Issue 219 of SOCIALIST REVIEW Published May 1998 Copyright Socialist Review

Feature article: Capital gains?

Peter Morgan

London is one of the richest cities in the world. But amid the view of it as a 'world class city' there is another picture of London which is not often found in the glossy promotion brochures or on picture postcards. This is of a city in crisis where poverty is common and homelessness is rife, where the super-rich live alongside some of the poorest people in Europe. No other region in Britain has such a stark polarisation between rich and poor, where divisions of class are as great as anywhere.

For the millions of Londoners who live and work in the city their quality of life has deteriorated markedly over the last decade. Now even some sections of the ruling class recognise that something needs to be done about the problems. The calls for greater investment do not simply come from those who have to endure the daily grind to work, but also from sections of big business which are increasingly frustrated by the appalling state of London's infrastructure.

As part of the solution to this acute crisis Labour is offering 5 million Londoners (out of a population of 7 million) the opportunity to decide in a referendum on whether there should be a mayor and an elected assembly for the capital. A yes vote is almost certain. Ever since the abolition of the GLC by Thatcher in the mid-1980s London has been unique among the world's cities as there is no single elected city government, nor a leading elected figurehead.

The London Chamber of Commerce estimates that in 1996 the residents of London contributed something like $198.2 billion, or 16.5 percent, of Britain's gross domestic product (GDP).

Yet very little of this wealth benefits the majority of ordinary Londoners. The Department of the Environment has produced a Local Conditions Index which it uses to assess poverty in different boroughs. By looking at such things as low income, unemployment, debt, poor housing, poor health and so on, it is able to locate the most deprived regions in the country. On this basis London boroughs make up seven of the top ten poorest boroughs, and 14 of the top 20. Newham is the poorest. On almost every count it comes out on top.

But what is particularly striking is the emergence in the eastern part of inner London of an area comprising boroughs which have over a quarter of their adult population on means tested benefits (Southwark, Haringey, Newham, Tower Hamlets and Hackney). While the outer London boroughs do not have such high rates, some have witnessed relatively large increases over the period 1983-94. These are Ealing (8 up to 16 percent), Waltham Forest (12 up to 20 percent) and Brent (10 up to 23 percent). Behind these figures there is another trend that has emerged over the last decade a polarisation between rich and poor within each borough, between the local authority wards.

The problem of being poor in London is exacerbated because the cost of living is higher some 18 percent above the national average, with housing costs 35 percent higher than elsewhere. Great swathes of London have appalling housing, health problems, large numbers on income support, and large areas of mass unemployment.

In 1994 there were nearly 1 million (936,000) London residents in receipt of income support. If we include partners and children it means that over 1.5 million Londoners were reliant on income support. Many children in the capital are some of the poorest in the country more than 50 percent of pupils in Lambeth, Hackney, Southwark and Tower Hamlets are eligible for free school meals. (The rate in Tower Hamlets, at 64 percent, is the highest of any local authority in the country).

The mortality rates for almost every age group in London are higher than in the country as a whole. Among young and middle aged men mortality rates are 20 to 30 percent higher than national rates. At the same time the number of hospital beds in London has declined by 41 percent in the ten years to 1993-94. The incidence of homelessness is higher in London compared to the rest of Britain and 8 percent of dwellings (229,000) are unfit for human habitation. At the same time the average cost of council rents in London rose 31 percent in the four years to 1994.

Transport costs are noticeably higher and car ownership is markedly lower in London. The National Travel Survey found that the average Londoner spends some 48 minutes travelling to work (the average for those working in central London is 56 minutes). This is supported by a recent Labour Force Survey which found around 40 percent of those working in inner London spend between 2 and 21/2 hours each day commuting. By contrast, in the rest of the country, 40 percent of people spend 30 minutes or less travelling to and from work. No wonder that the rundown of the tube, the daily breakdowns on trains and the constant traffic jams are such a political issue.

Any incoming mayor and assembly will have to confront the accumulation of all these problems. Previously there had always been some form of democratic government which attempted to deal with problems on a London wide basis. The London County Council (LCC) was established in 1888. Prior to that four counties Essex, Kent, Middlesex and Surrey administered London along with the ancient City of London (which still exists today) and a number of smaller local authorities.

But at the end of the century, with the growth of the working class and increased immigration into London, some sections of the ruling class recognised the need for a workforce that met the minimum standards of health and education. So the LCC organised poor relief, basic healthcare for the worst off and education for poor children, even if it was the absolute bare minimum. The LCC also had responsibility for the growth of London's infrastructure such as water and electricity.

The GLC which replaced it was established in 1965 and shared powers and responsibilities with the newly created 32 London boroughs and the City of London. Large areas surrounding London came under the control of one authority. The GLC had responsibility for such things as transport, the arts, the environment, as well as education in inner London with the establishment of the Inner London Education Authority (ILEA).

By the beginning of the 1980s with the victory of Thatcher and the decline of the Labour left many left wingers looked to using local councils to alleviate the worst excesses of Thacherism. Eventually, however, the left was to capitulate over the issue of ratecapping, with Ken Livingstone and the GLC leading the way. And Thatcher sought to let the free market take control of many areas of local government. In the 1980s the Tories believed that competition would be the way forward hence their decision to deregulate transport, release council houses for sale and privatise council services.

They also launched an assault on local councils and abolished the GLC. The passing of the 1985 Local Government Act marked a turning point in the government of London. Many of the functions that had for decades been under democratic control and were part of a coordinated strategy were to be run by Tory appointed quangos responsible to no one, and motivated by the need to make profits.

Some responsibilities were passed out to the other London boroughs, but central government took over many of the affairs of London. Today there are at least 1,000 civil servants working full time on London related topics inside the departments of transport, environment, education, employment, health and the Home Office all with very narrow departmental terms of reference and with little coordination between them.

Today the chaos of the Tories' strategy is obvious to anyone who lives and works in London. But Labour's answer is not to introduce any form of redistribution in London, neither does it want to get rid of the idea that market forces dominate policy. Hence its strategy for the tube is not to increase spending but the supposedly partial privatisation of the network, an option repeatedly opposed by its users, who instead want more investment.

For London voters Labour has proposed a far less democratic form of London government than those of the past. The assembly will consist of 25 individuals, and for the first time in British local government these will be paid. Only 14 of the members will be directly elected by ordinary people quite remarkable for a constituency of 5 million people. The other 11 will be chosen from lists compiled by Labour, Tory and Liberal headquarters and they will be allocated according to how many votes each party receives. Already Labour has said that those individuals on Labour's list will have to be approved by the national executive increasing the possibility that it will be stacked full of Blairites.

The mayor will have a budget of 3.3 billion (on current spending plans) but each year the budget will be set by Whitehall with strict limits about what should be spent and where. This falls far short of what many experts say is needed to alleviate many of the problems mentioned. And the straitjacket imposed by Whitehall will prevent the mayor and assembly developing the degree of spending autonomy that we see with other municipal councils. The mayor will only be able to raise extra money through council tax but, once again, this will be severely restricted by central government.

The new mayor will be paid a substantial salary and will be responsible for appointing a deputy as well as a host of other political appointments to oversee the work of the assembly. In effect there are all the ingredients here for the sort of nepotism and corruption which has become such a feature of of local government in the US. Blair is committed to extending a system of full time mayors throughout the country, but this will mean a reduction of local democracy as well as the emergence of a network of full time salaried individuals who would be open to even greater central government influence.

So, while socialists support any extension of democracy in London, what is on offer from Labour clearly falls far short of what is needed to address many of the real problems of the city. Among all the literature and publicity we have received extolling us to vote yes there has been no mention about reversing any of the Tory cuts nor has there been any talk about what Labour proposes to do to alleviate the real poverty and genuine suffering that many Londoners face day in day out. In fact Labour's leadership seems more obsessed with trying to prevent the left from winning the position of mayor than anything else.

What is also worrying is when you hear Ken Livingstone, the best candidate so far being mooted for mayor, saying recently that tube fares should stay high because it is overcrowded. What is desperately needed is a campaign that fights for greater democracy alongside one that challenges the idea that the free market and the profit motive can meet the needs of ordinary Londoners. Unless this happens then most people in the capital will quickly regard the mayor and the assembly as at worse a sham, and at best a poodle for the Blair government.

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