CITY OF DREAMS

London is too virile to be

deflected by recession, no matter how deep, argues Simon Jenkins

LONDON IS in crisis. London is seizing up. London lacks leadership. Its economy is faltering. Homelessness is soaring. Edu- cation is collapsing. Public services are in terminal decline. Libraries are closing . . and, for good measure, the theatre is dead. Crisis, crisis, crisis. These are some phrases I have culled from London's local newspa- pers over the past few weeks.

Ever since William Cobbett and his Great Wen, the language of urban apoca- lypse has been part and parcel of living in London. The capital is certainly passing through one of its more severe economic downturns. House prices, for the first time in most people's memory, have been falling for three years. As much as a fifth of the central business district is available for letting. The colossal Canary Wharf is in receivership, along with 15 of the largest east London commercial and residential projects, pride of the Governments' Enter- prise Zone.

Yet London's economic cycles are often deep but never particularly long. They are best observed in their most observable form, the ups and down of building devel- opment. Each high water leaves a tide- mark on London's geology, detectable in its architecture. The great improvement boom of the 1770s gave us Georgian Bloomsbury, Marylebone, Chelsea. The post-Waterloo boom of the 1820s left Regency Belgravia, Regent's Park, Bayswater. It ended in the stock-market crash of 1825. A resurgence at the end of the 1830s led to Pimlico, Islington and St John's Wood, collapsing in the crash of 1847.

The Great Exhibition lifted London out of the 1850s slump and left us glorious Kensington. It coated north, west and much of south London in Italianate and stucco, separated by great lakes of bylaw grey terracing, until the slump of the 1880s called another halt.

Further booms occurred in the suburban 'ripple' expansion of the 1930s, in Metroland and Finchley, in bypass Tudor and roadhouse Georgian. The Cycle gath- ered pace with the end of postwar controls in the 1960s and early 1970s, to be stopped by development taxes just when the market was itself exhausted. Boom returned with the Big Bang and Enterprise Zone incen- tives in the mid-1980s.

The signal for the end of a London eco- nomic cycle is always the same: bankrupt property developers, usually by the dozen. Take the greatest of them all, John Nash. His struggle in the 1820s to get Regent's Street and Regent's Park built and let makes Canary Wharf seem a passing local difficulty. Only a handful of Nash's 50 park villas were built. The subcontractor of the double circus at the top of Portland Place went bankrupt with just half of one circus finished, now Park Crescent. Nash had to abandon a unified design for Regent's Street itself — sadly making easi- er its piecemeal demolition and redevelop- ment when leases ran out early this century. He had to build the quadrant by Piccadilly Circus himself, even persuading his bricklayers to take shares instead of cash.

The richer the development, the more spectacular the bankruptcy. Of the three men selected by the Grosvenor Estate in the 1820s to develop the Duke of Westmin- ster's fields in Belgravia — Smith, Cundy and Cubitt — only the redoubtable Cubitt survived one building cycle. In Chester Square, now home to the richest of Arabs as well as Lady Thatcher, poor Cundy cramped houses tight round his mangy patch of grass, just getting them completed before going bankrupt.

Even Cubitt had his troubles. He built what turned out to be the Canary Wharf of his day at Albert Gate on Knightsbridge: the two largest private houses yet seen in London. They were equipped with such gadgets as hoists and even a passenger lift, but stood empty for years. Londoners dubbed them Malta and Gibraltar as they would 'never be taken'. One, now the French embassy, eventually went to Hud- son, the railway king. It helped bankrupt him.

Further west, Kensington Palace Gar- dens took a quarter of a century to be developed. In the 1830s, the Crown Com- missioners thought they would erect the most sumptuous residences in Europe, suit- able neighbours for a royal palace. For six years they tried to find a developer. Not until 1844 did they induce a builder named Blashfield to take on the first 20 sites. In three years he was bankrupt with not one house built. The Commissioners auctioned his plots but found few takers. Develop- ment did not commence until the next boom in the late-1850s.

But the most interesting bankruptcies of the 19th century (and the best parallel to today) were in Notting Hill. Old man James Ladbroke had a stab at developing what is now Ladbroke Square in the 1820s, but fell foul of the great crash of 1825, leaving a dejected circus turned over briefly to horse-racing as the Hippodrome. By the 1840s two developers, Duncan and Connop, had taken leases, gone bankrupt within five years and surrendered them to their bankers. These in turn were bitten by the property bug. With the next boom, everybody wanted a share of the action. Notting Hill was briefly London's gold rush. Country parsons, the widows of Indi- an grandees, unsuspecting Trollopian aris- tocrats treated the Ladbroke estate like a South American railway share. Most lost everything.

On the Portobello and Notting Hill hold- ings a clergyman, Samuel Walker, inherited and blew what was then a fortune of £250,000. He lasted just four years. A Mr Pocock took the old Westbourne Park estate, spent his fortune on it and died worth just £9,000. The only man to make serious money in these parts was a splendid rogue named Blake. He came to the game with qualifications that proved far more useful than a knowledge of finance or architecture. He was a Calcutta indigo planter and sugar dealer. He wandered the brickfields of Notting Hill picking up every- one else's bankrupt properties and even managed to survive the 1850s slump.

For years the district languished. Lad- broke Gardens was known as Coffin Row because of its half-built, gap-toothed hous- es, described by Building News as 'a grave- yard of buried hopes . . . naked carcasses, crumbling decorations, fractured walls, slimy cement'. It recovered through multi- occupation, as home to the poorest of the City's poor, the bricicmakers and potters, the Irish and then the West Indians. Not until the leases fell due in the 1960s did it realise the ambition of its original owner, not just one building cycle but a whole century on. Such is the penalty of over- rapid development.

Booms and bankruptcy are not special but normal in the evolution of cities. Prop- erty appears vulnerable to what economists call a hog cycle. In good times, developers rush in, confident that they will find takers before the next downturn. In the lag between development and letting, there is chronic oversupply, exacerbating the next downturn.

Planning should iron out the peaks and troughs in this cycle. It rarely does. At the height of the last boom, in the mid-1980s, City of London planners were offering office permissions with reckless abandon to compete with equally reckless expansion in Docklands. They thus encouraged the oversupply now seen across the London skyline. Along with the Docklands Devel- opment Corporation, the City was the biggest culprit for the depth of the present slump. This was not even benign neglect: it was anti-planning.

So what now? We are of course hearing all the things that were said of previous slumps. Predict an upturn and you will be told, this one is different. This one is 'ter- minal'. London employment peaked in the early 1960s and recovered only slightly in the late-Eighties, when the rest of the south-east was booming. The property market is no longer cyclical, it has col- lapsed. The game is up. History says this is rubbish. The property market in London has never collapsed. It is in rude health, doing what it's supposed to do: fixing prices to bring demand and supply into equilibrium. It has slashed office rents to a half what they were a year ago. House prices from Kensington across to Tower Hamlets are down between 15 and 20 per cent on the year. As a result, the out-migration of offices has almost stopped. Last year only 14 substantial employers left London, compared with three times that number in 1990. This year even fewer will leave. Devaluation has attracted foreign buyers to the top end of the market. At the bottom, flats are avail- able at auction for as little as £15,000.

London cannot fail to revive. Its indus- tries are what they have been for cen- turies, growth ones: government and administration, finance, the law, tourism, education, the arts. London has never depended on manufacturing, everywhere in decline. And bureaucracy and finance, despite efforts to decentralise, grow remorselessly in the environs of political power. The most recent tenants to have expressed interest in Docklands were a Japanese bank, an American university, a British film maker, a government depart- ment and London Transport: a typical spread of London's growth businesses.

Certainly there are aspects of the next upturn that will make it patchy. Lad- broke's contractors erected London ter- raced houses that have proved remarkably adaptable to each shift in the development cycle: from multi-occupation to single-fam- ily use, from sweatshops to offices and back to houses again. Canary Wharf or the half dozen blocks over Landon rail termini were aimed at the computerised trading floors that streaked through property fash- ion in the mid-1980s. They are about as adaptable as nuclear power stations.

The latter blocks may be more expensive to maintain than can be covered by current market rents, even after all development costs have been written off in domino bankruptcies. This means that the standard of upkeep must degenerate, as in Victorian Notting Hill, to the point where demand re-emerges. Some may be put in mothballs, like Centre Point, for a decade or more, sealed monuments to reckless government incentives and foolish development. Some may be reclaimed by nature like bombsites or the temples of Eastern civilisations. Trees may sprout from cracks in South Quay, rare orchids flourish in the heating ducts of London Wall.

But others may slide into 'informal' resi- dential use, as some blocks of council flats are now filling with immigrants of dubious legality via the black economy. The high- rise hotels of the Costa Brava, once packed with British tourists, are now Hong-Kong style rookeries full of north African migrants. This could be the pattern for east London.

You might not easily convert 30,000 square feet of trading floor into middle- class residential accommodation. But many newly arrived refugees would pay something for the privilege. The plumbing can ride on a wing and a prayer. And some future Rachman will have the devil's job getting them out. It may seem implausible to have Canary Wharf full of Bosnians sleeping rough, but I am sure the builders of Spitalfields' town-houses never envis- aged them packed with the children of the plains of Bengal. Developers who despair of attracting yuppies to their dockside duplexes will find housing-list tenants, Nigerian immigrants, even squatters preferable to emptiness.

The truth must be that as long as the city can keep its economic arteries flowing, it can recover. These arteries are those of traditional urban renewal, of buildings, the raw material of cities, kept responsive to the changing demand for living space. We must not worry if Peckham survives on a diet of social security payments, stolen cars, drugs and leather goods. We must not worry if the fancy blocks on the east- ern rim of the City become, perhaps for our lifetime, home to shanty towns.

In the past, planning has tended to exag- gerate peaks and troughs, an absurdity made worse by the lack of any London- wide overview. The rivalry between the City and Docklands in the mid-1980s to see who could get more office blocks built before the boom collapsed was a scandal. There must be some statutory authority put in place to stop this in future. The his- tory of London since the demise of the GLC says that Whitehall is not a compe- tent substitute.

But that is just machinery. Urban history is the quietest of tutors; its message is so often drowned in the city's din. But it tells us that in the life of cities there is only the oldest of cycles, birth and rebirth. There is no crisis.

Simon Jenkins is a columnist for the Times.