Michael Gove, the Levelling Up Secretary, gave a speech in Manchester this week at the Convention of the North. But the most interesting section of his speech was about London:
“The experience of successful economic transformation demonstrates that growth is not secured by absent Government but by active Government.
“A Government that plays a strategic role, irrigating the soil for growth. As Mrs Thatcher did. Specifically in the Docklands.
“When the Thatcher Government took office in 1979 London’s Docklands were a derelict economic desert. Their economic rationale had gone as containerisation had taken shipping away from the historic wharves of Bermondsey and Poplar to new purpose built ports. Jobs had disappeared, housing was slum-level, schools were places of narrow horizons and fading hopes.
“The original vision for regeneration of the area – from the Treasury of the time – was simple. Just cut taxes and de-regulate and a thousand flowers would bloom in the dusty and contaminated soil of the Docklands. But while lower taxes and smarter regulation are certainly powerful ingredients in any growth package they just weren’t enough.
“Margaret Thatcher, and her then Industry Secretary Keith Joseph tasked the then Environment Secretary Michael Heseltine with bringing together a wider range of interventions through the London Docklands Development Corporation – land was assembled and remediated through Government agencies, new transport links were built, including the DLR and what was to become London City Airport, new housing was commissioned and in due course cultural, sporting and educational investment followed. The area thus irrigated became fertile ground for massive commercial investment. Government created the environment, the private sector created the jobs. London Docklands today is an economic success story – one of the most signal success stories we owe to Mrs Thatcher’s Government.
“And it is that spirit that animates our levelling-up policies, active government. And that spirit is there most vividly our plans for new Investment Zones.”
Lisa Nandy, the Shadow Levelling Up Secretary, complained that Gove’s praise for Thatcher was “extraordinary.” But she should have been pleased with the emphasis Gove placed on state intervention rather than the free market.
The Isle of Dogs was made an Enterprise Zone. The tax cuts were certainly an important incentive – exemption from business rates, tax allowances for capital spending, various other exemptions from taxes and levies. Also easing the regulatory burden – notably planning was simplified. Provided development met certain specifications, planning permission was automatic (it is a pity those specifications required soulless modernist glass but that is a different point.) Gove was right to say that while those were “powerful ingredients in any growth package they just weren’t enough.” But even more important was another thoroughly free market measure – the sale of surplus public sector land to the private sector.
Sometimes the establishment of the London Docklands Development Corporation is described as a response to “market failure.” It is true that before the LDDC was established, property developers would look elsewhere to invest. But that was a failure of socialism.
The decline of the London docks was indeed due to market forces. Container shipping has been a wonderful innovation that dramatically cut the cost of international trade. We should all be very grateful to Malcolm Mclean, the American truck driver who came up with the idea. But it did mean a switch to bigger ships that couldn’t fit in London. This inevitably made docklands less competitive – though the dockers didn’t help themselves by union militancy. Or clinging to the astonishing restrictive practices of Dock Labour Schemes – which Iain Dale eloquently reminisces about here.
But why did the market not resolve the problem with a reallocation of resources? A Price Waterhouse study states:
“A high proportion of land was held by public bodies who had neither the will nor the capital to make it available for redevelopment. Relatively little land was in private holdings. Thus the supply of land was constrained by a pattern of ownership which was not market sensitive….
“There was very little owner occupation, with 83% of households living in council rented accommodation. Around 20% of the total stock was classified as being in a poor or uninhabitable condition.”
In comes the LDDC which had land “vested” (which seemed to mean compulsory purchased with compensation paid) to it from other bits of the public sector. Nearly 2,000 derelict acres. Southwark Council, Newham Council, Tower Hamlets Council, the Greater London Council. There was the Port of London Authority, of course. Then there was surplus land from the (then) nationalised industries. The Gas Board, the Electricity Board, the Water Board.
It was not just the convenience of these different bits of land having been “assembled” as Gove put it. They were now for sale and being vigorously marketed. The 1981/82 LDDC annual report gives a flavour:
“For some time a large part of the zone has been remarkable for its tomb-like tranquillity with acres of open space, sheds and water. This is no longer true. Cannon Workshops stand within its boundaries…
“Interest from others is already keen, including proposals from the Daily Telegraph for a 12 acre newspaper printing plant with a design which somewhat resembles an ocean-going liner. At the end of March, negotiations were well advanced for the conversion of a warehouse on Canary Wharf into a television/film studios for Limehouse Productions, a company owned by Associated Newspapers, D.C. Thompson, Scottish Investment Trust, May Gurney Holdings and Drayton Consolidated…
“In addition, the firm of Telstcher Brothers, local wine importers, is building its new headquarters, storage and bottling plant in the Enterprise Zone…”
Roll up, roll up! The psychological aspect matters. Imagine a plucky entrepreneur trying to ring up Newham Council about buying up some scrap of land in the 1970s. I doubt it would have been terribly congenial.
Of course, the infrastructure was also necessary – the new roads, the Docklands Light Railway, the Jubilee Line extension. There was flexibility. Land would be sold cheap if the developer would also agree to pay for the road, or the park, or for it to be decontaminated. Land for housing might be sold on the basis that the locals were given first refusal to buy, or that some new council housing was provided.
I am not claiming it was all perfect. My personal recollections are mixed. At one stage I was living in Howland Way in the Surrey Docks in Rotherhithe. Only some people called it the “Surrey Quays”. This was after the name given to a new shopping centre which prompted the Surrey Docks tube station to change its name to Surrey Quays in deference.
I remember quite a bit of backchat about this in the pubs, the bus stops, and the corner shops. A few years later I was working at the Daily Telegraph in Canary Wharf. Going out to lunch amidst the windswept towers had a dystopian feel. Reaching a wine bar which had attempted a “traditional feel” in one of these buildings by putting saw-dust on the floor next to wooden barrels felt pathetic. In the evenings we would make a clean break and go to The Grapes, a pub in Narrow Street, beyond all the new development. Making the short journey to it felt like departing a film set.
Was it the developers or the LDDC officials who childishly insisted the new architecture should be bright, scary, shiny, and tall? I don’t know. But I’m sure it was not necessary for economic success. On the contrary, providing something on a human scale conducive to a community to flourish would have been more agreeable as a place for people to live and work and thus of enhanced financial as well as economic value. So it is not all about money. But the sums do need to add up.
If all these Combined Mayoral Authorities mushrooming across the country were to take over all the surplus land from different parts of the public sector and then offer them for sale – tied with a ribbon and bow – that would be a worthwhile role. But they are not. They are just given power over evening classes and the location of bus stops. Gove is right to look to the 1980s for lessons. But I fear he is learning the wrong ones.