A few months ago, a senior EU official told a friend of mine that their most feared outcome from Brexit negotiations would be the UK diverging from EU standards to become a low-tax, low-regulation “northern Singapore” on the continent’s doorstep.
Reports over recent weeks suggest that this is precisely what the government’s attempted renegotiation of the EU Withdrawal Agreement is seeking to achieve – more room for divergence from Brussels on standards and regulation. Whatever the desirability or feasibility of such a shift, what might it mean for London?
Singapore is an occasionally liberating reminder that there are other ways of running cities. The island city-state off the coast of Malaysia is the magic mirror of urban policy, in which both right and left can see what they wish to see. The right sees low personal and corporate taxes (public spending is half the level it is in the UK), business-friendly regulation, self-reliance promoted through compulsory savings for retirement and health insurance, draconian law and order policies including capital and corporal punishment, and active promotion of family values – for example through giving married couples with children priority allocations of flats.
The left looks to another side of Singapore. It sees active regulation for environmental protection and reduction in congestion, through restrictions on car ownership and use (albeit administered through a regressive system of high-priced permits and road tolling). It also sees the Housing Development Board (HDB), the government agency whose flats house 80 per cent of Singapore’s citizens. Most are sold at 20 to 50 per cent of the price for an equivalent open market flat, though some are available at low rents of five to 20 per cent of household income. A complex formula is used to ensure a representative ethnic cross-section in every development – part of an explicit commitment to engineering a cohesive nation state from Singapore’s various ethnic groups.
The HDB makes a loss every year (around £1.8bn in 2017-18), but the rationale for its work is aspirational rather than welfarist. In the words of Singapore’s founding leader Lee Kuan Yew: “That loss is to give the man an asset which he will value, which will grow in price as the country develops, as his surroundings become better.”
Both sides may also look at Singapore’s education system in admiration. The city spends less on education than the UK (as a proportion of GDP), but Singapore consistently ranks at the top of the PISA international education league tables. The system emphasises teacher-led education and is accused of prioritising rote learning over creativity, but it is also based on paying excellent salaries for the best teachers, and rigorous testing of educational reforms.
It is simplistic to think that one can simply replicate the conditions and practices of a tropical city-state in south east Asia in a northern European city. Culture, history and geography all underline differences. But the focus on housing and education does respond to two of the biggest challenges of maintaining social cohesion and economic welfare in an open global city economy.
As London’s economy has opened up, the city has already seen a surge in both house prices and workforce qualification levels. Londoners are competing for housing and jobs with people from across the UK and beyond. House prices have jumped from seven to 13 times median salaries since 2002, putting them out of reach of more and more Londoners on modest incomes and without access to capital, and dramatically widening wealth inequality.
Similarly, London is highly qualified: 53 per cent of London’s workers are qualified to degree level (compared to 31 per cent in the rest of the UK). But the population as a whole doesn’t compare so well: London scores less well than many other global cities – and less well than other English regions – when compared on the basis of international tests such as PISA and PIAAC. Without the wealth or skills to compete, it is hard for Londoners or other British citizens to make their way in the capital.
Singapore’s oddity is that it includes both low-tax, low-regulation elements that commend it to global capital; and active intervention in transport, housing and education policy to protect the environment, ensure social cohesion, and to enable the local population to benefit from the opportunities that global city trading can offer. Whether or not the UK chooses the former, London urgently needs to consider the latter if all citizens are to feel they have a stake in their city and an opportunity to share in its prosperity.
Richard Brown is research director of the Centre for London.