London must be for Londoners not Kleptocrats

The crisis in Ukraine brings us to the governance of London. For us, citizens of a country whose capital city is a crossroads for global capital, foreign policy does not just happen out there.

British politicians anxiously vex about their ‘impotence’ in making a difference overseas, often imagining the only effective action is to deploy force. It never is. Violence is always an impotent tool. As Iraq and Afghanistan show, the idea that missile strikes and small, short-term armies of occupation can change things for the better is sheer hubris. But obsessing about the power of arms, we forget about the other great force which we control, money.

London is awash with foreign money, and it it’s good neither for the people the countries it has come from or Londoners. In London, housing costs have spiralled. The cost of doing business has increased, making it tough for any but the big corporates to survive. London’s small-scale manufacturing industry, it’s workshops and artists studios, cramped offices with IT innovators as well as small businesses who keep daily life going are suffering because property prices and land-grabbing investors deprive them of places to do their work. London’s asset prices boom as the rest of Britain still struggles. In the capital city, money isn’t being invested in places that provide worthwhile work. Unless you want to work in the City or high-end property, the prospects for school leavers and university graduates is still poor.

London needs to be a city in which assets that have been built up by people creating real value are put to productive use. We need to be open for business: but business is about creating value by making things people want and need. Supporting that will take a change of attitude in government. The state should be interested in more than it’s slender tax revenues, and start to care about where the assets which arrive are from and what happens when they come.

The crisis in Ukraine has drawn attention to how some of that money is made, from the supporters of anti-democratic, expansionist regimes. The money that’s flooding into London comes from proceeds of rent-seeking and state monopolies. It’s owners are predators not producers, and it’s the lives of Londoners as well as people back home they prey on. The fact that life for Londonders is getting worse because of the investment from officials in regimes we deplore should be the cause of anger. We should welcome makers and builders from Europe, Asia and elsewhere, who come with ideas and experience as well as cash. But we should say good riddance to the oligarchs and kleptocrats. It’s easy to tell the difference. If that means Chelsea falls a few places in the Premier League, I really am very relaxed.

London should be a city run for and owned by Londoners, for and by the people who, wherever they were born, have chosen to live and work here. To start to take our city back, we need to do three things.

First, Labour should think about how to limit investment in unproductive assets – in property and financial services – from outside the EU. It can begin that by championing restrictions on money coming from regimes which don’t respect basic democratic rights: electing leaders, freedom to demonstrate and associate. We supported sanctions against Apartheid South Africa. The case for sanctions are the same now. What’s more, there’s no sacrifice for us. Blocking the investment of bad money in property and the City will be a good thing for Londoners.

This is a cause Labour can take up to make mincemeat of the Conservatives, whose constant effort to put global finance first shows they are incapable of standing up for the real life of London or the country. The reduction in property prices would be a good thing, for all but estate agents. The job losses would be minimal. The idea that it is in Britain’s ‘national interest’ to allow anyone from anywhere to invest in whatever they want and pay low taxes is just nonsense, a sign of the extent to which the power of big, unproductive money has captured our policy language.

But, alongside a block on investment in property and financial services from un-democratic regimes, we need to change how property in London is governed. At the moment, power is dispersed between the boroughs, the Mayor, and the City of London. London is not one but three cities. The richest political body in London, the Corporation of London, is governed by the power of property not people and is beholden to no national or local power. The City acts as a highly effective lobbyist for global capital. If you don’t believe me, tweet something critical about the City and see how good their PR is. In effect that means the money which washes around London has no democratic master.

It’s time we had democratic control of all of London. The Corporation needs to merge with the Greater London Authority, so the City’s assets and leverage power are put back in control of Londoners. Our new democratic authority (why don’t we, as Maurice Glasman argues, simply call the whole of London ‘the City of London’) needs then to give power to people to control what happens in their neighbourhoods.

Third, the worst scandal is that it isn’t just private land but pubic assets which are sold to global financiers. Instead, we need to encourage the expansion of the community ownership of property, so land is developed by community land trusts which can’t be alienate it for a quick profit. To do that, London’s government might insist trusts which support local house-building and business premises have the right of first refusal on the disposal of public assets, with financial support from a city-wide community building bank.

We too easily imagine the rise in property prices and growth in luxury services means London is booming. It isn’t. The hidden story is that life is tough for many amidst the opportunity and the wealth. Part of the reason is that we’ve had too much of the wrong kind of globalisation. Part, though, is that our institutions haven’t believed they had the capacity to shape the destiny of a global city. A Labour mayor and Labour government can and should change that.