Alternative Economic Startegy for London

TIVE ECONO A N R E MIC ALT STRATEGY LONDON

TWO CITIES London is the most unequal region in England. According to London’s Poverty Profile, the top 10% of households account for 40% of all income wealth and two thirds of its financial wealth.

• London’s unemployment is rising faster than the national average with 900,000 adults unemployed, economically inactive, or under-employed in 2011.

• 23% of young people in London are unemployed, the highest level in 20 years and rising.

• 220,000 families in London live in overcrowded accommodation, 60,000 more than 10 years ago, mostly in private sector housing.

• There are 350,000 London households on local authority waiting lists.

• At the other end of the spectrum, London continues to operate as a giant playground for the super-rich, domestic and non-domiciled alike, who are insulated from the effects of the financial crisis by the Con-Dem government.

London is divided into two cities.

One is a precarious, increasingly unaffordable city with a crumbling infrastructure in which working people struggle to make a living.

The other is a bloated financial district that operates like an offshore tax haven, distorting the development of the capital’s economy and that of Britain as a whole.

This must be tackled if London is to become a city that works for its people. www.communist-par ty.org.uk london@communist-par ty.org.uk

WHY IS LONDON’S ECONOMY LIKE THIS? Since the rise of capitalism in the eighteenth century, London’s economy has been increasingly dominated, like that of Britain as a whole, by the City of London and the interests of finance capital. From the 1960s onwards London experienced significant de-industrialisation, a process that was rapidly accelerated by the Thatcher government’s de-regulation of the City of London. The ‘Big Bang’ was part of a deliberate strategy to enable the City to exploit global markets in financial services at the expense of British industry.

The end result was not only the acceleration of deindustrialisation at a national level, but also the financialisation of the economy, and the increasing domination of the City itself by US finance capital.

Many businesses were driven out of London by the long real estate boom, fuelled by inflows of foreign capital. Those sectors that remain, like creative industries, are heavily dependent on the fate of the financial sector and have suffered badly in the recession. The result is that London’s economy is desperately weak and dependent on a parasitic and crisis-prone financial sector.

As a result of its unregulated growth, ballooning speculation and inevitable crash, the financial sector is now unable to fulfil its basic function of driving the British economy. Desperately needed investment to stimulate Britain’s industrial modernisation is being withheld by the banks. This is despite major banks like RBS being majority-owned by the government.

Now the massive bailouts needed by the financial sector to pay for its speculation have fuelled the Con-Dem government’s political attack on the public sector. Under the guise of cutting the deficit the government has initiated a fire sale of public assets and a new round of privatisation.

The Con-Dem government’s and Boris Johnson’s cuts are eroding London’s vital infrastructure whilst protecting the banking sector and kowtowing to its threats to relocate abroad. These are empty threats since this would mean convincing another country’s people to provide the banks with massive subsidies from the public purse. www.communist-par ty.org.uk london@communist-par ty.org.uk

By attacking the public sector, the Con-Dems and Johnson are attacking the major source of secure employment in London and a cornerstone of its economy. The cuts are projected to cost around 600,000 jobs nationally and 1 in 8 public sector workers are in London. The burden of these cuts will fall disproportionately on the poorest inner London boroughs, where the public sector often accounts for in excess of 30% of employees. In mounting this attack they are not only shifting the burden of paying for the financial crisis onto London’s working people, they are also striking at the only possible lever for building an alternative economy in the capital.

WHAT WOULD AND ALTERNATIVE ECONOMIC STRATEGY FOR LONDON LOOK LIKE? An Alternative Economic Strategy for London must have at its heart a programme of job creation to rebuild a productive economy in the capital. The ultimate aim must be to regenerate London’s manufacturing base and reduce its dependence on financial services. This must be state-led through the Greater London Authority (GLA) and local authorities. Trade unions must play a central role in setting the economic agenda and campaigning for change.

Economic policies 1. Housing In cooperation with local authorities, the Mayor and the GLA should launch a major long-term affordable house-building programme. Consumer-focused development showcases like Boris Johnson’s plan for the Olympic Park and surrounding areas must be abandoned in favour of strategic public sector provision. Johnson’s so-called regeneration agenda is destroying working class communities and pushing those on lower incomes onto the outskirts of the city. The Con-Dem government’s welfare reforms are making private sector housing unaffordable to the unemployed. Rents for social housing set at 80% of the market rate are unaffordable to the unemployed and low-paid. Local authorities must use their powers to lower rents for social housing. www.communist-par ty.org.uk london@communist-par ty.org.uk

A planned approach to creating affordable public housing would also sustain employment in the construction industry. Building new homes could be accompanied by a programme of retro-fitting existing residences with renewable energy products like solar panels. This would also stimulate the demand for new green manufacturing industries, which could be developed in and around London.

2. Industrial Regeneration The Mayor and the GLA should lobby the banks majority-owned by the public like RBS to assist local authorities in taking public stakes in new start-up companies providing green industrial components for domestic and export markets. Local authorities could be allowed to raise bonds to buy stakes in start-up companies or to establish joint ventures with existing enterprises to develop new green industries with a long-term focus. This would expand upon work begun in the London Development Agency’s Green Enterprise District in the Thames Gateway. Public stakes would be important in countering the short-termist influence of financial institutions, oriented solely toward shareholder value and short-term profit.

London’s universities and further education colleges could form partnerships with local authorities and new publicly supported industries to train a new workforce in renewable industry skills and to inform and support research and development in green technology. The growth of the green industrial sector would also form a new pole for London’s creative industries. Marketing and advertising could be directed toward winning new markets for green industries and providing public information on renewable energy and transport initiatives. This could steer the creative industries away from over-dependence on the financial and associated business sectors and towards socially useful enterprises.

In the sphere of international relations the previous work of Mayor Ken Livingstone in developing an economic partnership with Venezuela to provide Londoners with cheap fuel could be expanded upon. New economic relationships could be established with countries like China, Brazil and South Africa based on sharing expertise in green technology and other industries. www.communist-par ty.org.uk london@communist-par ty.org.uk

3. Public Transport Public transport strategy should focus on defending and expanding infrastructure and using it to generate skilled employment. The Crossrail project, for example, can stimulate the creation of engineering, service and maintenance jobs.

Cheaper and more widely accessible public transport will discourage the use of private vehicles, not only benefiting the capital environmentally, but also boosting employment in the public transport sector as capacity is increased.

Cash and Oyster fares can be reduced by expanding the congestion charge zone and reintroducing the western extension scrapped by Boris Johnson’s administration in 2010.

Demand for more environmentally-friendly public transport vehicles from Transport for London could also provide a shot in the arm for British-based manufacturing industry including the potential for production plants in Greater London.

DEMOCRATIC POLICIES The power of the City of London is not just organised economically, but politically through institutions like the Corporation of London, the capitalist media and the mutually dependent relationship that exists between the financial sector and the Con-Dem government. That means that any alternative economic strategy for London would also have to be a political strategy that devolved power to organisations of working people to counterbalance the power of big business. These measures could include: • Measures to democratise the Corporation of London and open its operations up to public scrutiny.

• Use of public stakes in new companies to promote internal democratisation of decision-making and collective bargaining with trade unions.

• Positive action to build new tenants’ and other residential organisations and public service user groups. www.communist-par ty.org.uk london@communist-par ty.org.uk

• Creation of new political spaces for grassroots campaigning bodies and civil society organisations to feed into local authority and GLA policy formation.

• Active promotion by the GLA of an alternative, not-for-profit London media to serve the broader community.

These ideas and many more should form the basis for discussion within the labour movement about an Alternative Economic Strategy for London. This is vital if London’s labour movement is to maintain its relevance for communities and play a leading role in winning advances for working people.

WHY COMMUNISTS SUPPORT KEN LIVINGSTON FOR MAYOR OF LONDON The fact remains that an alternative economic strategy cannot be achieved in the political climate of a vicious neo-liberal attack by both Boris Johnson’s administration and the Con-Dem government. The immediate priority must be the election of a progressive mayor who will work to shield London’s working people from the worst effects of the cuts.

That’s why the Communist Party supports Ken Livingstone and the Labour Party in the mayoral and GLA elections. We have reservations about the mayoral system of local government and believe that it centralises power too much. We also oppose the trend toward devolving strategic powers from central government to the Mayor as contained within the provisions of the 2011 Localism Act. This creates the potential for a further reduction of state intervention in the economy and a greater democratic deficit. Yet in light of the mayor’s enhanced powers, in the short term it is a matter of vital importance who wields them. Strengthening progressive forces within the GLA, which scrutinises the Mayor’s activities, is also crucial.

Ken Livingstone has a record of imaginative progressive initiatives and fighting for London’s working people. The Communist Party also supports many of the initiatives his campaign has developed as moves toward the kind of alternative policies we have outlined above, within the limitations of mayoral power. www.communist-par ty.org.uk london@communist-par ty.org.uk

These include commitments to: • Re-establish targets for affordable housing and to enable local authorities to raise money on the bond markets to fund new council house building on public land.

• Lower public transport fares and encourage investment to rebuild the public transport infrastructure currently being attacked by Boris Johnson.

• Reduce fuel bills by establishing a London-wide energy cooperative to purchase energy on the wholesale markets.

These initiatives will stimulate valuable economic activity, create jobs and reduce poverty levels in London. For this reason, they demand support.

THE NEED TO TACKLE THE CITY However, the measures outlined by Ken Livingstone are limited not just by the powers of the GLA but also by the absolute power of the City of London. In this respect it is not enough simply to argue for stopping the cuts and trying to run London more fairly. Ken Livingstone and the Labour Party must be pushed to campaign harder and more openly against the City’s influence, and to promote the idea of an Alternative Economic Strategy for London based on policies developed in cooperation with the labour movement. At the moment the Labour Party is a long way from an understanding of the need for such a strategy. Trade unions must use all their influence to bring pressure to bear on Labour.

The deep structural weaknesses of London’s economy and that of the country as a whole will never be addressed without tackling the City’s power. This need is urgent since the financial sector is prone to cyclical crises, demanding ever more sacrifices from working people to maintain its speculative activity.

That is why the Communist Party argues that an Alternative Economic Strategy for London must be part of an Alternative Economic Strategy for Britain as a whole. This must involve curbing the power of the City of London as a vital first step toward rebuilding a productive economy and developing a socialist society. www.communist-par ty.org.uk london@communist-par ty.org.uk

CPB LONDON

www.communist-par ty.org.uk london@communist-par ty.org.uk