Crumbs from the tables of the rich

The Guardian’s Dave Hill is an astute commentator on the London scene, and chaired the London Labour Housing Group’s mayoral housing hustings with aplomb. Recently he has  written a couple of challenging (indeed provocative) pieces about Labour politicians and London development – here and here.
His central point is that we should stop and think before condemning the investment of billions of pounds in London property by rich foreigners. Dave likes a good argument, so he pulls no punches: ‘No spectacle of pious impotence is more complete than that of London’s Labour politicians railing against the global super rich. Their indignation about the power of City privilege, Mayfair billionaires and “rich foreign investors” buying “off plan” property from marketing suites in Hong Kong is dwarfed by their helplessness in the face of it.’
He argues that denouncing ‘Monopoly board London’ raises a cheer but ignores the fact that ‘without the flow of filthy lucre down the Thames much of their vision for the city will disappear into a funding gap that nothing else will fill.’  His dismissal of the Labour mayoral candidates’ ‘wish lists’ is based on his very pragmatic view that ‘politicians and planners must increasingly turn to private finance to pay for the things the public purse will not.’ He points to the evidence that one third of new affordable homes come from planning gain created by commercial development, often funded by off-plan sales abroad. Things shouldn’t be this way, he says, but this process is ‘one of the most fruitful proxies for a tax’. His challenge: do we want some extra sub-market homes, new transport infrastructure, or don’t we?
Of course Dave is right that many of the candidates’ ‘wish list’ items won’t come to pass because this Government is wholly opposed to them. It is, after all, only interested in devolution on its own terms. But I think he misses several big points.
First, some London boroughs achieve much more than others because they have the policies and determination to get more out of the system. It follows that more boroughs could also get more, and the total benefit would rise.
Secondly, some boroughs, Islington particularly, do manage to use their planning powers to get developers to behave in a more enlightened way. It is possible to negotiate away ‘poor doors’, it is possible to get new properties sold locally first, it is possible to get some homes at social rent and not just the so-called ‘affordable rent’ which often isn’t affordable at all. But, crucially, you have to want to do it, and some boroughs don’t.
Thirdly, ‘viability assessments’, the device used by developers to reduce their planning obligations (encouraged by Government and the current (alleged) mayor), can be much more effectively challenged and they can be made transparent and open for public scrutiny. Developers are making a mint on sites all over London, especially towards the centre, and it’s a farce for them to be saying a bit more planning gain makes their schemes unviable. But they will always try, it is the responsibility of public authorities to get a better deal for the community.
Linked to that point, fourthly, the recession is now over. Planning obligations were supposedly reduced to ancourage developers to keep developing despite the straightened times. If there is growth and expanding profits, it is reasonable to expect more.
Fifthly, it is vital that the Labour candidates set out their stall on policies like this. The winner has a very good chance of becoming mayor next year. They will be able to start implementing a raft of new policies that will make a difference. Johnson has rolled over for the developers and a new mayor with a different attitude will be able to achieve much more. It is not all about wish lists that will not be achievable: there are specific devolved powers that the mayor controls. In my view developers will be able and willing to pay a larger price – and they will still make lots of money.
Sixthly, the new mayor will control budgets as well as policy, including the (admittedly small) housing investment programme. This can be reprioritised to achieve more social rent, and the mayor will be able to push London’s housing associations into producing more homes for people on low incomes. Especially on public land, housing association-led development should be producing a much better result for the community.
Of course there are issues, like controlling or taxing foreign investment or taxing ‘buy to leave’ properties or penalising unreasonable land banking, that depend on Government action, and this Government is disinclined to interfere in the market. But a shift in policy is more likely if there is a Labour mayor making the case strongly, backed by Londoners. Since Dave wrote his articles, even David Cameron has expressed distaste for the dodgy provenance of some of the foreign money coming into London property and indicates support for the proposals of Transparency International. Having made this first good step, the Prime Minister could be pushed into more dynamic policies by an effective mayor.
Councils like Islington have already shown that it is possible to do much more and to achieve much more for Londoners. Of course you can’t reverse the flow of international capital but you can mitigate some of its worst effects. That’s why the mayoral race is so important.
It is also reasonable for candidates to make comment on trends and activities in London that they may not be able to directly control but can influence. It is called debate and it is important that the public in London knows what is going on and how it impacts on them.
And never forget that grabbing a few crumbs off the tables of the rich might be (just) worth doing for the moment, but trickle down will never solve the housing crisis.