What does the pandemic mean for the alpha city? London contains some nine million souls. It’s an area of concentrated wealth but also a city in which many institutions and elite actors have worked hard to further secure those gains while neglecting the needs of many others. Even in an emergency year, requiring support for the poor and the excluded, the alpha city’s operations could still be observed.
For the majority of citizens who had lived in overcrowded or vulnerable conditions for years, the observation that Covid showed the extent of inequalities was offensive. Which bubble had you been living in before the virus hit not to know how hundreds of thousands were already pushed to the limit by merciless welfare changes, or how Black citizens faced measurably poorer life-chances? Did scales really fall from the eyes of those suddenly seeing how genuinely bad contract working was, how widespread the loss of youth employment opportunities or how unjust the takeovers of land by capital that pushed thousands from their homes? This had been the familiar business of national and city politics and everyday life for many, for more than a decade before the current crisis.
In sections of the central city, the construction of dozens of luxury apartment blocks has continued, while digital money flows rebuilt losses on the screens of hedge fund operators and financiers. What had long been true of the city – that it operated primarily for capital, capitalists and those working to support them – remained so. While many on the left looked at the current social disaster as a possible spur to a more equitable and compassionate city politics, it became increasingly clear that little had or would change. The hunger of the powerful to return to pre-existing profit margins and for the wider population to go back to normal life pointed the way to such a future.
Towards a beta or better city?
How best to advocate for and seek greater claim to the city for its long-suffering working residents? Might it be possible to offer clear answers on how to make the city a fairer and better place for all? Can we help to assemble a city engine that runs on a cleaner fuel when the existing model is proclaimed the best and most efficient that can be found? Today the neoliberal tenets, of uncaring but efficient markets in the name of a greater social good, seem to offer a kind of political immaturity, a childlike denial of the lessons of growing up.
At the time of writing no real innovations are being proposed by government, whether in the form of an economic plan to build affordably, a green new deal, or effective spatial policies to tackle regional and social divides. Emerging proposals would do better to eschew talk of levelling up and replace this with more effective designs to level down and help redistribute property and land wealth – too many people with more than one home and too many others with no home or no personal wealth to keep them going in times of need. The fault lines here are not only regional but intergenerational, tenurial, ethnic, educational – how can these be addressed in ways that might lead to a better city for all? Here are some reflections on where things might be going.
On taxing wealth
Tax goes to the heart of the question of inequality and what fair contribution might mean. Tax is now a key site of debate and new ideas. Support is growing for some model of wealth tax that finds methods of fairly helping the asset-rich to contribute to the collective good. While the bogeyman of annual added taxes on million-pound homes has killed debate about reform in the past, this year brought a major new report from the London School of Economics and University of Warwick which proposed that a one-off tax at a 1 per cent rate applied to wealth over £2m paid over 5 years would raise £80bn (the same rate applied to all household wealth over £500,000 would raise £260bn). While the chancellor has said there is never a good time to discuss a wealth tax, the public appears to feel that an opportune moment has indeed arrived with 75 per cent believing that this is a valuable strategy when compared to taxes on work income.
On the issue of asset and wealth tax another key proposal is to level the playing field so that these are taxed at the same rates as income. Abolishing ‘non-dom’ tax status in favour of taxing the wealth of self-proclaimed citizens should come as part of the package. As an interim measure, publish the extent of wider wealth known to HMRC to assist in public discussion of future measures. Another key tax issue being widely examined is the need to close offshore tax havens (British overseas territories or crown dependencies are among 4 of the top 10 in the Tax Justice Networks index of Corporate Tax Havens, including top place to the British Virgin Islands) and to find methods of common accounting between nations that would eliminate the advantages of these loopholes. In this, the UK is a notably bad actor, as are sections of the EU (including Luxembourg) and the US. Public anger and movement to act is growing; all of us should join that movement, particularly those fighting for fairer cities (because that is where the money lands) and a revised model of capitalism that delivers for the social good at its core.
Right now, it is worth reminding ourselves of the estimate that addressing corporate and personal wealth in the havens, even say a very low target of 10 per cent on all dark money (estimated at $35 trillion globally), would generate enough to pay for the entire Covid crisis. All of this is difficult but possible with an effectively funded tax department working transparently to address these issues. In the meantime, it is interesting to look at other alpha cities, like San Francisco with its silicon billionaires, and New York, where tax proposals on the wealthy have been hotly debated and seem likely to see implementation. As always, the question arises as to whether the rich will leave. But existing research highlights that the super wealthy in particular are among the least likely to move from higher tax jurisdictions where they clearly enjoy rich leisure, lifestyle and social benefits.
On laundering and crime
Crime is a major part of the wealth-finance economy, whether this be in terms of fraudulent and sharp practices, or in terms of the laundering of illicit cash. The property sector has been a major beneficiary of criminal cash, helping to bankroll developments pitched at the cash-rich, and to further bolster profits by attracting buyers who are almost immune to real-world price signals. Global Witness has called for a register of beneficial owners of all UK property to prevent laundering, enabling the owners of all land and property to be trackable. Remarkably this is still not possible in many cases, made more difficult also by offshore ownership. Despite the UK’s lamentable progress on these issues the authorities in charge of such matters, the Financial Conduct Authority (FCA), remain under-funded and under-staffed, lampooned in Private Eye magazine as the Fundamentally Complicit Authority (now run by the chancellor appointed former head of the London Stock Exchange) – by January 2020 it had still not prosecuted anyone under its new anti-money laundering powers. It is in this area that pressure is particularly needed because it is becoming clear that easing regulation and policing allow cash to continue flowing in a climate where such injections are hard to find.
Housing and planning for all
A city captured by the rich and its allies in the property lobby needs to see a revitalisation of the planning system, dramatically privatised and defunded over the past decade. Two key issues stand out. First, the way that viability tests are used to avoid contributions of affordable housing by developers. Second, the need to promote on-site social housing contributions as a standard, non-negotiable aspect of all new provision. Communities in social rented housing should be presented with options only for investment and refits, never for demolition or any loss of homes, paid for through the first measure. Rehab should also take place using green new deal principles of sustainable design and involving local labour and training systems.
As Owen Hatherley argues in Red Metropolis, a major argument of the Mayor’s office has been that any new supply is desirable because it helps the middle classes and others to move out of stock which can then cascade down. The problem begins when the new housing is bought by people not part of the locality. The answer here is to follow the money and to seek greater contribution from wealthy international buyers who add pressure to the market by inflating prices, under-using, in many cases, these homes and contributing less to the local economy.
Other reforms have been widely discussed. One possibility is that continuing sales of social housing be abandoned, as could all plans for housing demolition. Rent controls should be put in place alongside other measures to reduce the attractiveness of being a private landlord (now a quarter of London’s housing stock). The general push in policy terms should be to move in the direction of a 50/50 tenure structure – with much closer to half owning, and half renting in social housing that is of good condition, affordable and secure, and which is spatially mixed with private housing. The current mayor has made efforts to increase affordable housing (which is often very expensive in reality) but has often been timid in his approach – international buyers have not been challenged and are unlikely to be in the coming years.
What is needed is a revitalisation of strategic thinking with an understanding of how public housing can indeed offer the single most cost-effective pathway to providing secure, good quality and spacious homes. Such possibilities will, we are told, rankle with ‘tax payers’ and others with interests in the kind of property economy that the UK has become. Yet some of the most popular, sustainable and even beautiful homes in the city were built by municipal institutions - the London County Council, the 32 boroughs and the Greater London Council over a hundred years. Many of the best of these, due to the commodification of public housing through the right to buy, saw homes among them resold for many hundreds of thousands of pounds in the best developments. In Rowan Moore’s Slow Burn City, all of the best neighbourhoods he cites are notable for being public housing developments. We won’t see a 50-50 city any time soon, but decisions that move us in that direction by de-financialising public housing and building more and better public homes could be a key way of engaging a green new deal and helping medium-sized builders to recovery, instead of bunging billions through redundant schemes like Help to Buy.
Choose a more social city
Individuals can and should support any initiative that challenges the narrowly economistic vision of what and who the city should be for. This includes several of the above proposals but also more sustainable transport systems, provision of green and play space, moves to better value the contribution of BAME citizens, women and the disabled, to see greater investment in schooling and health through central government funding allocations and the ending of austerity-driven welfare measures. All of this to be paid for by publicly deliberated discussions about fair wealth taxes and equitable contribution to public life by all who claim the citizenship of the city of London.
Good money for key public services and cultural infrastructure, such as for hospitals, universities, museums and other institutions should come through strategic allocation by publicly accountable bodies. All should contribute to these provisions through general forms of taxation. Large personal gifts to elite bodies, based on whim, interest or personal favour, should be denied in favour of the tax measures described above. This would prevent much of the reputation washing that goes on, the most recent example being the £100m from Ineos billionaire Jim Ratcliffe to Oxford University.
In all of this a rediscovery of civic life and the deep virtues of municipalism is long overdue. These keywords are not the preserve of the left or a metropolitan intelligentsia elite; rather they should be used to define the joint project of making places better for all people. And this is their danger. Because to embrace the idea of common provision, effective planning and fair contribution is a direct threat to models of private and excessive profit and wealth.
Arm yourself with knowledge
It is worth knowing that in a survey commissioned by Action on Empty Homes it was found that two-thirds (68 per cent) of Londoners think the London property market is now focused on building for investors, and almost nine in 10 (86 per cent) Londoners think expensive housing is a significant problem in London (figures from Pretty Vacant, Action on Empty Homes, 2020).
The next argument we may face from those representing capital, the wealthy, finance and the development sectors is that the city is again in crisis so we need the money of the rich, property and international investment to keep the machine going. Many will claim that the treasury is dependent on receipts of housing sales and on the contribution of the City of London (around 7 per cent of the UK economy). All of this true, but the preferable alternative for a future city is one that delivers for a much greater number of its citizens and is built on a more balanced and much greener economy, for social investment, greater social protections, a revised urban equilibrium in which property prices sustainably deflate, where affordable housing is guaranteed in all new development.
The alpha city is like an octopus with its tentacles integrated into its streets, suites and fine neighbourhoods. Yet despite London’s status as one of the single largest metropoles for the world’s wealthy it is also a complex mosaic of ‘red’ boroughs and civic organisations. Many of these organisations and their supporters are involved in efforts at preventing big money destroying community life. London’s citizens have long fought against national government directives that see the city as the de facto property of capital and those in charge of it. This made the city both playground and battleground of ideas and policies that ultimately enlarged the powers of the City and embedded ideas that see markets and inequalities as legitimate or necessary features of a modern urban-national economy. In strategic terms the city’s mayor has relatively few resources to manage the city in ways that might run counter to national political directives. Meanwhile its many citizens, irritated by labour councils following pro-market, pro-property plans to do land deals and alienated from a Brexit they did not vote for, are similarly estranged by the city economy’s tendency to over-determine social life in the city.
A new reality is coming into focus, with falling numbers of migrants and a less certain future for the finance and real estate sectors as well as wavering public health risks. In all of this any such risks are unlikely to impact the wealth or lifestyles of the rich, nor will they affect the desirability of the city as a socially or economically strategic place in which to live as a post-Covid world begins to emerge. As the Financial Times tells us daily, London today faces a fight for its future. Yet of course its implied object is the city of high finance, while for so many others the London fighting for its future is the one still gasping for air after being knocked down first by a decade of austerity and then by the effects of the pandemic.
The decade to come is unlikely to be the new ‘roaring 20s’ heralded by one elite property agency moments before the pandemic hit the city. Few will believe that the super-rich have firmly switched to ESG (environment, social, governance) goals above their strategies to preserve inheritances or rebuild their reserves. Outside elite networks all talk is now about fairness, economic recovery, the nature and rewards of work, and climate change. Citizen and NGO engagement with questions of tax justice, political reform, the role of big money and big corporate interests, the paid-for lobbying by Tufton Street advisers and so on all offer some hope to provide that such a fairer future may become a reality.
The above is an excerpt from Alpha City: How London Was Captured by the Super-Rich by Rowland Atkinson. Out now in paperback.