Without serious change, the black hole at the heart of London will continue to devour the livelihoods of its citizens, writes Alistair Cartwright

On Oxford street as London enters Tier 2, an atmosphere of expectancy mingles with the soporific effects of the fog. The sound of Slade’s Merry Christmas Everybody filters out from a half-open door somewhere. Stopping to look inside a shop, there are cellophane-wrapped boxes and strings of tinsel scattered on the floor. Several employees are busy arranging the latest displays, while at the door someone stands chatting to a staff member from a neighbouring outlet.

The streets are still far less populated than they would be normally at this time of year. Except, that is, for the Deliveroo drivers sitting on the steps of the London Palladium. Except for the security guards stationed in their booths by the goods entrances. Except for the groups of construction workers exiting and entering the turnstiles at the seven-storey Lendlease development, opposite what will be the new Elizabeth Line station. Except, except, except….

Christmas Past

Comparisons over the past few months of central London to a ‘ghost town’ have become one of several clichés deployed by commentators in an attempt to grasp the nature of the strange new times we’re living in. In a Wild West variation on the theme, The FT quoted a ‘Veteran Financier’ and chairman of the Business Growth Fund (a major investor in small enterprises): ‘you could practically see the tumbleweeds.’ The corporate argument against a zero-Covid strategy is barely masked in this case.

In another example, ITV broadcast a clip from the music video of The Specials’ haunting 1981 track, Ghost Town (1981), conjuring images of Thatcher-era urban blight and unemployment.

The problem is not so much the pessimism that is implied, but rather the failure to distinguish what is similar from what is novel about the current moment.

Part of what makes the present crisis different to previous ones is precisely that we have already experienced over 30 years of Thatcher-inspired neoliberalism. Behind the statements that Covid, or rather lockdown, has transformed the city centre into a ghost town, is the old rallying cry of a return to ‘normality’. But what if the ghostliness of the city centre is precisely its normal condition? Covid-19 then merely exposes a condition that penetrated the deep tissue of British cities three to four decades ago, if not earlier.

You can experience this anytime you walk around the City of London or Canary Wharf on a weekend. Westminster and Victoria would be the same if it weren’t for the tourists. Increasingly vast tracts of central and inner London are more or less empty outside of business hours. Witness the vast new Nine Elms development around Battersea power station, where despite sales of flats falling by as much as 75% since 2017, a forest of luxury towers continues to rise higher and higher, growing thicker and more sprawling by the month.

The more city centres are converted into places purely for shoppers, office workers, tourists, and the extremely wealthy (with their portfolios of investment properties), the more surely creeps the blanket of silence and abandonment each night, each off-season and, eventually, as we are seeing now, during each prolonged period of crisis. Like a rising tide, the ghost town slowly engulfs the town. 

The vacuum at the heart of the city centre is endemic to the unequal and uneven development of the city as such. The pandemic has merely exposed this situation.

But it also exposes the fact that the city cannot survive without its ghosts, without all those expelled from the very centre where capital is most attracted. At these moments, the topsy turvy world of the capitalist city, in which shop mannequins have more reality than the people who dress them, is suddenly inverted.

Trouble in Paradise

If there was ever an illustration of this telling reversal, it was the moment when nurses, teachers, cleaners and supermarket assistants started appearing on billboards around the country. Land Securities, the owners of the giant LED screen at Piccadilly Circus, was one of those that responded to the national mood. The company gave over its famous ‘Piccadilly Lights’ to a celebration of frontline workers during the first lockdown.

This digital mirror-effect has not completely disappeared from outdoor advertising spaces, but its traces have scattered and fragmented. All but a single corner of the screen at Piccadilly has returned to business as usual, with adverts targeting the anticipated onrush of Christmas shoppers.

But behind the rippling pixels that bathe Piccadilly in phosphorescent rainbows there is another story.

Land Securities (or LandSec as it is now known) plans to turn the semi-derelict building that Piccadilly Lights wraps its digital skin around into a new development of offices, shops and flats. Demolition work is underway. Behind the screen lies a shanty town of rubble and container units. The architects meanwhile boast of a secluded ‘winter garden’ that will solve the ‘jigsaw puzzle’ of one of London’s busiest junctions.

Announced five years ago, Landsec’s Piccadilly  project is finally taking shape amidst an economic crisis that has exacted its first major casualties in a retail sector already under severe pressure from online shopping. LandSec will be among the creditors of Philip Green’s Arcadia Group, the conglomerate behind brands such as Topshop and Dorothy Perkins, which entered administration on 30 November and is said to owe several months of unpaid rent.

LandSec’s 10 Arcadia stores represent a small part of its massive portfolio but the bankruptcy will come as disturbing news nonetheless. Like other property companies exposed to the retail crisis – including British Land, Hammerson and Intu – LandSec already accepted rent cuts of 25% as part of a rescue package last year. As a result of cuts like this, the company has had to write down the value of its assets by £945 million, or 7.7%.  

Share prices in the top property companies have dropped sharply over the six months since the pandemic, and rent debts are piling up across the board, with an estimated £1.5 billion in unpaid rents within retail during the same period, and £4.5 billion arrears in commercial property anticipated by the end of the year. 

Expensive shop premises were by no means Arcadia’s sole or even main problem. But pressure from landlords may well have pushed it over the edge. (Some have suggested that the big property companies took action to call in their debts during the cash-rich Christmas season while they still could).

This is not an isolated example. Criterion Capital, the biggest property owner in the Piccadilly-Leicester Square corridor – owner of the Trocadero Centre and also a major player in private rented flat conversions – has recently sued several of its commercial tenants for non-payment, including Picture House Cinemas. Westfield shopping centre is taking similar action against retailers including Boots, Pret à Manger and Hugo Boss.

We should have no illusions about stories of plucky shopkeepers versus greedy landlords. What we are seeing is a tug of war between two different sections of capital, with Philip Green’s asset stripping tactics on one side and the imperatives of the property industry on the other.

But there is another aspect to the contradiction between these two players. Because although in an immediate sense retailers and property companies find themselves as antagonists during the current crisis, they are also desperately roped together.

If the property companies push for enforcement on debts, they risk forcing tenants into bankruptcy and undermining the confidence of the market as a whole. But if they allow retailers to dictate the terms by lowering or postponing rents, they undermine the value of their own assets, since capital values must inevitably decline when rents are falling and yields remain high (yields here meaning the percentage return investors demand for lending out their money).   

This is the kind of downward spiral that retail property is entering right now. One way out of it may be to convert retail premises to other uses. Offices in particular are seen by the industry as capable of absorbing vacancies for the next few years. But that generally sanguine view rests on a belief that the shift to home working is just a temporary blip, something that cuts against evidence from the CIPD (the professional institute for HR managers) who suggest 2 in 5 staff will be working from home on a regular basis once the pandemic is over, double the current number. If conversions do go ahead on a large scale they might come to fruition just at a time when the long term effects of the pandemic start to take effect.

Conversions of this sort are precisely what the government’s proposed planning reforms are designed to encourage. John Lewis, for example, has recently announced plans to experiment with this model by converting its flagship store on Oxford Street. Like so many companies, its profits, if not its day to day activities, will become increasingly bound up with property speculation. And as the different categories of city centre space (retail, office, residential) become more easily convertible, the crisis in one sector will become more easily translatable into a general crisis. 

How such a crisis resolves itself depends partly on political intervention, and partly on the nature of the historic phase of urban development that Covid-19 has collided with.

Scenes from Another World

Day X, 2010. Trafalgar square bristles with the crisp winter light of a November morning. Overhead there is the faint buffeting of helicopter blades. Suddenly, from behind St Martin’s church, a group of about 50 students in school blazers comes running and cheering into the square. The first group is clambering onto the pedestal of Nelson’s column when another emerges from Admiralty Arch. Then a third group charges in from behind the National Gallery. Within ten minutes the square is full of students, greeting each other with hugs, screaming, waving homemade placards that say things like ‘tax the banks not the students’, ‘fight for free education’, and ‘no ifs, no buts, no public sector cuts’.

Some protests have the atmosphere of a carnival, others, a funeral march. Both can be powerful. This one felt like a reunion – a convergence from the far corners of the city of the young people whose futures were being mortgaged to the financiers that ruled over this quarter.

The London Vortex

One thing is for certain: the crisis that has overrun Arcadia is a crisis of the city centre.

Already investors have started to channel their money away from the urban core. Warehouses and supermarkets have become hot property. Rather than a straight binary between online versus offline, these trends point to integration, with large, out-of-town stores doubling as distribution centres. On the back of evidence that more people are shopping locally, even corner shops are being eyed up as ‘opportunities for value enhancement’.

What we are witnessing is a potentially historic rebalancing of the relative gravitational pull between urban centre and urban periphery. The movement of people and capital between the two is now, as it always has been, a matter of class politics.

In the nineteenth century, the construction of new warehouses, workshops, docks and railways displaced people within central London at the same time as they were pulled towards the growing monster city by opportunities for work. The pattern of a working-class inner ring surrounding a wealthy commercial centre started to become visible. But most people didn’t move far simply because the centre was where jobs were, as well as so many informal community resources. Overcrowded ‘rookeries’ became hotbeds of cholera, but equally of radical politics, which broke down the barriers between steady artisans and casual labourers.

This was the great fear of the elite at the time – that their citadel was being surrounded by an army of the ‘dangerous classes’, thrown together by the very productive forces that had brought the glittering centre into being.  

Central London kept up its frenetic pace of change throughout the twentieth century. Hotels and restaurants replaced warehouses and workshops, joined by yet more offices and shops, each wave of redevelopment causing more displacement. But suburbanisation also appeared as a new phenomenon. A technological revolution in transport and a financial one in the provision of mortgages enabled (at first) middle-class people to escape the inner city. As a result, London’s geographical spread doubled between the two World Wars, and the inner city became even more solidly working class.

London’s class geography now had three parts to it: a middle-class suburbia, a working-class inner city, and a wealthy commercial centre. But several factors began to complicate this picture. From the First World War onwards, the relocation of industry to bigger, less crowded sites at the city’s edges brought huge numbers of workers to places like Hounslow and Dagenham. New suburban council estates in the interwar and postwar periods accelerated the trend. Soon afterwards, beginning in the 1950s, depressed property prices, cheap mortgages and the opportunism of a handful of developers lured some middle-class Londoners back to the inner city. This ‘gentrification’ has today become virtual government policy, with all kinds of incentives offered to developers. 

Where does that leave us today? On the one hand, the inner city has become a much more splintered kind of space. Some of the richest places on earth now sit next to some of the most deprived areas in the country. Estate demolitions and a crisis of affordability are exporting these patterns of extreme inequality across the South East. At the same time, a network of huge distribution hubs – crucial not just to the capital but to the entire UK economy – have sprung up on London’s outer edges. Finally, we have a city centre which is almost purely a home for capital rather than people, a true ghost town, where even major retailers face the prospect of eviction.

Occupy Ghost Town

Without decisive intervention empty retail spaces and unsold luxury flats will continue to stack up. The £3.6 billion split between the government’s Towns Fund and Future High Streets Fund – earmarked to help town centres move beyond retail – will make only a small dent in the 44,000 empty shops that some in the industry expect to double over the next few years.

Any solution will have to be much more radical than this. Local authorities should be given powers to compulsory purchase empty units at less than market value. Instead of more luxury flats, we need a new generation of carbon-neutral council housing that targets the city centre – a reversal of the suburban exodus of the 1930s and ’50s.

Failing hotels and luxury flats should be taken over and converted to give a once-in-a-lifetime boost to the public housing stock, as they were in the past and as they have been recently for emergency purposes.

Attracting forms of work other than financial services and the tech industry would also have to be central. A wide range of light industries can happily coexist with residential uses.

Above all, we need to cancel the extreme differences between centre and periphery through a programme of regional development. Without serious change, the black hole at the heart of London will continue to devour the livelihoods of its citizens.

The challenge is great but there are also opportunities, not least the serious fissures opening up between property companies, retailers, and other businesses. At the same time, the very structural imbalances created by London’s over-centralisation leave the system vulnerable to its own hungry ghosts.

In the inner city, inequality is written in 100 ft high letters in the urban fabric itself. New luxury developments drive home the impression of us-versus-them. Anger at Labour councils is one result of this, leaving a huge demand for genuine progressive leadership at the local level.

At the same time, the concentration of workers in giant distribution centres at the edges of the city – in places like Heathrow, Dartford and Tilbury – creates the possibility of industrial action at strategic locations.

Meanwhile within the city centre itself, stalled developments like the Westferry Printworks site, or the swathes of empty flats at Battersea’s Nine Elms, could become lightning rods for a united housing movement that builds on the strength of fighting local evictions. The stunning victory by Manchester students, who won a 30% rent reduction after a two week rent strike and occupation, points the way.