“Nobody knows anything”: A brief guide to how Brexit could affect Britain’s cities

You can give up on this for a start. Image: Getty.

A consensus has rapidly emerged around the correct way to respond to Britain’s exit from the European Union: blind panic.

There’s a reason for this. It’s not that new arrangements will inevitably be a disaster (though it’s far from clear that they won’t be) – it’s simply that all bets are off. It’s not clear whether we’ll stay in the single market, or whether there’ll be a recession, or whether the United Kingdom of Great Britain & Northern Ireland will even exist in a few year’s time.

Given all that, the idea that we can predict with any confidence what specific bits of public policy will look like in the near future is a bit of a nonsense. Which, for a man who writes quite a lot about housing/transport/devolution, is a bit of a problem, if I’m honest.

But we are where we are – even if we might be somewhere entirely different by this time tomorrow – so let’s survey the landscape. Here’s a brief guide to why Brexit means uncertainty for the sort of things CityMetric cares about.

Devolution

One man has been the driving force behind the Northern Powerhouse, Midlands Engine and all the other names for the revolutionary idea that maybe British cities should have some measure of control over their own destinies: chancellor George Osborne.

Except, he’s almost certainly not going to be chancellor any more come the autumn. Since he’s ruled himself out of the Tory leadership contest – presumably on the quite reasonable grounds that he would lose – Osborne will almost certainly be less powerful in the next ministry than he’s been in this one.

Without anyone pushing it – and with much of the government distracted by the biggest political event to hit this country in decades – it seems likely that the devolution agenda will come to a halt. And any city that doesn’t have a devolution deal in place now – hi, Leeds – is pretty unlikely to get one.

It’s possible that grassroots pressure from local government will keep the devolution train rolling: London’s mayor Sadiq Khan is already using referendum result to agitate for more powers to London. But it’s unclear how cities without mayors would even make that case.

Oh, and local authority funding will probably be cut because that happens every time there’s a Budget in this country, so.

On which note:


Transport

We haven’t had an emergency budget yet. Once we have a new prime minister, and a new chancellor, though, we almost certainly will.

Even if the promise of an extra £350m a week to spend on domestic priorities hadn’t been a lie – which it was – that money wouldn’t materialise until we actually leave the EU, some time in 2018 at the earliest. In the mean time, economic turmoil means that tax revenues are likely to fall, and extra austerity is the order of the day.

Now personally, I’m quite a fan of Keynsianism: I reckon that making some serious infrastructure investments could be just the counter-cyclical action we need to strengthen the British economy over the next few years. Ministers, however, rarely ask for my views, and they’re distinctly unfashionable in a Westminster more concerned about the deficit.

So don’t be surprised if new grand-projets are in short supply for a while. Indeed, there’s no guarantee that those already approved will go ahead. The new line between Manchester and Leeds (£20bn), London’s Crossrail 2 (£30bn), High Speed 2 (£55bn) – any or all of them could be juicy targets for a new chancellor looking for savings.

Housing

Trying to work out what Brexit will do for housing policy is like trying to work out what your lunch today will do for how you feel tomorrow. There’s a link, but good luck trying to find it.

Here’s what we can say for certain. The referendum has hit the share price of Britain’s house buildings very, very hard. See if you can spot the day of the vote on this chart of Taylor Wimpey’s share price:

Image: Wolfram Alpha.

Explaining small movements in share prices is a mug’s game, but that is not a small movement – it’s about 30 per cent – nor is it an isolated case. The consensus is that Brexit will mean a fall in house prices. That in turn will mean the housebuilders build less, which will make it harder to deal with the fact we don’t have enough homes.

Then again, one big factor in any fall in house prices will be a rise in interest rates. Such a rise may not happen – indeed, there’s also been some talk of a fall in interest rates, effectively to negative levels, so who knows.

Even if house prices do fall, it’s unlikely to make things easier for any first-time-buyer who isn’t sat on a pile of cash, because mortgages are probably going to get more expensive: you just won’t be able to afford a cheaper house than you couldn’t afford before.  As for renters, if landlords are feeling poorer – which they will be – they’ll probably at least try to increase rents. (Whether the market will bear this is another question.)

Then again, if Brexit really does mean a fall in immigration – or even just making it very clear to existing European residents that they’re no longer welcome – Britain’s population increase could slow, or even go into reverse. In 10 years time, it’s quite possible we’ll be talking about the brain drain and half empty cities once again – in which case, housing would be cheaper, but this may not be much comfort.

To sum up: nobody knows anything. But unless you’re a first-time-buyer with £200k in the bank, it’s difficult to see this as good news.

 

There’s more – there’s so much more. The EU directs a small fortune towards regional cultural and regeneration projects - those are all gone, and it’s hard to see anything replacing them. Universities are fretting about lost funding, too, and since they make a big economic contribution to so many British cities, that’s bad for those cities, too.

This week, hilariously, London is hosting the Business & Climate Summit, where leaders from around the globe are meant to be discussing how to implement April’s Paris Agreement on reducing carbon emissions. Climate secretary Amber Rudd says the UK remains committed – but since we’re due a new government, and since abandoning international agreements is the order of the day, it’s difficult to feel too confident.

Oh, yeah, and foreign direct investment will be frozen, at best, and a load of multinationals may or may not leave the country.

On the upside, in the immediate future, Brexit is extremely unlikely to negatively affect the tube map.

Small mercies, eh?

Jonn Elledge is the editor of CityMetric. He is on Twitter, far too much, as @jonnelledge.

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Can you have capitalism without capital? Brighton, Ankara, Ghent and the intangible economy

The Fusebox, Brighton. Image: WiredSussex.

As you head north out of Brighton on the A23 things take a distinctly granular turn. The cool bars and trendy eateries give way to second-hand shops and nail bars.

Looming over the area, New England House, an eight-storey brutalist office block, is home to Wired Sussex, a collection of digital and media companies, as well as its offshoot The Fusebox. Here, a collection of entrepreneurs, tech visionaries and creative technologists are seeking to transform their ideas into successful businesses. This island of cutting-edge thinking, surrounded by the evidence of the glaring consequences of austerity, could stand as a synecdoche for the suddenly vogueish concept of the “intangible economy”.

Towards the end of last year, on Radio 4’s Start The Week, Jonathan Haskel, author of Capitalism Without Capital, laid out the features of this brave new economy. The ideas are scalable, have sunk costs, their benefits spill over, and they have synergies with other intangible assets. All of these things are, to a greater or lesser extent, attributes featured in the virtual reality games, apps for care home workers, and e-commerce ideas mapped out by the bright sparks in the Fusebox.

Its manager, Rosalie Hoskins, explains that it exists to support the work of small companies doing creative work. Within these clean white walls they can bounce their ideas off each other and reap the fruits of collaboration. “We’ll provide the doors,” she says. But “it’s up to them to open them.”

One innovative thinker hoping to make her entrance is Maf’j Alvarez. She tells me she studied for a masters in digital media arts at the University of Brighton, and describes herself as an ‘interactive artist’. “Right now I am playing with virtual reality,” she tells me. “There’s a lot of physics involved in the project which explores weight and light. It definitely has a practical application and commercial potential. VR can be used to help people with dementia and also as a learning tool for young people.”

The Fusebox, she says, is “about collaboration. The residents of the Fusebox are in all a similar situation.”

The willingness to work together, identified by Haskell as a key element of the intangible economy, is evident in the Fusebox’s partnership with like minded innovators in Ankara. Direnç Erşahin from İstasyon, a centre for “social incubation” based in the Turkish capital, visited the Fusebox toward the end of last year.

“It was a good opportunity to exchange knowledge about the practice of running a creative hub – managing the place, building a community and so on,” he says.

Erşahin and his colleagues have launched a fact-checking platform – teyit.org – which he believes will provide “access to true information”. The co-operation between the Fusebox in Brighton and İstasyon in Ankara  is “a good opportunity to reinforce a data-oriented approach and university and society interaction,” he argues.

But the interaction between wider society and the denizens of the intangible world is often marked by friction and, ironically, a failure of communication.

This point is underlined by Aral Balkan, who runs a company called indie.ie which aims to develop ethical technologies. “There’s a good reason we have a trust problem,” he says. “It’s because people in mainstream technology companies have acted in ways that have violated our trust. They have developed systems that prey upon individuals rather than empowering them.”

A former Brighton resident, Balkan is almost a walking definition of Theresa May’s “citizen of nowhere”. He is a regular speaker on the TED and digital circuits, and I crossed paths frequently with him when I covered the industry for Brighton’s local newspaper. He left the city last year, chiefly, he tells me, in protest over the UK government’s overweening “snooper’s charter” laws.


He has Turkish and French citizenship and is now based in Malmö, Sweden, while working with the city of Ghent on a radical redevelopment of the internet. “Ghent is a beautiful example of how location affects the work,” he tells me. “They don’t want to be a smart city, they want to encourage smart citizens. We are exploring alternatives.”

Karl-Filip Coenegrachts, chief strategy officer at the City of Ghent, is another believer in the synergies made possible by the intangible economy. “The historic perspective has impacted on the psychology and DNA of the city,” he says. “The medieval castle built to protect the nobility from the citizens not the other way around. People in Ghent want to have their say.”

Left out of this perspective, of course, are those who cannot make their voice heard or who feel they are being ignored. The fissures are easy to find if you look. The future of Belgium’s coalition government, for example, is threatened by Flemish nationalists in the wake of a scandal over the forced repatriation of 100 Sudanese migrants. In Ankara, President Recep Tayyip Erdogan has purged local government and continues to stamp on any dissent.

In the UK, the gig economy makes headlines for all the wrong reasons. Back in the area around the Fusebox, the sharp observer will notice, alongside the homeless people curled up in sleeping bags in charity shop doorways, a stream of gig-worker bikers zooming from one order to another.

The intangible economy throws up all-too tangible downsides, according to Maggie Dewhurst, vice chair at the Independent Workers Union of Great Britain. She gives short shrift to the idea of ‘capitalism without capital’.

“It does get a bit irritating when they muddy the waters and use pseudo academic definitions. They pretend tangible assets don’t exist or are free.”

In fact, she adds, “The workers are a human resource.”