Boris Johnson used to be a mayor. So what does his premiership mean for Britain’s cities?

The coming man. Image: Getty.

David Cameron and George Osborne’s departure from Downing Street involved no change of party in government or its legislative arithmetic, but it did change how cities were treated by government. The Northern Powerhouse went from hot property to the political deep freeze from which it has only recently thawed.

But now a new leader has stepped into Downing Street and for the first time in history he is a former directly elected mayor. What might this mean for cities and the people living in them?

Boris Johnson clearly won his party’s leadership ballot and the keys to No 10 on the back of his support for Brexit at the referendum, and for pursuing the hardest of Brexits since then. This policy will hit cities hardest.  Exports to the EU dwarf all other markets, and impaired access to the single market will hurt cities.

Source: ONS 2018, Regionalised estimates of Great Britain service exports by NUTS3, NUTS2 and joint authority; HMRC 2018, Regional Trade Statistics; ONS 2018, Regional trade in goods statistics disaggregated by smaller geographical areas; ONS 2018, Business Register of Employment Survey.

“If the Brexit vote taught us anything, it is that too many parts of the UK feel left behind [and] don’t get the investment they need” – Boris Johnson

Addressing the underlying economic issues that have driven the divergence between the Greater South East and the rest of the country is a huge undertaking. But the first step to bridging this divide is to reverse the last decade’s worth of cuts to local government. Northern cities have been cut twice as hard as non-urban areas and have seen, on average, a 20 per cent cut in their day-to-day budgets. This amounts to £386 less per city dweller, compared to £172 less per person in non-urban areas.

Johnson’s views on major national transport infrastructure, from Heathrow to High Speed 2 range from hostile to circumspect.  But his views on how he helped poorer Londoners by improving transport are a blueprint for how as Prime Minister he could help leaders of other major cities do the same.

By increasing public transport capacity, and cutting delays by 30 per cent, we helped people on modest incomes to commute easily to the opportunity areas and to get good jobs” – Boris Johnson

Johnson should use his experience in City Hall to support urban leaders in Manchester, Birmingham, Bristol and Leeds build the Crossrails they will need to relieve growth-sapping congestion. City-region schemes will open up city centre jobs and amenities to residents not just within the city but of nearby towns too, many of which have not just faced the collapse of local industry but also the misfortune of being close to poorly performing cities. And every city – not just those with metro mayors – should be given the same powers over buses that Johnson had when he was mayor of London.

“University isn’t for everyone – which is why we need more apprenticeships” – Boris Johnson

In many of the left-behind places Johnson talks about, more young people go into further education rather than university. This means that the 20 per cent cuts to further education funding since 2010 has hit young people in left behind cities harder. Johnson has committed to improve opportunities for young people in these cities. His proposals to improve access to FE will be a first step.

And it is not just young people hit by cuts to FE in these places. Adult education has been cut by 45 per cent since 2010.  Lower skill levels and the higher vulnerability of cities such as Sunderland and Mansfield to further automation and globalisation mean that workers and businesses in these cities will need access to high quality lifelong learning to adapt and retrain.

As a former mayor of a major city, Johnson should understand how urban economies function, and how constrained local leaders are in taking action to keep up with growth. The main driver of the UK’s national economic imbalance is the underperformance of big cities north of the Watford Gap. Manchester, Leeds and Birmingham are working hard to close this gap but they need support from Johnson to ensure they regain their place as powerhouses of the national economy.

As the mayor who ordered the first London Finance Commission, the new Prime Minister should now use his power to put some of the tax powers that Commission recommended – such as fully devolved stamp duty, businesses rates and council tax – into the hands of big cities and fast-growing ones such as Cambridge so that they can build the housing and transport infrastructure they need to and remain open and attractive places to newcomers and business.

Johnson will give a speech somewhere in the North later this week – a clear signal that he wants this to be as a key priority for him as Prime Minister. He should use this speech to build on what he has said and done in the past, especially while mayor of London, to finally lay out, three years on from the referendum, exactly how people in towns and cities across the country can at last take back control.

You can hear more about this topic on this week’s podcast.

Simon Jeffrey is a policy officer at the Centre for Cities, on whose blog this article first appeared.

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A new wave of remote workers could bring lasting change to pricey rental markets

There’s a wide world of speculation about the long-lasting changes to real estate caused by the coronavirus. (Valery Hache/AFP via Getty Images)

When the coronavirus spread around the world this spring, government-issued stay-at-home orders essentially forced a global social experiment on remote work.

Perhaps not surprisingly, people who are able to work from home generally like doing so. A recent survey from iOmetrics and Global Workplace Analytics on the work-from-home experience found that 68% of the 2,865 responses said they were “very successful working from home”, 76% want to continue working from home at least one day a week, and 16% don’t want to return to the office at all.

It’s not just employees who’ve gained this appreciation for remote work – several companies are acknowledging benefits from it as well. On 11 June, the workplace chat company Slack joined the growing number of companies that will allow employees to work from home even after the pandemic. “Most employees will have the option to work remotely on a permanent basis if they choose,” Slack said in a public statement, “and we will begin to increasingly hire employees who are permanently remote.”

This type of declaration has been echoing through workspaces since Twitter made its announcement on 12 May, particularly in the tech sector. Since then, companies including Coinbase, Square, Shopify, and Upwork have taken the same steps.

Remote work is much more accessible to white and higher-wage workers in tech, finance, and business services sectors, according to the Economic Policy Institute, and the concentration of these jobs in some major cities has contributed to ballooning housing costs in those markets. Much of the workforce that can work remotely is also more able to afford moving than those on lower incomes working in the hospitality or retail sectors. If they choose not to report back to HQ in San Francisco or New York City, for example, that could potentially have an effect on the white-hot rental and real estate markets in those and other cities.

Data from Zumper, an online apartment rental platform, suggests that some of the priciest rental markets in the US have already started to soften. In June, rent prices for San Francisco’s one- and two-bedroom apartments dropped more than 9% compared to one year before, according to the company’s monthly rent report. The figures were similar in nearby Silicon Valley hotspots of San Jose, Mountain View, Palo Alto.

Six of the 10 highest-rent cities in the US posted year-over-year declines, including New York City, Los Angeles, and Seattle. At the same time, rents increased in some cheaper cities that aren’t far from expensive ones: “In our top markets, while Boston and San Francisco rents were on the decline, Providence and Sacramento prices were both up around 5% last month,” Zumper reports.

In San Francisco, some property owners have begun offering a month or more of free rent to attract new tenants, KQED reports, and an April survey from the San Francisco Apartment Association showed 16% of rental housing providers had residents break a lease or unexpectedly give a 30-day notice to vacate.

It’s still too early to say how much of this movement can be attributed to remote work, layoffs or pay cuts, but some who see this time as an opportunity to move are taking it.

Jay Streets, who owns a two-unit house in San Francisco, says he recently had tenants give notice and move to Kentucky this spring.

“He worked for Google, she worked for another tech company,” Streets says. “When Covid happened, they were on vacation in Palm Springs and they didn’t come back.”

The couple kept the lease on their $4,500 two-bedroom apartment until Google announced its employees would be working from home for the rest of the year, at which point they officially moved out. “They couldn’t justify paying rent on an apartment they didn’t need,” Streets says.

When he re-listed the apartment in May for the same price, the requests poured in. “Overwhelmingly, everyone that came to look at it were all in the situation where they were now working from home,” he says. “They were all in one-bedrooms and they all wanted an extra bedroom because they were all working from home.”

In early June, Yessika Patapoff and her husband moved from San Francisco’s Lower Haight neighbourhood to Tiburon, a charming town north of the city. Patapoff is an attorney who’s been unemployed since before Covid-19 hit, and her husband is working from home. She says her husband’s employer has been flexible about working from home, but it is not currently a permanent situation. While they’re paying a similar price for housing, they now have more space, and no plans to move back.

“My husband and I were already growing tired of the city before Covid,” Patapoff says.

Similar stories emerged in the UK, where real estate markets almost completely stopped for 50 days during lockdown, causing a rush of demand when it reopened. “Enquiry activity has been extraordinary,” Damian Gray, head of Knight Frank’s Oxford office told World Property Journal. “I've never been contacted by so many people that want to live outside London."

Several estate agencies in London have reported a rush for properties since the market opened back up, particularly for more spacious properties with outdoor space. However, Mansion Global noted this is likely due to pent up demand from 50 days of almost complete real estate shutdown, so it’s hard to tell whether that trend will continue.

There’s a wide world of speculation about the long-lasting changes to real estate caused by the coronavirus, but many industry experts say there will indeed be change.

In May, The New York Times reported that three of New York City’s largest commercial tenants — Barclays, JP Morgan Chase and Morgan Stanley — have hinted that many of their employees likely won’t be returning to the office at the level they were pre-Covid.

Until workers are able to safely return to offices, it’s impossible to tell exactly how much office space will stay vacant post-pandemic. On one hand, businesses could require more space to account for physical distancing; on the other hand, they could embrace remote working permanently, or find some middle ground that brings fewer people into the office on a daily basis.

“It’s tough to say anything to the office market because most people are not back working in their office yet,” says Robert Knakal, chairman of JLL Capital Markets. “There will be changes in the office market and there will likely be changes in the residential market as well in terms of how buildings are maintained, constructed, [and] designed.”

Those who do return to the office may find a reversal of recent design trends that favoured open, airy layouts with desks clustered tightly together. “The space per employee likely to go up would counterbalance the folks who are no longer coming into the office,” Knakal says.

There has been some discussion of using newly vacant office space for residential needs, and while that’s appealing to housing advocates in cities that sorely need more housing, Bill Rudin, CEO of Rudin Management Company, recently told Spectrum News that the conversion process may be too difficult to be practical.

"I don’t know the amount of buildings out there that could be adapted," he said. "It’s very complicated and expensive.

While there’s been tumult in San Francisco’s rental scene, housing developers appear to still be moving forward with their plans, says Dan Sider, director of executive programs at the SF Planning Department.

“Despite the doom and gloom that we all read about daily, our office continues to see interest from the development community – particularly larger, more established developers – in both moving ahead with existing applications and in submitting new applications for large projects,” he says.

How demand for those projects might change and what it might do to improve affordable housing is still unknown, though “demand will recover,” Sider predicts.

Johanna Flashman is a freelance writer based in Oakland, California.