Forgive me if you’ve heard this one before. A billionaire property developer sits down next to a millionaire Cabinet minister at a dinner. The developer shows the minister a promotional video for his latest multi-billion pound project. Weeks later, after a number of texts and emails are exchanged, the minister personally intervenes in the planning process to fast track this development, overruling his own departmental planning inspectors and the local authority in question, both of which had vetoed the original application. This decision saves the developer £45m in community infrastructure payments. Twelve days later, he quietly donates £12,000 to the minister’s political party.
The story is staggering in its simplicity. Even in Britain’s dysfunctional democracy – in an era defined by government ministers avoiding the sack for abuses of powers – Jenrick’s direct intervention in the planning system to enrich a party donor at the expense of ordinary people is a new low. In a normal democratic system, Robert Jenrick would be immediately sacked as Secretary of State, and removed from the House of Commons.
But we should be under no illusions that his dismissal will solve the deeper rot. The British planning system is now a well-refined machine for the extraction of wealth out of our communities by billionaire property developers such as Richard Desmond, aided and abetted by ministers of successive governments, Labour and Conservatives included.
In the last ten years, the Conservatives have gone deeper and further than even the Thatcher government could have imagined in this, removing any checks and balances that previously defended people from rapacious developments. This is the ‘real estate state’ in action, in which developer-led development is now the only game in town.
‘Loads of Doe for Nothing’
The release of official documentation about this affair allows us to pore over the details of the relationship between the Secretary of State for MHCL Robert Jenrick, and the billionaire property developer Richard Desmond. We already knew that the two were seated next to each other at the Carlton Political Dinner, a £12 per head fundraiser for the Conservative party before the 2019 General Election. We know that at this dinner, Desmond showed Jenrick a promotional video for his development on the Westferry Road printworks, a £1bn construction of 1,524 apartments on a site in the Isle of the Dogs, East London.
We know that Jenrick and Desmond exchanged texts, calls, and meetings after this dinner, and that Desmond arranged a tour of the Westferry site weeks later. Crucially, we also now know that on the 20th November 2020, Desmond emailed Jenrick, urging him to fast track the development on the grounds that ‘we don’t want to give the Marxists loads of doe for nothing!’
This sentence is crucial, because it explains in black and white the crude financials at stake here. The Westferry build was taking place in Tower Hamlets, and as such would have incurred up to £45m worth of taxes through the council’s community infrastructure levy (CIL). The CIL is a charge introduced by local authorities on new developments in order to help them deliver infrastructure in the local community. It is a critical lifeline for localities to claw back some value on luxury development projects- especially in a borough like Tower Hamlets, a place with the highest rate of pensioner and child poverty in the UK.
Tower Hamlets Council and MHCLG’s planning inspectorate had originally vetoed the Westferry project, on the grounds that the impact on the local community would be negligible, or even damaging. Moreover, at the time the decision was made, the Council was on the verge of increasing the local CIL, meaning that new developments would pay higher fees that before.
It is at this crucial moment that Desmond lobbied Jenrick to approve the decision before this hike in CIL was introduced. In the stark language, we can see the billionaire developer railing against a‘Marxist’ council that had the temerity to suggest that, if he wanted to build luxury flats in a place with amongst the highest levels of child poverty in Europe – he should maybe have to pay back something in return.
We know that the development went ahead, Desmond donated £12,000 to the Conservative party and then, when pressured by the Council, Jenrick was forced to admit that it was wrong to have directly intervened in the process. The only question now is what happens next.
Minister for Developers
The story of how the Conservative party captured the planning system to benefit luxury developers is larger than Jenrick himself, but his rise to prominence is symbolic of the deep entanglement between politics, private developers and landlords. Hailed as the ‘first millennial minister’, Jenrick’s personal story is anything but typical of his generation.
While a third of millennials are likely to never be able to afford their home, and half having to rent well into their forties, Jenrick boasts an enviable property empire, including a £2m townhouse in London, a Grade I listed manor in Hertfordshire that was built by a prominent slave trader, and a third property in his constituency, that is handily paid for by the taxpayer at rent of £2,000 a month.
Under Jenrick’s tenure, the Conservative party has had close links with major property developers across the UK. Developers are amongst the largest group of donors to the party; for example John Stuart Bloor- owner of Bloor Homes gave the Tory Party £1.6 million pounds before the last election. Why does this group donate so much to the Conservatives? Well, because the current policies around planning, development, and house building are incredibly fortuitous for the developers.
According to the latest Bloor Homes annual report, their turnover went up 15 per cent between 2018 and 2019, rising to £1.1 billion. Profits went up 5 per cent, to £173m, with their annual report citing that ‘current economic conditions create a positive backdrop for the housing industry.’ This might seem like an odd statement when we have a national housing shortage and thousands homeless, but the truth is that developers have discovered a new way to generate super profits; build luxury houses rather than homes for the masses, and the profits will roll in. Understanding how they have done so requires knowledge of the real role of the planning system in modern Britain.
Planning today is essence is far too driven by the interests of ‘developer-led development.’ This means that decisions are taken in a way that gives preferential treatment to the investors who own the land and capital on which property developments take place.
For example, it means the steady erosion of the power of the CIL over the last eight years, so that the sum developers have to pay back towards community benefit is ever decreasing. It also means that, due to a ‘bonfire of regulations’ under the Coalition government, developers have been freed from obligations to build ‘affordable’ social housing, and can instead focus solely on high-value projects, even if this leads to gentrification and rising local inequalities.
The result is the continuation of a situation in which working class residents are increasingly priced out of city centres, as the forces of gentrification remould our urban spaces into vehicles for wealth and rent extraction. This dynamic was first noted in the UK by Engels nearly 150 years ago; writing in The Housing Question, he noted that ‘the spirit of Haussmann has also been abroad in London, Manchester and Liverpool’, referring to the work of Georges-Eugène Haussmann, the French politician who redesigned Paris in the interests of the property-hungry bourgeoise.
This ‘spirit of Hausmann’ is alive and well in the UK today, aided and abetted by both Labour and Conservative governments. As Owen Hatherley has acutely chronicled, it was the New Labour government that opened up northern cities in England to the interests of property developers, with city centres in places such as Manchester becoming playgrounds for a ‘post-rave urban growth coalition’ of developers and landlords.
In each regeneration, government gave sizeable tax breaks to private developers to build luxury commercial and residential developments, whilst simultaneously depriving local authorities of the resources needed to build social housing. This process was intensified under the coalition government, and has been refined to an art by the most recent administration.
The cumulative effect of these schemes has been to turn the planning process into a neat system of private wealth accumulation, at the expense of working class communities and the public purse. Planning has become handmaiden to a deepening of economic and social inequalities in our cities, to the extent that the way in which the planning system functions is now indistinguishable from the ever-increasing wealth of the UK’s property developer class.
This has had a catastrophic effect on our local economies; for example, a 2018 report into thirty years of pro-developer policies in Manchester found that developer-led development has made the majority of the city region’s population poorer, increased negative public health incomes, and has been a ‘good servant but a bad master’, in that it has made the rich richer, and the poor poorer.
The Real Estate
The now symbiotic relationship between politicians, the institutions of the state, and the property development lobby can be summarised by the idea of the ‘real estate state’. Coined by urbanist Samuel Stein in his influential book Capital City, the ‘real estate state’ refers to:
Growing centrality of urban real estate to capital’s global growth strategy. Through this process, the price of land becomes a central economic determinate and a dominant political issue, determining both which social groups have access to urban life and what kinds of economic activities can survive. The clunky term “gentrification” becomes a household word and displacement an everyday fact of life. Housing becomes a globally traded financial asset, creating the conditions for synchronised bubbles and crashes.
We can see the ‘real estate state’ at work in the Westferry affair. It also lurks in the foreground of other major confrontations between capital and labour in Britain today. You also cannot understand the racial wealth gap in this country, especially in urban centres, without considering that developments often target working class, ethnic minority communities with particular vindictiveness. Recent episodes such as the Latin Market in Haringey, or the fate of much-loved community shop Nour in Brixton market both illustrate the vulnerabilities of these communities to a planning system imiciable to resident’s interests.
A Democratic Planning System
What is so galling about the Westferry saga is that, even in a planning system that is built to the exact specifications and preferences of developers, the developer in question stretched every sinew possible to make sure that not even the crumbs reached the local community. £45m probably would not have made a huge difference to Desmond in the long term, but it could have provided vital relief to poverty-stricken Tower Hamlets as it battles with mass unemployment and destitution post-covid.
But we should not be content with merely scrapping for the crumbs offered to us- or not- by the real estate state. Instead, the left needs to reimagine the planning system as a force for good, in which the democratic rights of the public sphere is reasserted over the interests of property developers. This means confronting developer-led development by rewriting planning regulations so community and environmental interest is put first.
Truthfully, it will also mean many Labour councils ending their cosy relationship with the developer class, and taking bold steps to take back control of our cities in the public interest. Without reforming the planning process, any future left government will be unable to tackle the inequalities of land and place that sit at the core of Britain’s dysfunctional and unequal economy.
At some point, Robert Jenrick will no longer be the minister. Hopefully it is soon. But the real estate state will march on. It is up to all of us to stop it.