough ] A shorter version will be published in the next issue of  Capital and Class, in a special symposium on Brexit. Do comment below and/or contact Jamie direct on jamie.gough [at] sheffield.ac.uk  I am grateful to him for agreeing to this further dissemination. ME

 

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Risks of Haringey’s #HDV

5 April 2017 I am one of those invited to give evidence at a Scrutiny Committee meeting today, looking into the Council cabinet’s proposals to set up a Haringey Development Vehicle #HDV.  [For background, see my previous post and the Council’s web site.]

evidence from Prof Michael Edwards, UCL Bartlett School of Planning, m.edwards@ucl.ac.uk  [ and later updates at the end ]

My comments are mainly about [some of] the risks and uncertainties which the Council confronts. In this I’m drawing on experience since my first professional job working on the economics of Milton Keynes, through a career of consultancy, research and teaching on the economics of planning and property development. In particular I set up and ran for 15 years a Masters programme on property development and planning, initially with a European scope but now more broadly international. I have also learned a lot from being involved in the King’s Cross development over the last 25 years, and the GLA London Plan process from 2000 onwards. I’m a member of the Highbury expert Group on Housing Supply.

But first I want to make a comment as a resident. I have lived in Seven Sisters Ward for 14 years. I am a regular reader of the Council’s glossy magazine which comes through my letter box and I also get periodic emails from the Council. I have read draft Town and Country Planning documents as they appear and have made representations on some of them. But I have never been aware of, let alone consulted on, the HDV proposal and I think it’s impossible that I would have missed an announcement about it, given my professional interest.

Risks

The Council’s Business Case of 2015 was prepared before the EU referendum and before the numerous changes in housing and planning law which were enacted in the Housing and Planning Act 2016 and trailed in the White Paper recently released. As a result of these changes in the economic and political environment the Council’s decisions have to be tested against a much wider range of possible circumstances than must have seemed likely in 2015.

The economy of the UK is very weak, with low investment; what little growth we have being driven by migration and expanding household debt and no clear prospect that we’ll be able to take advantage of a devalued pound to increase our exports. Many of our export sectors in finance, insurance and related professional services are directly threatened by brexit while others – like the university sector, a huge earner of foreign exchange, are threatened by visa restrictions. We share with Greece the decline in real incomes in the last decade.

We thus need to consider the possibility that the UK economy will fail to grow and may contract in the coming decade. Furthermore the effect of inflation of import prices leading to higher interest rates would both impoverish an indebted population and change balance of power within the HDV.

The other contextual factor is related to housing policy: it keeps changing in ways which make it ever harder for councils to resume house-building. That’s one of the reasons why Haringey has proposed the HDV. But it seems quite possible that government will find ways of extending the Right to Buy to Council-owned companies or in other ways inhibit the efforts of London Boroughs to circumvent government policy. Although the Minister has backed off the RtB threat recently we cannot be very confident.

So what are the risks we should be looking at:

  • The risks of debt exposure of the HDV. We are told that the Investment Partner (IP) will match the value of the Council’s successive transfers of property with injections of equal amounts of its own equity finance. Then on top of that the HDV will borrow the money to do its developments. Can the HDV borrow through the Public Works Loan Board (at about 2% currently) or would it have to pay open market interest rates of perhaps (7-8%)? I’m not a local government finance professional but I doubt whether a private company would be eligible for PWLB.

In any event (whatever the interest rate) if interest rates then rise, it could indefinitely postpone the moment when Haringey begins to receive 50% of the profits from the venture. (We are told that the Council would receive profits only after all debts are repaid.)

  • All the work of managing the HDV and the property portfolio handed over to it on day 1 would be undertaken by the IP (Lend Lease). This would presumably mean that the IP is expected to charge the HDV with its costs, and these costs would undoubtedly include some level of profit to themselves on each task performed. The IP would thus be enjoying steady profits from these operations while the Council would gain no profit share from the HDV until much later, if at all.
  • If the government goes ahead with measures which would impose the Right to Buy on sub-market dwellings produced by Council subsidiaries, the HDV could be losing units which it had made such sacrifices to produce.
  • The Council’s cash flow under the HDV regime would, at least initially, fall because the rental income from its commercial property portfolio would instead flow to the HDV. The leader of the council in her recent article (extract below), implicitly accepts this prospect, but expects it to be made good by growing income from Business Rates and Council Tax. That may be so, but we ought to be able to see the figures.
  • A final risk which I consider should be explored is what happens if and when the IP  decides to sell its share. We are assured by the Council Leader that Haringey would have to consent to any such sale. But if economic conditions become very adverse and there are few willing buyers the Council might not have much choice. I raise this point because we have seen examples, especially in Germany, of large portfolios of rented housing falling into the hands of hedge or private-equity funds of the very aggressive kind which then exert intense pressure to raise rents and evict those who cannot pay. Rather less likely, though possible, is that the Council sells its share, or part of it.

I have listed all these risks because they appear to me to be possibilities which should be explored before the scheme is finalised. Perhaps they have been explored. Your committee and the general public at least need detailed reassurances and surely should be able to scrutinise the cash flow projections which correspond to them.

Alternatives:

Among the alternatives which should be explored I am not at all happy that the set is wide enough or serious enough.

The “do nothing” strategy Option 1 Base Case gets little attention in the Business Case document. But it could really be the best strategy in current conditions insofar as “regeneration” on current models almost invariably leads to a reduction in social rented housing. (Assembly report PDF) It would, in that event, maximise the Council’s capacity to house those in greatest need including the homeless, while not meeting the Opportunity Area targets for total dwelling numbers.

This would combine well with a more piecemeal approach: developing individual sites or estates as an when it can feasibly be done in the changing economic and policy environment. If political condition improve, for example, the Council would be able to borrow and build in the normal way. If conditions get worse, the Council would at least have battened down the hatches.

There is a lesson from King’s Cross here. Camden negotiated one huge outline planning permission for what is now known as King’s Cross Central (KXC) with one huge S106 agreement alongside it. The local community groups called for the Council to give permissions stage by stage but were defeated. Under intense negotiation the scheme was to have about 41% of affordable housing units of various kinds, with some co-funding from the HCA (from the Labour Government). In the first half of the development this went well. But, after HCA funds for affordable housing were severely cut back by coalition and conservative governments, the developer exercised a clever clause in the S106 agreement which enabled them to reduce the social housing % in the later phases. Camden was tied down to a 2006 contract and had to accept a reduction to about 31%.

Had the permission been split into phases, a fresh negotiation would have taken place for the later phases and, since market values for homes had escalated enormously, it would have been possible to negotiate at least the same level of affordable housing, and probably more.

I tell this story not because there’s a likely parallel in Tottenham, but because it illustrates the dangers of committing an entire long-term programme in one agreement.

Finally we should be looking at 2 other alternatives:

A Development Corporation. London has two already and why don’t we explore how good a third one would be for Haringey? Although there is criticism of the level of community engagement in the 2 existing ones, they are at least governed by accountable bodies, with planning meetings open to the public and fully subject to FOI. They also have the attraction of being able to draw on GLA funds.

Finally the study should explore a majority-owned public-private company, perhaps on the model of the Sociétés d’économie mixte in France, hundreds of which have been operating for decades. The law prescribes that public bodies, taken together, must have a minimum of 51% control, and maximum of 85%. It’s a distinctly lower level of privatisation than the 50% proposed here because the public owner can ultimately break a deadlock in the public interest. The economist Nicholas Falk has also written compellingly on German and Dutch models which we should be learning from: [ Main book with the late Sir Peter Hall 2014 on learning from Europe ]
[ 2014 link ] [ 2017 link ]

Extracts from: Cllr Kober article 19 January 2017 http://www.haringey.gov.uk/news/article-council-leader-cllr-claire-kober-haringey-development-vehicle

That transfer of land constitutes the Council’s 50% equity stake in the development.  The private partner then matches that stake with an equal cash equity contribution, cementing the 50/50 nature of the partners’ relationship.  The vehicle will then borrow whatever additional funds it needs to pay for development, and do the building work.  The proceeds from development are then used first to repay the borrowing, and what’s left over is split 50/50 between the partners. [I was told in today’s meeting that this has since been ‘clarified’: the IP’s equity contribution would not be made in one go, all at the outset, as this text implies, but would be advanced as needed, project by project.]

and

First of all, I’m determined that council budgets – and the services which depend on them – are protected.  The first principle has to be that we are no worse off.  Where the council loses rental income from commercial property transferred into the vehicle on day one, we are absolutely clear that the vehicle will make good the difference.  As the vehicle’s work goes on, we will very closely manage both our General Fund and Housing Revenue Account, always ensuring that any impact is manageable.  In the long run, our costs will be greatly outweighed by the returns from development and the increases in council tax and business rate income. 

For further source material see previous blog post.

Later addition, after the meeting.

  1. A courteous committee which asked a lot of questions. It is amazing how little they have been able to find out about the HDV after a year or so of studying it. How can “scrutiny” be applied to something so inscrutable?
  2. I was delighted to hear (informally, in a coffee break) that they had interviewed Pete Redman (of Trade Risks, and the Highbury Group). Apparently, while broadly sympathetic to the Cabinet’s ambitions, he had favoured splitting the one huge project up into smaller ones (one of my main points) and had also made strong criticism of the legality or necessity (I’m not sure which) of the level of secrecy in which the negotiations are shrouded.
  3. They are interested in the continental models and in the experience of other UK Councils.  I told them about Janice Morphet’s work on English LHAs and they might want to meet her.
  4. The other witness this morning was Gail Waldman of the Highgate Society who was extremely knowledgeable about borough affairs and the Local Plan system and policies. She has promised to send me her written submission and I’ll seek her permission to link to it. Very impressive indeed.

Later 12 April 2017 a good blog post by Doug Thorpe of RHN:  http://radicalhousingnetwork.org/a-2bn-gamble-with-public-assets

Haringey “Development Vehicle” #HDV

14 Feb + 19 Feb 2017  The municipality where I live, Haringey, is proposing to pass a large proportion of the landed property it owns (we own) to a 50:50 private company. The plan has been brewing without consultation for some years but surfaced recently through an article in the national press by the great Aditya Chakrabortty and a response by the leader of the council, Claire Kober. I was asked to come to a meeting opposing the sell-off yesterday. A big meeting with 200-300 people: anxious and angry tenants, good analysis, diverse class mix and both Labour and Green parties – perhaps others – as well as non-party people.  My contribution below.

Video of the meeting, notes from Joe Beswick and other material at GreenN8  | Aditya Chakrabortty article | Claire Kober response | Scrutiny Committee report Jan 2017 | Business Case January 2015 | Statement by David Lammy MP 14 Feb | and I’ll add more stuff as it come to hand.

My 5 minutes:

I’m an economist and planner, and now a semi-retired professor at UCL’s Bartlett School of Planning. My comments draw mainly on my experience in supporting community groups negotiating with developers and councils at King’s Cross over 25 years and on the decade of experience across London in the JustSpace.org.uk network of community groups.

One of the big issues Just Space organisations have been battling ever since the GLA was created is the weakness of the Opportunity Areas policies in London – the policies for the main areas where large scale development is planned. There are 38 such areas and rarely any effective participation by residents or businesses in the formulation or execution of plans. These often emerge as cosy deals between developers, compliant borough councils and the Mayor’s office. The outcomes tend to be deeply inadequate provision of social housing, major displacement of low- and middle-income people living in and around the Opportunity Areas and of industrial and service businesses.

The Upper Lea Valley, within which lies most of Tottenham, is one of these and we can see the democratic deficit powerfully displayed in this HDV proposal, smuggled in with no effective consultation. (I’ve been a Haringey resident for many years, receive regular emails and glossy magazines from the council but heard nothing about the HDV until now. Even in the Borough Local Plan documents which I have plodded through I do not believe there is a reference to the HDV.) It seems that Haringey has learned nothing from the famous Supreme Court judgment against it of October 2014 which ruled that consultation is valid only if these conditions are met:

  • Consultation takes place at formative stage
  • Sufficient reasons are given, allowing intelligent consideration
  • Adequate time is allowed for consideration and response
  • Responses are conscientiously taken into account
  • “arguable yet discarded options” are set out with the reasons for the choice of preferred option.

The present proposal is in many ways the opposite of what would be sensible. We are in a period of great uncertainty. Planning and housing law changes frequently, governments in the coming decades might be much more to the left – and thus supportive of Council development— or even more to the right and thus finding ways to frustrate even the optimistic aspirations of the HDV. Interest rates could escalate to more ‘normal’ levels, thus further postponing Haringey council’s expectations of their 50% share of profits remaining after all costs are covered and debt repaid.

In these conditions of uncertainty it is rational, surely, to sacrifice as little as possible, preserving freedom of maneuver for better or even worse times to come.

Community organisations at King’s Cross urged Camden to do its deal with Argent phase by phase but the council refused and signed a single agreement for the whole scheme under the laws and policies obtaining in 2006. After the fall of the Labour government and the withdrawal of government subsidy for social housing, Argent were able to exercise a clause in their agreement to lower their social housing percentage. Prices realised in private market sales of flats in the scheme have of course escalated mightily since 2006 so the developer could well have afforded to maintain their original undertakings from their increased profit. But the contract had been signed in 2006 and could not be re-calculated. Argent argued, quite ‘correctly’, that their responsibility to shareholders, including pension funds, obliged them to do their best for profitability.

The rational course now is for Haringey to put the whole scheme on ice and do a grown-up and open public consultation on a variety of options. The consultation must include cash flow forecasts to deal with suspicions that the HDV proposal has Haringey giving up all its assets at the outset and gains no profit share until after the IP has enjoyed years or decades of profitable operations. The options must include:

A “do nothing” scheme in which businesses can continue to operate and tenant households to remain in situ, their homes remaining in the Housing Revenue Account while leaseholders remain under council freeholds. This is “battening down the hatches” hoping for a more benign policy environment to come. Since “estate regeneration” under current practices leads to a reduction in social housing, this could well be the best strategy for maximising social housing (London Assembly Housing Committee report Feb 2015 Fig 2).

Setting up a wholly-owned development company, as Croydon and now Hounslow have done, or one with a clear majority Council control. A tolerably good model for this is the Société d’économie mixte used all over France in which public bodies must have between 51% and 85% ownership and control.

They should also compare these schemes with a Mayoral Development Corporation. Just Space is very critical of the inadequate democracy embodied in the 2 MDCs established so far (at the Olympic Park and Old Oak Common) but they at least have clear public accountability, prepare local plans which are subject to examination in public and have planning committees open to the public – not to mention access to City Hall funding. So compared with today’s HDV proposal they are much more democratic.

Note: Supreme Court endorsed basic requirements in its Moseley case judgement 29 Oct 2014  http://www.bailii.org/uk/cases/UKSC/2014/56.html  Commentaries at http://www.out-law.com http://www.bdb-law.co.uk ….  R (on the application of Moseley (in substitution of Stirling Deceased)) (AP) (Appellant) 
v
 London Borough of Haringey(Respondent)

Added 19 Feb:  Close reading of the tory government’s recent Housing White Paper by the eagle eyed Joe Halewood points out that the Right to Buy would be extended to all sub-market rental housing (“affordable” as well as social) and to arms length housing companies as well. He wrote on the day the White Paper came out and again today.  He concludes “Hence there is never any chance ever that councils or ALMOs will ever build for social rent and hence all councils will become private landlords.”  Do read it.

There are many examples of this government forgetting to implement some of its more ludicrous or controversial ideas but we should assume the worst. And it reinforces my view —above— that “doing nothing” might be the best course of action for Haringey, or at least it merits careful evaluation against various possible futures.

Joe Beswick writes:  Your point about profits is interesting. A couple of things strike me.

I) a number of the partner offers were a coalition between finance and a housing association, but the council went for LendLease alone.  One of the reasons for this may be because the others were going to give management fees to the housing association, whereas LendLease will contract the council for management – potentially increasing council ‘profits’. The flipside of this is that this, if costly, may in reality put pressure on the HRA, and draw on funds which should be used for the council’s own stock. (This has happened in another borough, whereby these privatised properties are ultimately managed within the HRA.)
ii)  Someone at the meeting mentioned to me that they thought that LendLease are not actually going to contribute their own capital – instead they will just borrow against the properties to make up their contribution. I do not know if this is true, but if so it seems completely outrageous – especially if the costs of that borrowing are paid before profits are divided. And even if not, they would be using (part) public land to secure entirely private loans.
The need to see detailed breakdown of the funding and finances, a cash flow and detailed business plan are clearly massive.   Joe
(M.E. comment:  On both these important points Haringey Council must have the draft contracts or equivalent documents which answer these questions. Without these answers no evaluation of the project is possible, no.)

 

Next London Plan: the embryo

This post, which will be written over some days or weeks, is my notes as I read A City for All Londoners, published in late October 2016 as the Mayor of London’s first airing of the policies and approaches he has in mind as the basis for the new London Plan, a draft of which is expected in the autumn of 2017. Previous mayors, so far as I recall, have called their equivalents ‘Towards a London Plan’.

What I write here is personal, not the views of Just Space, nor of UCL, nor of the Queen of England. In the back of my mind as I read are the Community-led Plan for London documents which Just Space has been working on for 18 months and in which I have played a small supporting role, mainly on economy.

The first comment I have is on the format. There are no printed copies available, I gather, so everyone must use the PDF. The version the GLA posted was over-designed and terribly unfit for purpose. At first sight it looked like a layout for a 96 page saddle-stitched A5 booklet. But the PDF was compiled so it prints 2-up on landscape A4 and it’s tricky to print so the pages are all the right way up. How many low- and middle-income and/or elderly Londoners have the skill and equipment to print things like this or could pay to get it done on the high street or at the library?city-for-all-spread

Many will want to (or have to) read it on screen, and for that it was deeply unsuitable, mainly because the text is in narrow columns, between 2 and 4 to a page. One has to scroll up and down, left to right to read it: impossibly burdensome, especially on a phone. Nobody seems to have been thinking and I wrote to GLA asking them for a user-friendly version. Meanwhile here is a smaller version which is better for scrolling on devices. city_for_all_londoners_small though the resolution is bad on the maps. Success: within a couple of days Ben Johnson, the mayor’s advisor on Digital matters replied to say that the team had replaced the bad PDF with a better one.  The new one scrolls in the same simple way as our version and his high resolution images (though the page numbers no longer correspond). Congratulations to them for listening.  And they say they are giving thought to improving the accessibility of documents in future, especially consultation documents.

My wry friend Robin, when we first looked at it, came to a page with a map and said “Oh look, no photo of the mayor.” He was spot on: this plan has something like 20 photos of the mayor. That must a world class achievement. A professor I know carefully deleted all these pictures of the mayor to conserve his ink cartridges: it’s not just the poor who economise.

The mayor’s foreword is warm and personal, emphasising his fear that young Londoners today are being deprived of the opportunities he had. The strains of growth are referred to, but the growth itself is unquestioned.

The summary and structure are simple and make clear the thrust. First comes Accommodating Growth. No questioning the desirability or the character of growth, or the ambition to fit as much as possible of it within London – a slight shift from previous mayors who pretended it could all be fitted in. Housing is, as usual, treated just as a supply problem (not enough have been built, and so on) without any reference to how demand got so out of hand, so inflated, so unequal. Nothing about the haemorrhaging of the social housing stock and no attempt to qualify his use of the word ‘affordable’. No mention at all of private renting or of cuts and caps to benefits. Depressing. The economy paragraph does at least refer to brexit but it sees success as though economics were an olympic sport where London is defending its gold medal: making London as attractive as possible to the imagined global players, calling for an immigration system fostering access to talent and so on. There is a slightly surprising new (to me) strand of idiocy: that we need to protect our environment and our world class culture so that people and businesses around the world… A sentence about ensuring that everyone benefits and finally “I will also promote economic activity across London, day and night, and take account of the particular needs of small businesses operating in the capital.” We have clearly had no impact whatever: ‘across London’ reads to me like softening-up the reader for a throughly centralising plan in which suburban employment will continue to shrivel. And note that small businesses just have ‘needs’, no potentialities.

A portmanteau paragraph called environment, transport and public space then says nothing tangible though it does set a target for London to become zero-carbon by 2050. I must check whether that is significant, and whether it includes aviation. Nothing on reducing the need to travel. The final section of the summary returns to the overall title: a city for all Londoners and to me it seems excellent and relatively  heartfelt. I just quote (most of) it: ‘For the city to be successful, Londoners in all their diversity must live well together. Social integration is a broad but vital concept – it means addressing inequalities, tackling disadvantage and discrimination and promoting full participation in the life of our city. It means considering how people from BAME, disabled, or LGBT+ communities, as well as women and young people from low-income families, are disproportionately affected by all issues in London – and making sure that in every area of policy, they are given the resources they need to make London a more equal city. Social integration relies on an affordable, accessible transport system, measures to improve health and reduce health inequality, and ensuring that the city’s amazing culture continues to thrive and unite us.…’

Nothing in this summary about democratic process except that that final paragraph on inequalities does have ‘…promoting full participation in the life of our city.’ [I’ll reflect and add more comments on that later. There are contradictory signs about City Hall’s attitudes to public participation this time round.]

There remains the unspoken issue of scope. The London Plan should deal comprehensively with the city but has always been blinkered by the fact that it has significance under the Town and Country Planning acts as part of the Development Plan and this has perhaps been a reason or a pretext for limiting it to land use and related transport issues, even though it is supposed to be embody the spatial integration of all the mayor’s strategies.  (Check that wording).  Thus the plan has nothing about the fiscal constraints on GLA activity or about the appalling and vindictive cuts which have been imposed by the Tories in national government on Labour Boroughs. It has nothing about health services despite the under-funding, privatisation and re-structuring being inflicted on them, nor about education or social security. The City Hall defence would be that health, social security and education are not competences of the GLA but that should not prevent their treatment in the analysis and the plan as essential to understanding the social and economic dynamics of the city (not to mention some severe coordination failures which flow from their omission).

Digression: the launch event
Some of us got seats (or just smuggled ourselves in) to the launch event this morning 31 October. There is quite a lot on Twitter #allLondoners, much of it from @Justspace7 but some from other people. A very middle-aged and mainly white crowd in the room.
The GLA fielded a powerful panel: John Lett + deputy mayors + Benson from Housing and others. The overall impact on me was that this is a slightly more encouraging apple pie than the apple pies of previous mayors but that everything depends on the detail of exactly how it is elaborated and implemented. All of the ideas and proposals, I think, were evident in officers’ discourse before the mayoral election, and many were embodied in the very undemocratic 2014 document London Infrastructure Plan 2050. If the new mayor has any hand in the new document it is a matter of emphasis: some modest proposals for private rentals and an aspiration for 50% affordable housing (though with much of it not in fact affordable to most Londoners). Pat Turnbull of London Tenants Federation and Just Space made the most powerful intervention from the floor, asking where were London’s working classes who had to make the greatest sacrifices —loss of their estates, displacement, seizure of their estate green space— to enable housing to be built which they could never afford to occupy. Applause.  Richard Lee asked for audio and transcripts to be placed on the web site & was told that there would be written records of the workshops and launch (though probably not transcripts) but that audio would be given consideration…). Strong sense that ‘consultation’ is mainly by invitation. Delighted that the slides shown at the launch were made available the same day. I did, after the meeting,  extract from Ben Johnson (advisor on business and digital policy) an undertaking to try and get a user-friendly PDF.  End of digression.

Now to start reading the main sections…

Accommodating Growth

Starts by outlining population and household growth and the (unquestioned) need to accommodate it. There is a sentence in the first paragraph on the incursions that makes on the rest of the city’s land: “…As well as housing, it is also crucial to sustain and promote economic growth by making the right decisions about places of work. Land is in high demand for many other competing priorities, such as green space and infrastructure of all kinds.…” but still it is couched in terms of growth.  It’s good to see it there but the devil is in the detail.

The discussion of land and floorspace for employment (I’d prefer to call it non-residential activity so it’s clear that it covers education, health, libraries and so on – but that sounds pompous) starts with central London —the Central Activities Zone CAZ— where the mayor plans to resist change of use from office to residential “…unless this can be justified…” and facilitate inward commuting.

In the rest of London the mayor  says “Across the city, I will make provision for industrial and retail activity, and I will promote viable strategic locations for office space, including in Outer London.” This paragraph goes on with the assumption that fostering “regeneration” is an aim.  A few comments on all this:

The text is trapped by some dead or dangerous categories: “office”, “retail”, “industrial” and “strategic”. First of all the range of activities which goes on is now really hard to force into the categories of land use classes. Vehicle repair takes place in all manner of premises; delivery/distribution of goods involves huge purpose-built sheds through smaller industrial estate buildings, retail ‘parks’ to tiny depôts, pickups and drop-boxes  in shops, stations, petrol stations and so on. While the vehicle movements associated with all this distribution activity do seem to be alarming TfL, there is no sign that the premises dimension is getting any attention, nor that the pollution and congestion aspects are being examined. There is more to the economy and society than the property investors’ and planners’ categories of office, industrial and retail.  The best passage in this text is the bit on cultural activities (“cultural capital’) where the full range of locations is reviewed. But the same could and should be done for the rest of the economy and that’s what’s missing. No sign here of the JustSpace discussions with GLA Economics about what they should be doing in their Evidence Base. 

One of the fallacies embedded in London planning is that only very big things can be regarded as ‘strategic‘ and thus merit the GLA’s attention and policy: big industrial areas, big shopping centres. In fact major changes in the structure of London are the cumulative outcome of thousands of small changes, extinguishing services and jobs in high streets and behind them.  This is what has led JustSpace to call for careful studies of these local economies.

We really do have to push for the GLA to start from the economy we have, paying as much attention to the non-sexy 50% of jobs outside the main centres and high-value sectors. They don’t seem to realise that the extinction of that activity makes a negative contribution to growth while improvements in pay, productivity and output there is just as much a contribution to growth as more jobs in finance and business services.

This chapter on conflicting demands for land breaks out inexplicably into a section on transport. It says “To manage this demand, I will look at introducing innovative methods, including using road space for different purposes at different times of the day, shifting lorry consolidation centres closer to the River Thames or the rail network, and encouraging more business deliveries by bike.” This all sounds decent, though the shifting of “lorry consolidation centres…” sounds half-baked, or perhaps a poor summary. perhaps it mean break-of-bulk rather than consolidation. Rail and river (and canals) are indeed good ways of bringing in heavy and bulky stuff, saving very large amounts of truck traffic. So thats good to see, but it means protecting wharves beside the water and keeping some railway sidings free of housing developments and that’s what we have to watch out for in the Plan, when it comes. Still nothing about reducing the need to travel by bringing homes and destinations closer to each other, fostering local services or realising the concept of ‘lifetime neighbourhoods’.  [That was the only good idea to enter London Planning in the Johnson period and has now disappeared from the text.]

Rebalancing the UK economy and the role of citizens’ organisations

The downsides of London’s widely heralded role as the ‘engine’ of the British economy are largely borne by citizens, but there may be signs of change in the way that community groups in the capital have begun to make themselves heard – offering experience from which all in the wider metropolitan region could learn, says Michael Edwards

[Contribution to a special issue on Planning in the London Metropolitan Region of the journal Town and Country Planning, guest-edited by Duncan Bowie. The whole issue is available from the TCPA here. ]

We have lived through the first two mayoralties of the Greater London Authority (GLA), governed by the imperative that the scale and nature of London’s growth cannot be questioned and by the fantasy that the space requirements of this growth can be met within the Greater London boundary and without attrition of the Metropolitan Green Belt.

The growth imperative remains widely unchallenged, but the palpable impossibility of the containment fantasy now seems to be accepted by professionals and by many of those in power. Housing market demand knows no bounds and spills ever further into surrounding English counties, spreading the affordability crisis far and wide. London local housing authorities, desperate to meet their homelessness and other obligations, are increasingly placing their tenants wherever they can find space cheaper than the private rented stock of London.

Within Greater London there has been a severe democratic deficit as financial, infrastructure and real-estate interests have been able to set the agenda for the planning of the city, reaping rents, capital value growth and profits from the concentration of building and civil engineering work in the capital. The conventional measures of GDP and GVA show London as a ‘success’ and feed the narrative that the city is the ‘engine’ of the British economy – this despite the omission of environmental costs from those measures, the fragility of the rentier economy being produced, and the somewhat illusory character of the growth component which comprises rents and the imputed rents from the growth of value of the owner-occupied housing stock.

The downside of London’s fabled agglomeration economies is largely borne by citizens in the form of high rents and prices for housing, high travel costs, air quality which seriously breaches the law, displacement and disruption of communities and enterprises and the dispossession of tenants and leaseholders in erstwhile social housing. It was no surprise when the Resolution Foundation analysed median household incomes in UK regions since 2007-08 and found that London is superficially a rich region with a strong post-crash recovery but that, after paying housing costs, Londoners were by no means the richest and had seen the worst real income falls in the entire UK.1

The forms of democracy we inherited have not enabled these oppressions to be voiced effectively in policy-making. But there are signs of change as the victims of Britain’s uniquely dysfunctional housing system get organised (Priced Out, Generation Rent, Renters’ Rights London, London Tenants Federation, Radical Housing Network) and broader campaigns emerge (Take Back the City, Reclaim London). On specifically planning issues, Just Space has grown to be a strong network of local and London-wide citizen organisations, supporting each other (in the absence of any public funding) to make effective use of the participation opportunities which planning, environmental and local government law provides. It has just published its proposals for the next London Plan to the new Mayor and Assembly: a big achievement for a city of 8 or 9 million Towards a community-led plan for London: policy directions and proposals. It works in effective co-operation with the long-established London Forum of Civic and Amenity Societies, finding much common ground despite a different class composition and working method.2

It has been hard enough to scale up community activism in London from its long-established neighbourhood scale to span Greater London. How might it extend even more widely in the coming years? In some ways the imperative is for citizen organisations in all the UK’s regions and countries to co-operate since —as in so many European countries— it is the widening disparities at the national scale that need to be challenged and changed. The multi-scale structure of the Social Forum movement of the early 2000s would have been an ideal framework for these grass-roots collaborations, but that whole system seems to have wilted, at least in the UK. In the world of political parties, perhaps the rejuvenated Labour Party might become helpful, as is the Green Party to some extent. The New Economics Foundation (NEF), IPPR North and the Centre for Local Economic Strategies (CLES) are valuable beacons of sanity and analysis, but none of them is more than an infrastructure for social movements.

As things stand in 2016 it appears that we shall be getting officer-level and member-level collaborations between the London and nearby local authorities. Representative democracy in these Home Counties is weakened by the first past the post electoral system and, as a Londoner, I would guess that working class and low-/middle-income communities there feel even less empowered than their London counterparts. At least in London there is an element of proportional representation in the London Assembly which has made that body, while still toothless, a remarkably effective sounding board and debating site compared with most local councils. We shall see.

On the other hand, some of the geographical wheeling and dealing is likely to be done by Local Enterprise Partnerships (LEPs), even more removed from grass-roots accountability than local councils. Some older readers will remember, however, that the abolition of the Greater London Council in 1986 was followed by 16 years of similar informal consultations among London boroughs in LPAC (the London Planning Advisory Committee). That system was widely expected to be an ineffectual talking shop, but it surprised everyone by building some strong consensus positions, often quite progressive, and leaning on national governments. It was democratically accountable only in the most indirect sense and scarcely engaged directly with citizens, but it did have some achievements. Could today’s informal local authority collaboration develop the strength needed to enforce planned new urbanisation on reluctant shires?

A rebalancing between UK regions would take time, and presupposes a release from the damaging orthodoxies of neo-liberalism. However, the potential for multi-scale planning of regional development in Southern England is immense, the need for it is urgent, and progress could perhaps be made. The experience of community groups in London suggests that planning should be guided by the following principles:

  • reducing the need to travel (and for road freight movement), especially by private vehicles – and doubly so for diesel vehicles;
  • meeting the backlog of unmet housing need and keeping up with the growth of need and demand, providing for more refugees and migrants; and
  • respecting environmental limits, slowing climate change (while preparing for it to accelerate), and making the most of highly valued urban and rural landscapes.

Progress on these fronts will be a major challenge. The vested interests in high and rising house prices and rents (the financial sector, landowners, and many owner-occupiers and professions) are powerful. Infrastructure builders and investors are interested in heavy radial railways to permit London’s housing deficits to be met by dormitory settlements along the lines – rather than in the less glamorous job of reducing the transport damage caused by daily life in our spaced-out polycentric city region. Thinking in London’s City Hall seems to favour shifting employment growth out to the Home Counties on the grounds that this would be politically easier than shifting housing growth out. That might be expedient, but it does not sound like a reduction of the need to travel, and it threatens to exacerbate the crisis in workspace availability within London, driven by inflated housing land prices and the dismantling of controls which have kept land use classes as separate property markets for 70 years.

We shall be regaled with pleas for a more polycentric system of settlements within and beyond London, and the heroic ‘Polynet’ research of Peter Hall and Kathy Pain will be cited in support. But their analysis drew attention to the environmentally alarming scale of travel – especially car travel – generated by our dispersed settlement system. Growth of employment and housing across the wider region will have to be very systematically modelled and managed if it is to strengthen local economies without growth of car dependence. An opportunistic splatter of new towns, new villages, urban extensions and transit-oriented developments could be the worst of worlds.

Furthermore, within London, powerful market forces driven by a financialised housing price boom have combined with de facto planning practices to create an increasingly centralised structure of employment growth, eating away at diverse local service and manufacturing economies. London’s greatest 21st century achievement of reversing the growth of car-dependence will be very hard to roll out across the wider regions, and the ambition of current policy debates does not seem adequate. It is hard to be optimistic just now.

Michael Edwards is a Teaching Fellow at the Bartlett School of Planning, University College London and a co-organiser of the Just Space network. The views expressed are personal.

Notes

1 A. Corlett, D. Finch and M. Whittaker: Living Standards 2016: The Experiences of Low to Middle Income Households in Downturn and Recovery. Resolution Foundation, Feb. 2016. www.resolutionfoundation.org/wp-content/uploads/2016/02/Audit-2016.pdf

2 This article draws with gratitude on the author’s very stimulating years of work with the Just Space network of London community, activist and ‘voluntary’ organisations seeking to influence planning within the GLA boundary. It is in no way written on behalf of Just Space, indeed some of the issues raised here have not yet been discussed within the network. Thanks to the TCPA for triggering these reflections, which may thus enter the network’s debates. [later note: some of the issues raised here are discussed in the Just Space Economy and Planning Group’s Commentary on the Draft Economic Evidence Base for London Planning prepared by GLA Economics. ]

Comment on Simon Jenkins

Being stuck at home in my chair, recovering from minor surgery, prompts me to comment on a piece which Simon Jenkins published in today’s Guardian. 1 October 2015

http://www.theguardian.com/commentisfree/2015/sep/30/housing-crisis-policy-myth-realities

I can hardly put all this in a comment box, so here it is separately.

Copyright lies with the Guardian and/or the author and I hope they will excuse me treating it in this way.  Jenkins in roman, me in italic.

The problem with this writer, for me, is that he has flashes of good insight and flashes of reactionary ideology, all jumbled up.  Fundamentally he is on the opposite side from me, but…

Many of my comments draw on stuff I just published in a paper commissioned as part of the Government Office for Science’s Foresight programme the Future of Cities.  You can find that paper here.

 

Housing is Britain’s top policy issue. It is the “crisis” of our day. London’s mayoral elections, says Labour’s Sadiq Khan, should be a “referendum on the housing crisis”. The migration crisis, the NHS crisis and the poverty crisis all pale before its awesome might. So what is the “solution”?

In a way Jenkins is right because the housing crisis is partly (only partly) a symptom – a symptom of poverty and inequality facing the rising cost of housing.

Partly wrong because there is a distinct and awful problem added by the role of land ownership and rent in exacerbating inequality.

 

There is no solution. As in all political crises, there are tribal myths and economic realities. When the myths win, policy degenerates into chaos and counterproductivity. First, let’s deal with the myths.

 

1 That there is a housing “crisis”. There is none. Too many people cannot find the house they want in London and the south-east, which is where most politicians and commentators live. This is inevitable where an economy is booming. Average prices in London may be £500,000, but in the north-west and north-east of England they are £150,000. You can get a decent home in Salford for £65,000.

Sloppy but superficially true. London and the south-east are the main pressure areas because that’s where the jobs increasingly are (and perhaps also a bit because it’s where you can participate in the fastest asset-value appreciation if you can afford the entry price).  But this spatial imbalance is itself part of the crisis because of the way it limits migration and otherwise constrains people’s development. At the poorest end (especially Northern Ireland where ‘recovery’ is slowest) I read of the poverty of households who had become owner-occupiers, come to rely on equity withdrawal for survival and now have negative equity. Extreme regional disparity is a real problem, not just something to be equilibrated through a market.  Insofar as it equilibrates it does so with great pain.

 

2 That an average is a minimum. It is not. Housing hysteria is based on averages. When someone asks “How can I possibly afford £500,000?”, the answer is: you cannot, but somebody presumably can. But go on Zoopla and there are houses in parts of London for £180,000. Even the poorest newcomers seem to find somewhere (usually private) to rent.

On averages: yes of course.

 On finding somewhere to rent this is the standard heartless neo-classical ‘solution’: the market will divide up the space so everyone can have what they can afford – thus beds in sheds, day tenants sharing with night tenants and so on. Not to mention the issues of quality and safety at the bottom of the rental market. The economist Alan Evans famously declared that what slum dwellers needed was MORE slums to bring the price down.  Yes, London has a “wonderfully flexible” housing market in which anyone can find a space quickly if they can afford it, and a shared shelf otherwise.

3 That there is a national “need” for 250,000 new houses a year. For decades this has been Whitehall’s meaningless concept of “household formation”, taking no account of regional preference, propensity to move home, house prices or cost of finance. Housing need implies homelessness. It should refer to the 60,000 people currently in temporary accommodation, who ought to be the chief focus of policy attention. All else is “demand”.

Matching housing output to household formation is indeed rather a crude and mechanistic idea, but if the shortfall persists for decades, as it has done, then scarcities will worsen, as they have.  Especially in London and south-east. This is just a mean paragraph.

4 That the solution to house prices lies in building more new houses. New houses are always worth building, where the infrastructure is in place. But new houses account for a mere 10th of housing transactions. The chief determinant of house prices is the state of the market in existing property and the cost of finance. During the sub-prime period, prices soared in America and Australia despite unrestricted new building. It was cheap money that did the damage. The house-builders lobby equates housing to “new build” because that is where their interest lies.

Yes.  Here he is right.  Or at least he’s right to dismiss the argument that building more houses is the solution.  Building a lot more dwellings, especially if they were available cheaply and were in places where needed, would eventually tend to bring general prices down in the second-hand market which, as he says, is where price levels are mainly determined.  But it would take a long time.

 In the mean time, as he says, we would have to stop chucking credit at the housing market.

But it’s a crude statement because it misses the tax incentives and pension-failure problems which further pump up the demand side, and the floods of demand coming from abroad. It also misses the terrible shrinkage of the social housing stock through RtB.

5 That the solution lies in the green belt. This is an anti-ruralist’s version of myth four. Even were the green belt obsolete, which few accept, or partly so (which I accept), it will not dent the pressure of overall demand. Nor is sprawl remotely “sustainable” development. It requires new infrastructure and puts more pressure on roads and commuting. It is bad planning.

Mostly I agree, certainly on the inevitable car-dependence of sprawl permitted at the urban edge.  I’d favour some GB developments round London but only if and where they could be integrated in the full public transport network of London – not just on radial railways.  The Thames Gateway of Prescott and Co could have been rather good if tackled with gusto and public land ownership.  But the Paul Cheshire etc de-regulation version I do not favour, though the latest versions do acknowledge that some planning would be needed.

6 That high buildings are the answer. They are inefficient as the higher you build the more is spent on servicing. London’s most popular and economic housing is “high density/low rise”. Towers have supplied mostly empty pads for the rich, housing no one.

There are lots of environmental objections to very high buildings, yes, though many who live up high love their views.

 On the “mostly empty” I am getting fed up with people (professors as well as journalists and politicians) throwing this assumption around.  Where is the serious evidence?  Measurement very difficult and prediction even harder.

7 That the answer lies in new social housing. Security of tenure and low turnover – not to mention right to buy – renders the fixed stock of public housing inflexible and immobile. Increasingly it has become a generous donation by the taxpayer to a fortunate few, for life. It is largely irrelevant to acute homelessness.

Wrong.  You imply that the security of tenure should be leveled DOWN across sectors.  Why not up?  If renters’ security in the PRS were as good as in many European countries the security enjoyed by Council tenants would not seem so profligate as it clearly is for you.  Why should owner-occupiers be the only people with security of tenure?

Low turnover is surely a by-product of the differences in security. Some council tenants naturally cling on.  If there were affordable secure alternatives fewer would do so.

8 That people have a “right” to live where they or their parents lived before. Localities benefit from stable populations, but conferring and bequeathing such a right to discriminatory subsidy is in no book of rights.

Rights are struggled for, not accorded by ‘books’.  Why should poor people and their communities not be able to stay in their neighbourhoods just because the properties around them have seen their prices driven up by the financialised housing boom?  I’m happy to struggle for these ‘rights’.

In my view you misuse the word “subsidy” in this context. Council tenants have been paying for their flats through their rent, with many local authorities banking surpluses in many periods. I could dig out some authoritative literature on this.  To describe council rents as ‘subsidised’ simply because the surrounding market has risen is an abuse of language – though common among neo-classically trained economists.

(Housing Benefit is a subsidy – probably to employers or to landlords or both – but that’s not what you are complaining about, I think.)

9 That there is also a “right” to home ownership. The state has a housing obligation for those who need help. Home ownership is capital accumulation, developed out of the Tories’ mortgage tax relief as a form of saving for old age and to endow offspring. It promotes inequality and cannot be termed a right.

Yes.  It would be good to establish a right to housing at an EU or global level. But a “right” to owner-occupation UK-style with all its privileged capital gains (if you play it right) no.  The fetish surrounding it, fostered by governments since Richard Crossman was Minister in the late 60s and boosted so much by Thatcher, then inflated by the lunatic financial system, has been a disaster.

 You are wrong about Tory mortgage tax relief, surely.  It was started by Roy Jenkins (then Labour), and abolished by Gordon Brown. Countries which still have it, like the Netherlands, will live to regret it.

10 That renting is stupid. Renting is buying a service. About 60% of Germans rent. They do not think of buying until their 40s. Booming Berlin has 90% of its population renting. Renting aids labour mobility and channels savings into productive investment. As a result, Germany has little house price inflation and no “ladder” advantage to owning not renting.

Correct, but you are having Germany both ways. They have had very good (fairly good) security of tenure in private renting (though it’s being weakened now) which you so dislike when UK council tenants enjoy it.

 Renting only channels savings into productive investment if rents are low. KPMG in their UK report with Shelter cite evidence that many UK private tenants are paying so much rent that they can’t save or contribute to pensions.

 There are inter-dependencies here: controlled rents and secure leases in Germany combine with the lack of a primate city to produce low price inflation and land values.  However major cities even there are now suffering problems as financialisation becomes more ‘British’.

11 That buy to let is evil. The poorest people rent from the private sector. The more houses are available to rent, the more flexible is the housing stock and the lower are rents for those who do not buy. Whether buyers-to-let should enjoy tax breaks and whether rents should be regulated are quite different matters.

In my view it tends to be bad in the current UK (or at least London / SE) form: it creates power relations between landlord and tenant which can be highly exploitative.  Certainly we need more houses to rent, but we must have them in non-market, non-commodity form.  We know how to do that well and there is no sign that anyone is going to civilise the PRS. The banks probably wouldn’t permit it.

Facing these myths stand a few realities.

1 There is no “need” to build on rural land outside cities. Jobs, leisure and infrastructure are available in cities. We should not aid hypermobility with sprawl. Every city, in de-industrialising, leaves empty sites stuck in planning arguments or delayed decontamination. The London agents Stirling Ackroyd have identified sites for 500,000 houses in London without touching the green belt. People may like houses in the countryside, but that is preference not need.

You can’t generalise across places like this.  These estimates of London’s “Brownfield” tend to assume we can gobble/destroy council estates and/or displace the workshops and offices where people work and exchange services. I’m open minded on this (need for green field development) issue.  Proper large new towns/cities could be tremendously innovative as part of the mix…

2 The one massive reservoir of vacant residential property in Britain is under-occupied property and underdeveloped city land. London is awash with small houses and empty rooms, its residential density the lowest of any big city in Europe. Detached houses, spare rooms and gardens are the nation’s luxury. Britons had 1.5 rooms per person in 1981 and have 2.5 today, even as new housebuilding is declining. Freeing up this capacity should be the overwhelming goal of policy.

Yes on the under-occupied O-O property. Reducing the incentive to hold so much space involves things to do with tax, inheritance, CGT, SDLT and also the production of a lot more housing which would entice ageing people like me and the droves of divorcees who contribute to the under-occupation to downsize.  Could and should be done.

3 Tax makes it worse, not better. VAT discriminates in favour of new building and against the conversion of existing properties. Stamp duty is a tax on transactions, and thus on downsizing and more efficient use of space. Council tax is wildly regressive, promoting wasted space. Inheritance tax relief rewards hoarding.

Yes. Land Value Tax probably best to replace the whole lot.

4 Planning control is too strict. Permitting an extra storey, apartment or back extension on every existing property would drastically increase density and capacity. London can grow higher without growing high.

Haven’t the Tories already given a blanket permission for that?

5 The most effective way to relieve housing poverty is through housing benefit, at present chaotically administered.

What’s wrong with the admin?  The admin isn’t the problem anyway. The problem with HB is that it has to fill a widening gap between low pay and high rents.  Raising pay would be the best strategy. Lowering rents good too. It’s a class battle either way.

Cash payments are more flexible and fit for purpose.

What does this mean?  You prefer the HB money to be paid to tenants, not to landlords?  That just turned out to make it even harder for HB recipients to find flats because landlords discriminated…

They should extend to a new “public sector Airbnb”, geared to bringing vacancies to market.

Sounds good.  Some universities do it.  Every council could.

6 The only way to force down rents and house prices in the south is to strain every policy sinew to make London poorer and the regions richer. That seems too radical for anyone.

Well I would favour discouraging the (British and foreign) global super-rich from buying so much of our stock. That would bring the average down.

 Strong regional re-balancing is a very high priority, yes.

 A final comment: you and I are facing the same evidence, the same experience.  My take on it has some overlaps with yours but is fundamentally different.  This is the last few paragraphs from my report:

 

  • How can it be that, on the one hand, we have an extremely ‘high-value’ built environment and its value has mushroomed in recent decades, generating massive profits and capital gains (rents) amplifying inequality while many of us are inadequately housed, space standards are low, value for money poor, funds for social and physical infrastructure and services can’t be found and the environmental performance of the resulting settlement pattern is substandard?  It is a dreadful paradox, a severe contradiction.
  • Put like this, however, it is clear that the problem could be solved.  There is lots of money being spent on housing and more of it could go on what we need — good quality, well-designed, affordable housing with good services, environments and workplaces — less being distributed as profits and capital gains/rents.
  • It is as though there were two kinds of tax in the society: one paid to the state and local authorities for public services, the other paid as rent to landlords, financial institutions and established owner-occupiers.
  • The future has to be different from the past. How it could be done is the subject of the report.

 

Planners Network UK – People’s Plans

[This document was formerly on the PNUK.org.uk wikispaces site which has now lapsed. Fortunately Robin Brown of Just Space had saved a copy, so here it is. August 2015 ]

Compilation from various authors.

Planning is usually seen as the domain of governments, private consultancies and even developers. It tends to wrap itself up in claims about expertise, technical competence and professionalism. Yet planning is a potentially far more democratic, radically democratic, activity than this. And that’s because it offers all of us, as citizens of our neighbourhoods, the opportunity to think and act creatively about the future of the places we live in, to creative alternative visions.

There are many examples of community led plans and campaigns which have succeeded in stopping public and private sector development proposals and realising alternative community inspired visions in their place. Continue reading “Planners Network UK – People’s Plans”