Daniel Moylan: how Conservatives can challenge Labour’s claim on London and its values

by Daniel Moylan

Karen Buck, Labour MP for Westminster North and my distinguished On London fellow-contributor, spoke up for Sadiq Khan’s first two years as Mayor of London recently. Writing in City A.M, she did her best with the thin gruel of endless selfies and constant blame-shifting that have characterised the first half of his term. But she also made a striking claim:

Londoners are also having to contend with the most anti-London government in memory. The Tories just don’t understand our city or our values and only offer more of the same austerity and cuts.

“The Tories just don’t understand our city or our values.” This is more than taking Londoners’ support for granted. It appears to stake out a claim to Labour’s ownership of Londoners. Given the iron grip that identity politics now exerts, will it be long before those Londoners who don’t share Labour “values” are characterised by the Left as aliens, non-Londoners, outcasts? Just as the Left now believes that it is impossible to be Conservative and gay, will it become for them a contradiction in terms to be a Tory Londoner?

The challenge issued to Conservatives was put more analytically by Sebastian Payne in the Financial Times:

The next generation of Tories have five significant challenges to overcome if they are to have a hope of beating Labour: secure the future of the National Health Service; define a new immigration policy; stimulate more economic growth; fix the housing market; and restore some trust in capitalism.

He was speaking of the country as a whole, but the challenges apply if anything more acutely to London. Payne overstates his case. One clear lesson of the London borough council elections was that London voters do worry about the quality of public services and their costs and have serious reservations about handing control of their part of London to Labour if they know they are getting good value and efficiency from the incumbents. And national polling numbers, for what they are worth this far from an election, contain much encouragement for the Tories.

But let’s take Payne’s challenges in turn and consider what the Conservatives might offer that could speak to Londoners. What follows shouldn’t be taken as a draft manifesto for the next Mayor of London: that person will not run the NHS, the economy or immigration policy and the Mayor’s powers over the housing market are limited to what can be achieved through planning law and the disbursement of government-provided subsidies. But here are five ideas in response to Payne that might offer a starting-point for a new Conservative approach to London.

The London Health Service

For London, there is an obvious new approach to the NHS. Under Boris Johnson, there was talk of transferring the NHS in London to the remit of the Mayor, and that idea should now be back on the table, with a long term fixed per capita funding formula and a new name – the London Health Service. Devolution to the capital should find support from all parties, as a logical next step in a broader process initiated by Labour and continued by the Coalition and Conservative governments.

A limited devolution of health services to Greater Manchester was pushed through by George Osborne. But there should be a proviso when it comes to London: none of the civil servants who currently run the NHS should be transferred to the new service. The Mayor needs new approaches, new answers, new flexibilities, and these will not come from the people who have made our hospitals and GP services the most bureaucratically micro-managed in the world. And there is a further proviso: the Mayor must not accept financial responsibility for the inherited deficits of the London health trusts. If they cannot bear their own financial burden, then their creditors must carry the loss.

Londoners need the chance to shape and own their health services. We are now mere passive objects of its attentions, a status wholly unattenuated by the occasional bogus “consultation” exercise. Under an elected Mayor, our health services could be adapted to our needs and our priorities. That would be a huge prize.

Immigration

Thanks to Brexit, immigration policy will be entirely under the control of our elected parliament. It will be a matter of normal politics again, not imposed by a supra-national law. So while Sebastian Payne is right to say that the Conservatives need to define an immigration policy, so too does Labour. This will perplex them even more than it might the Tories, with a London-based Labour leadership that seems to believe in open doors and a national electorate that wants controls. What Conservatives can and must offer is the removal of the current injustice of an ethnically discriminatory immigration policy that overwhelmingly favours white Europeans and the restoration of fairness and non-discrimination to our system. Londoners, with their natural sense of fairness, will appreciate this, those of non-European heritage particularly so, since they have been the Londoners most unfairly treated by “freedom of movement”.

But there is a larger question: not merely what future immigration policy should be, but what Conservatives can say and do to appeal to immigrant voters who are already here, and to their children, who often inherit an assumption that Labour are “for” immigrants and Conservatives “against”. The answer to that must fit into the wider social narrative that Conservatives need to develop as the Government completes the delivery of Brexit. But it will not be achieved by a facile adoption of an identity politics approach centred on making candidate selection more diverse and imagining that voters will be happy with that.

Stimulate more economic growth

The word “more” is important there, since Payne was fair-minded enough to concede that the economy is and has been growing: the lowest unemployment rate on record is evidence that the economy is, in broad terms, working for most people. But the word “stimulate” is more worrying, since it implies that economic growth is the result of government action. Nothing could be further from the truth. All governments can do is set the parameters in which economic actors can flourish. And on that we have been following a cross-party consensus that has not been delivering as well as it should.

What the economy needs in order to thrive is normal interest rates, low taxes and a predictable legal and policy environment. What we have at the moment is artificially low interest rates (that have driven up the prices of assets, including housing), a tax and benefit system that is riddled with disincentives to work (for the low-paid and middle-earners alike), damaging meddling with the pensions regime that deters savings, and constant new policy gimmicks that increase the burdens on employers and so enhance the attraction of the gig approach to recruiting staff.

It’s not difficult to fix these things, but it will require something of a revolution in Conservative thinking. George Osborne effectively adopted New Labour economic policies in a panic reaction to the 2008 banking crisis and there has been little evidence of change since. Londoners, with their canny vitality, will respond positively to an environment in which there are more rewards for working and saving and more encouragement for businesses to innovate and challenge each other.

Fix the housing market

 This needs an essay in itself. But in brief:

  1. The market in “second-hand” housing works well: the biggest threat to it is the absurdly high level of stamp duty that is now biting on an ever wider swathe of London, deterring sales and preventing people from up-sizing and down-sizing as family needs require. That has to go.
  2. There is no real “market” in new housing (which is in any case a tiny sliver of homes compared to the existing housing stock) since it is already “fixed”, but in the wrong way – fixed by regulation and planning restrictions that reward large house-builders, freeze out small ones and ensure that new supply remains restricted. There needs to be a wholesale change to the system that will let the market actually operate for the first time in decades. Then Londoners will start to get the homes they want and need.
  3. That there is a fluid and flexible private rented sector is a good thing. Who wants to go back to the 1970s, when new private rentals in London had been reduced to almost nothing by rent controls and unbreakable tenancies, and the only option for the newly arrived Londoner was to be a lodger in somebody else’s home? But the current state of affairs needs improvement. Agents should be legally prohibited from taking fees from both landlord and tenant and obliged to act for one side only. And there should be a legal presumption of a nil-fee continuation of all shorthold tenancies provided a rent has been agreed and both sides want to continue the arrangement. Measures such as this would offer at least some alleviation to Londoners reliant on the private rented sector.
  4. Subsidised housing. Is there enough of it? Actually there is too much. Something like a quarter of Inner London housing is in the council or social sector. Don’t we need this for the low-paid? Maybe we do, but we don’t rent it to the low-paid. The great bulk of council housing is occupied on lifetime inheritable tenancies irrespective of the financial circumstances of the occupants. Don’t we need it for the homeless? Again, maybe we do, but very few homeless people get into it, since only a fraction of it becomes “void” every year – very few people move out voluntarily. And, of course, councils and social housing providers never have enough money to maintain it properly and are generally hopelessly inefficient at doing so anyway. Perhaps Right to Buy was insufficiently radical and we should have a policy of giving Council housing away to its occupants, with a share of the local authorities’ historic housing debt allocated to each unit and secured by an amortising mortgage. We would then see the stock condition improve dramatically as the new owners were allowed to contribute their own labour to its improvement and upkeep. There could be a very large group of Londoners who would support a housing policy based on this approach.

Capitalism

The problem with rebuilding trust in capitalism is that we don’t really practise it very much any more. The essence of successful, wealth-enhancing capitalism is competition. But capitalists don’t like that, not a bit of it. What they want to achieve, even more than the maximisation of profit, is the reduction of risk. And the best way to do that is to collaborate with the state in increasing regulation. Regulation (the more detailed, the better) may be a burden on big firms but it is an absolute killer for the small businesses they fear as competitors – the disruptors and the innovators.

The EU, with its instinct for minutely detailed regulations, all written in close co-operation with large producers, is a paradise for these anti-capitalist capitalists and it is no wonder that their advocates in the Confederation of British Industry are squealing at the prospect of leaving. But we can’t blame it all on the EU: successive British governments have adopted an even more zealous approach. That now needs to stop and Conservatives must take an approach to the real economy that recognises that businesses need to be forced to compete against their will and that it isn’t merely visible monopolies that prevent that.

Does this add up to a programme that would answer Sebastian Payne’s challenges in a way that would appeal to Londoners? One that would allow them to break free from the “values” (the most visible of which are currently vicious in-fighting and anti-semitism) that Karen Buck claims they share with Labour? That would appeal to their willingness to look at the world afresh and see the failings of the current system in a new light? That would allow the Conservatives to approach the capital with a bold programme of reform that would win Londoners’ confidence? I think so.

Copyright © 2018 Daniel Moylan. Daniel was a senior advisor to the Boris Johnson mayoralties, primarily on transport issues. His previous pieces for On London are here, here, here and here.

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