Thatcherism, Class Politics, and

Urban Development in London

Chris Toulouse

ABSTRACT: This paper uses class analysis to explore the politics

of urban development in London in the 1980s. It shows how the
Thatcher government’s economic and urban policies had the strate-
gic effect of shaping economic restructuring in the city and trans-
forming the sociological bases of class politics. The broad impact of
Thatcherism in London is discussed, with particular attention being
paid to the financial district ("the City") and the Docklands. The
paper concludes with a discussion of the struggle between the
Thatcher government and the London Labour Party which culmi-
nated in the "poll tax."

There is by now broad interest in the idea that the advanced capitalist
societies have entered a new era in the organization of capitalism. There
are a number of theories describing the essential characteristics of this
new era: post-Fordism (Mayer, 1991), disorganized capitalism (Lash and

Urry, 1987), postmodernity (Harvey, 1989), and post-industrialism

(Savitch, 1989). Many researchers interested in these theories look to the
&dquo;world cities&dquo; for evidence of the most advanced manifestations of the
new era (King, 1990). For it is here - to use the imagery of Castells

(1990) - that the evolving electronic networks and informational flows

of transnational producers, finance capital and corporate services are
brought to earth and linked together. It is in metropolises like New York,
London, and Los Angeles that researchers have best documented the
social polarization wrought by global economic restructuring: in the
occupational order (Sassen, 1991), in the housing market (Smith and
Williams, 1986) and in the configuration of public space (Davis, 1991).
Curiosly, however, much of this research pushes the concept of class
into the background. In attempting to model the dynamics of the new era,
theorists have focused on the increasing mobility of capital and the lever-
age transnationals and international capital markets can now exert on

Department of Sociology, Columbia University, Broadway at 116th Street, New York,

NY 10027. An earlier version of this paper won the Albert Szymanski Memorial Award from
the Marxist Section of the American Sociological Association in August, 1990.
56

state policy-making at all levels. In post-Fordist terms, capital is migrat-

ing toward a new regime of accumulation, and nation-states and localities
are scrambling to foster modes of regulation appropriate to particular
niches in the global circuit of capital. When classes appear in these
accounts they are usually in the expiring form of the old industrial work-
ing class, fading away with unions and the dwindling socialist commit-
ments of left-wing parties, or in the emerging forms of an international
upper class and a professional middle class defining a new consumer
culture through its consumption of designer goods. In short, and without
indicting the often complex arguments of many theorists, we may say that
there is a general tendency to conceive classes either as casualties or as
emerging consequences of the restructuring process imposed by the glob-
alization of capital.1
This paper offers an alternative conception: that classes and class poli-
tics are a cause as well as a consequence of social polarization. It uses the
&dquo;world city&dquo; of London and the urban policies of the Thatcher govern-
ments as a case study. Instead of approaching urban development in
London as a consequence of the globalization of finance capital upon the
options of the British state, this paper argues that much of what
happened in London was caused by the Thatcher government’s attempts
to use state power to shape the social polarization wrought by economic
restructuring to class-based ends.
The Role of Class Politics in Urban Development
The argument builds on several assumptions about the nature of the
class phenomenon that arestated at the outset for the reader. These
assumptions developed
are further in the paper.
Class is defined by ownership of productive property and the posses-
sion of marketable skills, which together determine what a household is
likely to procure from the markets for labor, credit and essential
commodities (like housing, schooling and health care) (Walton, 1990:
142-3, 164-5). However, classes are not simply aggregates of individuals
with similar amounts of power to defend their material interests. They
are first and foremost collective agents whose most organized groups
(unions, employers’ lobbies, parties) are involved in a constant struggle
over the way goods and services are produced, distributed and consumed

(or, in other words, over what the households in each class are likely to
procure from the labor, credit and commodities markets).
The most important point for our purposes here is that classes are
continually forming and reforming one another in the course of this
struggle (Przeworski, 1977; Thompson, 1978:147-50; Stark, 1982:316-21).
The fulcrum of struggle in capitalist democracies is the disposition of
state power. Class-based parties utilize the market-making powers of the
state in an attempt to shape economic restructuring to their own ends.
 57

They can do this by steering state spending and private capital to regions
and economic sectors where they are already politically strong and by
building up new ranks of occupations and types of localities to call on for
support in the future. For example, Mollenkopf (1983) describes how the
Democrats and Republicans used state spending on suburbanization, the
interstate highway system, and the U.S. military to build up the social
bases of their vote. Parties can also use the state’s powers to disorganize
the social bases of their opponents. Thus, if the working class in advanced
capitalist societies is presently weak, it is not only because economic
restructuring is polarizing the labor market, it is also because other
classes have succeeded through anti-union legislation, welfare cuts, priva-
tization, and (as we will see here) urban development policies, in frag-
menting and disorganizing the occupational and communal basis upon
which working people mobilize.
This argument will be developed through an analysis of the Thatcher
government’s urban strategy and its impact on London. The spatial
impact of Thatcherism’s economic strategy on Britain’s regions will be
discussed first, followed by an analysis of the strategic effects of its urban
strategy on the country as a whole. The middle part of the paper focuses
on the effects of the economic and urban strategies on the social struc-
ture and built environment of London, and the London Docklands area
in particular. The last section examines the political struggle between the
Thatcher government and the London Labour Party over the implemen-
tation of the urban strategy. This struggle escalated into a series of
increasingly direct attempts to prevent Labour from mobilizing opposi-
tion. In 1986 it led to the abolition of the Labour-controlled Greater
London Council, and in 1990 it culminated in the debacle of the &dquo;poll
tax.&dquo;

Thatcherism as a Class Project

A major criticism of applying class analysis to the workings of

Thatcherism in London is that it assumes that the Conservative Party had
a class-conscious intent to foster the long-term
interests of capital
(O’Leary, 1987; D. King, 1987). This paper analyzes Thatcherism in class
terms without making any such assumption. Thatcherites had no master
plan for the economy based on any inexorable logic of capital. Given the
range of institutional arrangements and political regimes that sustain
capitalist economies, it seems unlikely that any such logic exists (Block,
1989). In place of a grand strategy, Thatcherites had a set of general
priorities based on the aspirations of the suburban middle class and a
steadfast determination to push small-scale changes toward long-term
political gains. As far as her supporters were concerned, the point of
Margaret Thatcher’s elevation to the party leadership in 1975 was not to
restore the profitability of capital, but to recover the moral and political
58

order (&dquo;the smack of firm government&dquo;) they thought existed in the

halcyon days of Empire (Hall, 1988; Bulpitt, 1986; Boyle, 1988). The class
nature of this project is more readily appreciated if analysis focuses not
on the intentions or aspirations of Conservative urban policies, but
rather on their strategic effects.
This is seen in the spatial effects of Thatcherism’s economic strategy.
The essential break that the government’s economic strategy made with
previous attempts to modernize the British economy was to work with
the trends of economic restructuring evident since the late 1960s (and
particularly deindustrialization), instead of trying to shore up the manu-
facturing bases of post-war politics. The industrial cities and regions that
had provided the sociological base of the Labour Party and the corpo-
ratist consensus previous Conservative governments had supported were
abandoned to their own devices. The intention was to revive the economy
and to restore Britain’s international standing by forcing regions and
localities into more open competition for global capital. The strategic
effect was to abandon all manufacturing that could not compete inter-
nationally and to compel cities to specialize in corporate services and
high income consumer markets (Radice, 1987: 72).
The abolition of industrial and regional policy in the first term of the
Thatcher government (1979-83) had the immediate spatial effect of exac-
erbating the 1979-86 recession in regions where it was most severe (in the
industrial areas of the north of England, Scotland and Wales) and rein-
forcing the advantages of regions that were already economically strong
(in southern England) (Massey, 1988). Growth returned to the Southeast
about the time of the Falklands War in 1982. It was another five years
before the rest of the country experienced prosperity. Although Britain’s
regional disparities are not sharp by West European standards (as sharp
as Italy’s for example), the widening North-South divide became the
central social and political fault-line of the 1980s. Between 1979 and
1986, 94 percent of job losses in Britain were outside the Southeast, while
more than two-thirds of new jobs were created within the region

(Barnekov, Boyle, and Rich, 1989:216). The uneven distribution of

growth gave Thatcherism a regional base to fall back on in southern
England, a solid suburban identity. After the 1987 general election, the
Conservatives had a virtual monopoly of Parliamentary representation in
the area south of a line from Norwich to Bristol, while they had been all
but driven out of Scotland (Johnson and Pattie, 1989).

The Importance of Urban Policy

The most important feature of urban policy is that it can be used as a
strategic tool to shape the character of economic growth on the ground in
localities. The Thatcher governments tried to shape growth through a
succession of policy initiatives designed to transform the way local
 59

government works. The Conservatives cut subsidies to local spending

while simultaneously redefining, and often expanding, local responsibili-
ties for the implementation of national programs. This forced local
governments to come to terms with new central initiatives directing local
policies on what gets built, by whom, and with what subsidies (Duncan
and Goodwin, 1988; Barnekov et al., 1989).
Thatcherism’s urban strategy had three principal policy initiatives: (1)
housing; (2) urban revitalization; and (3) a campaign to cut spending and
reduce local autonomy in the implementation of national policies. These
initiatives had three very important points in common. They were all
launched with the rhetoric of cutting red tape and fostering enterprise
and self-reliance. They all had the consequence of increasing competition
for resources (for jobs, housing and government aid) and thereby favor-
ing groups and localities that had the power to be more enterprising and
self-reliant. Third, they all had the strategic effect of building up the
Conservatives’ own political base while weakening those of their oppo-
nents. Thus, the avowed intention of making town halls more responsive
to market forces had the strategic effect of consolidating a shift in the
balance of class forces set in motion by the Conservatives’ own economic
strategy.

Thatcherism’s Urban Strategy

The commitment to sell municipal housing to sitting tenants was one
of the most important features of the 1979 Conservative election mani-
festo. During the campaign this provided a readily apprehensible illustra-
tion of the Conservatives’ new &dquo;popular capitalism&dquo; and won them a
good many working-class votes (Krieger, 1986:83). Central government
forced local governments to sell their municipal housing to tenants at a
discount, while it simultaneously fueled a boom in owner-occupation by
deregulating mortgage finance and forcing counties in the Southeast to
accept more new private housing estates. After changing the law several
times to push reluctant Labour Councils into the line, the proportion of
dwellings in the public sector fell from 31 percent of the total stock in
1977 to 26 percent in 1987 - a loss of 700,000 units (Hamnett,
1989b:211) - and rents were raised toward market levels. The practical
consequence for many Labour Councils was to divide their strongest
communal bases of support and to leave the public sector burdened with
the poorest housing stock with the most social problems - the so-called
&dquo;sink estates.&dquo;
Meanwhile, the proportion of dwellings that are owner-occupied grew
from 53.6 percent in 1979 to 63.5 percent in 1987, an increase of 2.3
million (Hamnett, 1989a:207). After the economic upturn in the South-
east, the housing boom was so strong, that by 1987 house prices in the
region were four times higher than in the North (Hamnett, 1989b:220).
60

The capital gains of the 30 percent of homeowners who live in London

and the Southeast were being underwritten by over 40 percent of all tax
relief on mortgage interest (Hamnett, 1989b:223). Buoyant house prices
were an extremely important factor for the Conservatives in consolidat-

ing their political base in the region (Johnson and Pattie, 1989:62).
The Conservatives’ attempts to revitalize Britain’s inner cities
(Lawless, 1987; Butcher et al., 1990) initially took over the public-private
partnership schemes the preceding Labour government copied from the
Carter Administration. However, under the influence of the revival of big
cities in the U.S. Northeast, they added high-powered urban development
corporations, starting in London and Liverpool, and their own innova-
tion : enterprise zones. In contrast to the mix of market and social uses
the Labour Government’s schemes had encouraged, the explicit aim of
these new Conservative initiatives was to &dquo;prime the pump&dquo; for market-
rate development. The aim was also, as far as possible, to bypass local
government. As the decade wore on the Conservatives became increas-
ingly receptive to developers’ complaints about local red tape, especially
in the planning system (Healey et al., 1988). In response, they sought to
advance new revitalization schemes in which developers deal directly with
civil servants from central government and avoid negotiating with local
officials altogether (Barnekov et al., 1989:206-213). The results of these
initiatives were strategically valuable to the Conservatives, not only in
terms of new commercial constituencies they rebuilt in the center of
Britain’s inner cities, but also, in terms of political symbolism, in the
substance they gave to rhetoric about the regenerative powers of market
forces.
The third urban policy initiative was a sustained campaign to control
local spending and to reduce local autonomy (Duncan and Goodwin,
1988). This was the most important of the three initiatives politically
because it sought to restrict the ability of local governments to run their
own policies. Most significantly, it threatened their capacity to mobilize

opposition to central government. It was over this initiative that the

Conservatives faced the most protracted struggle.
This campaign to cut spending was launched under the monetarist
rationale that local spending cuts would reduce the public sector
borrowing requirement, thus lowering interest rates and contributing to
the battle against inflation. In fact, local government can only ,borrow
through central government, and the amount they borrowed came to only
4.1 percent of total public spending in 1982-3 (Duncan and Goodwin,
1988:121; Butcher et al., 1990:65). Thus, it is more likely that the
campaign was started because local spending was an easier target than
central spending. This is borne out by the fact that local spending fell in
real terms over the course of the decade, while an increase in central
spending drove the total for all levels of government up as a proportion
of GDP (Butcher et al., 1986:58). Either way, the debate about why and
 61

by how much spending was cut disguises the most important social effect:
the recession hit urban poorer residents much harder than local govern-
ments because central government ceased to use urban spending as a tool
of counter-cyclical policy.
After Labour’s sweep of the big city council elections in 1981, and the
boost this gave to the stubborn resistance of Labour Councils, the
rhetoric in the campaign shifted from the battle against inflation to the
accountability of councils to local rate-payers (the local property tax,
based, somewhat notionally, on assessed value). Labour Councils (and
some Conservative ones too) were making up the loss of central govern-
ment subsidies by raising the rates. In 1984, the government responded
with &dquo;rate-capping&dquo; legislation that gave it the power to penalize councils
that exceeded centrally-defined targets. For a short time in the spring of
1985, at the height of the mineworkers’ strike, it seemed as if Labour
Councils were going to put up a collective wall of defiance. However,
local government-enabling legislation makes councilors personally liable
if they set illegal budgets. As the budget deadline drew near, the specter
of personal bankruptcy and imprisonment produced cracks in the united
front. One council after another broke ranks, and amid bitter recrimina-
tions, passed a budget that met central government targets.
Nonetheless, the struggle was far from over. Many councils found
assistance in the least likely of places, the City of London. Financial
consultants helped devise such revenue-enhancing instruments as &dquo;lease-
back schemes&dquo; (whereby councils sold property to developers on condi-
tions that it be leased back for a certain period) and &dquo;interest-rate
swaps.&dquo; In 1987, the point that her government still could not control
local government spending led Mrs. Thatcher into a sweeping attempt to
resolve the matter once and for all. The Conservatives’ election manifesto
contained a pledge to abolish the rates (which was a mildly progressive
tax) and replace it with a flat-rate &dquo;community charge&dquo; for every adult.
Since it is a levy by head, and local registrars are empowered to consult
the electoral register when compiling a list of those eligible to pay, the
new tax quickly became known as the &dquo;poll tax.&dquo;

The Impact on London

If Thatcherism was to be at all viable as a political project, it had to
show results in London. It is the nation’s capital. It is where the most
powerful people in the country live and work. It is the political arena with
the highest media profile. It is Europe’s largest city and one of the global
centers of international trade and finance.
The impact of the economic and urban strategies on London has been
profound. The economic upturn that began in London and the Southeast
in 1982 peaked in 1986, just in time for the 1987 general election.
Whereas London lost manufacturing and service employment to its
62
it
suburban hinterland in the 1970s (Buck et al., 1985), in the 1980s began
and corporate services, and then
adding jobs, first in banking and finance tourism
in associated sectors like printing, construction and (P. Hall,
of
1988; King, 1990:113-120). By the far most important motor growth,
of London’s
however, was an acceleration in the internationalization
financial core, &dquo;the City&dquo; (Thrift, 1987; King, 1990).
Fostering &dquo;the City’s&dquo; global role was integral to Thatcherism’s plans
to enhance Britain’s specialization in the global marketplace. The
London a more
government therefore undertook two initiatives to make
attractive locality for &dquo;footloose&dquo; financial capital. The first was the
abolition of exchange controls in 1979. This made it much easier for
financial corporations to move money in and out of London. The second
initiative was the deregulation of &dquo;the City’s&dquo; stock-trading system, the
so-called &dquo;Big Bang&dquo; of 1986. This attracted American and Japanese
banks and securities corporations to set up large-scale operations in
London in anticipation of the financial repercussions of the European
Community’s 1992 single market project.
The initiatives worked to reinforce London’s status as Europe’s lead-
ing financial center. So far, London has managed to hold off challenges
from Frankfurt and Paris because while its office costs are higher, its
skilled labor costs are lower (King, 1990:102). However, &dquo;the City&dquo; is now
a global stage located in Britain, rather than a British stage in the global
arena. British capital is now more internationally oriented than ever

(Radice, 1989:73-5). Using the connections of British corporate services

overseas and aided by deregulation, British financial corporations have
been exporting capital at breakneck speed. By 1987, Britain held a greater
value of assets overseas (£114.4 billion) than either the Americans or the
Japanese (King, 1990:95). By 1990, according to the U.S. Commerce
Department, the total British holdings in the United States ($123 billion)
were three times those of the Japanese (Time, 1990).
The expansion of the City’s global role created tens of thousands of
jobs and brought billions of dollars and trillions of yen to London’s built
environment. The Conservatives channeled this growth through their
policies on revitalization and housing. The creation of an urban devel-
opment corporation for the London Docklands came to fruition in a
dramatic transformation of the area. Zoning bonuses were used to
encourage further expansion of the commercial core. The City Corpora-
tion (the association of medieval guilds that still administers the &dquo;old
square mile&dquo; at the center of the financial district) retreated on the plan-
ning guidelines it had devised in anticipation of the &dquo;Big Bang&dquo; and
offered incentives for construction on the fringes of &dquo;the
City&dquo; (Marmot
and Worthington, 1986). London’s architecture
acquired a postmodern
gloss. Lloyd’s Insurance Market moved to an all-silver version of the
Beauborg in Paris, while American financial corporations filled offices
around the atriums of &dquo;the City’s&dquo; new
Broadgate complex.
 63

Government housing policy that encouraged owner-occupation met

with the rapid growth in the number of young computer-literate white-
collar workers to produce demand for gentrification. This spread through
the boroughs to the southwest of Central London (especially
Wandsworth and Hammersmith) and the inner sections of those to the
north (Camden and Islington) and sent rents and house prices sky-rock-
eting through the city (Munt, 1987; Hamnett, 1989a). In 1986-1987 (two
years after New York) the British media discovered, and duly had a
&dquo;moral panic&dquo; about, the workaholism and profligacy of Yuppies. The
prosperity clearly in evidence by this stage - in terms of the expansive
labor market and the gains many homeowners made from the booming
housing market - served the Conservatives very well in the 1987 general
election. While their majority fell in the country (if only from 140 to 104),
they gained three new seats in London, and there was much speculation
that young in-movers had tipped the balance in key wards.
Thus, the Thatcherite project was a substantial success for people with
productive property and marketable skills. The economic and urban
strategies facilitated the creation of tens of thousands of new jobs
through the expansion of banking and finance and corporate services, and
these new businesses were corralled in high profile additions to the built
environment. The Conservatives were rewarded politically by consoli-
dating their control over the heavily populated Southeast, and by making
gains in London. It is important to appreciate, however, that Thatcherism
was also a success in strategic terms in the way it worked on those with no

property and few skills. For the practical consequences of the economic
and urban strategies was to exacerbate the fragmentation and disorgani-
zation of working people, and in particular the division between the
traditional industrial working class and new lower class groups.2
This division was in large part a function of the kinds of jobs generated
at the lower end of the occupational scale. London continued to lose
manufacturing employment. Entry level jobs were added primarily in
non-manual occupations, like word-processing, day care, and security.
These are ancillary to corporate services and require skills that do not
command much in the way of wages and benefits. Much of the remaining
manual work is also ancillary to services, in businesses like printing,
office furniture, transport and catering. These businesses are also depen-
dent on the vitality of the corporate sector and tourism (Buck et al., 1986;
P. Hall, 1989; King, 1990). Like large U.S. cities, London also has seen
growth in &dquo;down-graded manufacturing,&dquo; in which costs are cut by replac-
ing machinery with cheap immigrant labor (in apparel, for example), and
in the &dquo;informal economy.&dquo; In both manual and non-manual spheres
there has been an increase in short-term and part-time work (Sassen,
1991). The vast majority of new jobs are very difficult to unionize.
The plight of lower class Londoners is also a function of the urban
strategy, and particularly the policies on housing and spending cuts. Inner
64

London has some of the worst &dquo;sink estates&dquo; in Britain, and their situa-
tion was exacerbated by cuts in government aid. For example, although
Inner London received £261 million under the government’s program for
public-private partnerships between 1979-80 and 1983-84, it lost £865
million in government grants and housing subsidies (Barnekov et al.,
1989:175). The collapse of new public housing construction, together
with escalating home prices and rents, contributed to a substantial
increase in the number of individuals and families that councils put into
emergency &dquo;bed and breakfast&dquo; accommodation. The numbers forced out
onto the street increased, and London has acquired homeless encamp-
ments like those seen in American cities (New Statesman and Society,
1989). For people without work or on low incomes, there were frequent
changes in the rules on unemployment benefits and housing assistance.
In Inner London, and especially in the &dquo;Victorian horseshoe&dquo; to the
east where the docks used to be, concentrations of officially registered
unemployment reached the highest levels in Western Europe in the early
1980s, and have not fallen appreciably since (Eisenschitz and North,
1981:419). Unemployment levels are even higher in the Indian, Pakistani
and Afro-Caribbean communities that make up 20 percent of London’s
population. In 1981 in Brixton and in 1986 in Tottenham, Afro-
Caribbean (and white) youths rioted against repressive policing. Rela-
tions with Pakistani, Bengali and Indian groups (which the British tag
with the imperialist label &dquo;Asians&dquo;) are hardly better because of police
failure to stem racist attacks by white youths. Much of the publicity about
the revitalization initiative has emanated from these areas, but because of
the Conservatives’ commitment to market-rate development, most of the
positive results were achieved elsewhere.
However, perhaps the main factor in the disorganization and fragmen-
tation of the lower class was the uneven social and spatial development of
the economy and the social consequences of government policy. Many
traditional working-class households shared in the prosperity of
Thatcherism (Leadbeater, 1987). For households in which both parents
held down jobs, for those who owned a home in the suburbs, or who
made some easy money on the privatization of a nationalized industry,
the 1980s were certainly more prosperous than the recession-strapped
1970s. On the other hand, for those who lost jobs and could find only
short-term, part-time or low-paid ancillary service work, for those who
owned homes in hard-to-sell districts or who rented, and for those who
did not have the collateral to leap on the credit bandwagon, the 1980s
were much bleaker (Townsend, Corrigan, and Kowarzik, 1987). This divi-
sion in fortunes gave the Conservatives tremendous political leverage. It
enabled them to detach Labour voters from skilled lower class house-
holds, and it allowed them to complicate Labour’s job of winning these
voters back by highlighting the cultural differences between traditional
working class and new lower class households.
 65

The Impact on the London Docklands

The impact of the Thatcherite economic and urban strategies - recon-
stitution above, disorganization below - is nowhere more starkly illus-
trated than in the effects of the revitalization initiative on the social
structure and built environment of the London Docklands. The devel-
opment process in the area is of particular significance for two reasons.
First, because the building boom in Docklands was such an important
symbol of the political success of Thatcherism in the capital. Second,
because the fate of development in the area gave a preview of the limits
of the Thatcherite project.
There is no doubt that the transformation is physically striking: all
along the banks of the Thames to the east of &dquo;the City,&dquo; warehouses that
had stood derelict after the closure of the docks have been transformed
(often while retaining the exterior shell) into postmodern apartment
blocks and offices. The changes within the docks are even more impres-
sive. A new town of 1,200 homes, &dquo;Surrey Quays,&dquo; has appeared around
the old Greenland Docks in Rotherhithe, and the West India Docks on
the Isle of Dogs have become home to a veritable city center of dark blue
office blocks, some of which house the new headquarters of national
newspapers. Meanwhile, the jewel in the crown is still taking shape: in
the middle of the West India docks the Canadian developer Olympia and
York is at work on what is essentially a scaled-up version of Battery Park
City in Lower Manhattan, with plans for what will be the tallest building
in Europe (800 feet) with 10 million square feet of office space.
Throughout the mid-1980s credit for these developments was given to
the genius of private enterprise and the ground-breaking work of the
London Docklands Development Corporation (LDDC). Led by a board
of developers and businessmen appointed by central government, the
LDDC took over planning jurisdiction for 5,000 acres along the banks of
the Thames from the boroughs of Southwark, Tower Hamlets and
Newham. It was to be a streamlined model agency: its task was to cut
through red tape and do whatever was necessary to get development
going. Under this philosophy, revitalization was not to be planned
according to corporatist compromise; it was to be led by demand from
the marketplace (even if government had to step in and lead that
demand) (Ambrose, 1986).
To this end, the government gave the LDDC an enterprise zone to
work with on the Isle of Dogs and granted it hundreds of millions of
pounds to buy, reclaim and prepare land for developers, to upgrade
infrastructure and to promote the commercial image of the Docklands.
By the time the economic upturn sputtered to a halt in 1988, it could lay
claim to generating 5 million square feet of office space, 9,000 residential
units, and a leverage ratio (private to public money) of an outstanding 9:11
(LDDC, 1989). The government’s commitment to create a new office
66

center for London (to add to &dquo;the City&dquo; and the West End) seemed to
have paid off. In its bid for the business of global capital the Thatcherite
project had not only done away with &dquo;the old school tie&dquo; (the strangle-
hold of upper-class networks over the business of &dquo;the City&dquo;), it had also
fostered the emergence of a new postmodern City of London.
Unfortunately for Thatcherites and the LDDC, by the later 1980s it
became apparent to developers that the Docklands also has postmodern
characteristics that were bad for business (Davis, 1984). Most promi-
nently, Docklands has a woefully inadequate transportation system. The
area is not well-serviced by the Underground or by roads. There is only
one two-lane road off the Isle of Dogs in the direction of &dquo;the City&dquo; and
this road is heavily congested in rush hours. The LDDC’s main answer
has been the Docklands Light Railway (DLR) and a short take-off
airport to the east, in the Royal Docks. Both have flopped. The DLR,
with its driverless robot trains, has been straining at capacity well before
Canary Wharf has even opened (DCC, 1990).
Even before the 1987 stock market crash and the subsequent property
market downturn, the Docklands suffered from a reputation for poor
community relations. More precisely, since public relations is one of the
LDDC’s strong suits, the whole Docklands enterprise suffers from the
absence of any concerted effort to integrate the new apartment
complexes and office blocks with the established East End communities.
The LDDC made little effort to shape development to meet any of the
social needs of the indigenous working-class population. Although it
could claim to have brought 20,000 jobs to Docklands between 1981 and
.1987, nearly .16,000 of these were transferred in from outside the area.
The 4,000 new jobs hardly make up for the 11,000 Docklands lost during
the period, in part because escalating property values tempted manufac-
turers to sell up and move out (DCC, 1990:26). In addition, the vast
majority of new jobs require office skills when the local labor office is
based in skilled and semi-skilled manual work. The LDDC consistently
refused to compel contractors to hire local labor. In 1986 male unem-
ployment in the Docklands boroughs stood at 32 percent and female
unemployment at 16 percent and the situation has not improved
markedly since (Church, 1988:194). One private study for the LDDC
forecast that only 6 percent of the 45,000 jobs from the Canary Wharf
development would go to local people, mainly as part-time cleaners
(DCC, 1989).
Nor did the LDDC do very much to address local housing problems
(DCC, 1990). Of the 9,000 residential units built by the end of 1987, more
than 7,000 or 81 percent were for sale (LDDC, 1989). The LDDC
claimed that of the 5,600 built under its jurisdiction, 45 percent went to
local people, and 25 percent were sold at the &dquo;affordable&dquo; price of
£40,000 (roughly $70,000) or less. Community advocates in the Dock-
lands Consultative Committee (DCC) and the Docklands Forum charge
 67

that many of these &dquo;locals&dquo; were speculators hiring tenants’ names. A

1986 survey of local incomes showed that £40,000 was out of the price
range of 75 percent of local residents (DCC, 1990:50). In any case, land
price inflation, instigated by the LDDC, soon took the type of home on
which developers could realize a profit way up the income scale
(Klausner, 1987).
On a city-wide basis, it was possible for the Conservatives to keep
pockets of deprivation and neglect out of sight in Labour boroughs. Their
problem in Docklands is that these problems sit festering right next door
to once-in-a-lifetime investment opportunities. By the late 1980s rows of
luxury apartments were standing empty across the street from a working-
class and immigrant housing stock that is more overcrowded and in worse
physical condition than it was a decade ago. When the property bust
came after &dquo;Friday 13th&dquo; (October, 1989), Docklands was one of the

epicenters from which it spread.

Thatcherism versus the London Labour Party

So far this paper has concentrated on how Thatcherism worked as a

political project, through its economic and urban strategies, to shape the
effects of economic restructuring on the social structure and built envi-
ronment of London. As we have seen, the Conservatives were able to

pursue their project primarily because their urban policies had the
strategic effect of fragmenting and disorganizing the occupational and
communal bases upon which lower class people mobilize. This section
will examine the fate of the principal force by which opposition could
have been mobilized: the London Labour Party. It will focus on what
happened to this potential during the struggle between the Thatcher
government and local governments over local spending and autonomy.
The Conservatives’ sensitivity to the London Labour Party was a func-
tion of its proximity to the seat of power. The borough councils
surrounding the wealthy core of the city, in which MPs have their resi-
dences and where national journalists and broadcasters live, are (with the
exception of those to the southwest) all Labour-controlled. These coun-
cils did their utmost to frustrate the implementation of Conservative
policies, and they did so by passing some of the highest rate increases in
the country on to some of its most powerful and influential taxpayers.
Inevitably, the fact that the government’s own figures showed that these
boroughs faced the worst levels of urban deprivation in Britain was the
subject of far fewer editorials and articles than the scope and propriety of
council support for gay, minority and peace groups.
More pointedly for the government, County Hall, home of the city-
wide Greater London Council (GLC), and seat of the most flamboyant
Labour Council, was situated across the Thames from the Houses of
Parliament. In the early 1980s, London’s unemployment figures were
68

posted in 10 foot high numerals on the roof. The GLC’s challenge had
ideological overtones. Its formal functions were largely restricted to
coordinating transport and planning in the capital. But it used its deduc-
tion from the boroughs’ rates to pursue a series of high profile initiatives
publicizing its social, economic and even foreign policies.
The activists on these councils constituted a &dquo;new urban left,&dquo;
although in some respects they were a reincarnation of the &dquo;municipal
socialism&dquo; of the inter-war period (Gyford, 1985). Many of them came
into politics through a radicalization in the late 1960s, spent the 1970s
working in various far left groups, and then joined the Labour Party in
the late 1970s (Lansley et al., 1989). At this time the left in the party was
beginning a revolt against the Labour government’s monetarist manage-
ment of the British state’s fiscal crisis, and particularly its capitulation to
IMF demands for spending cuts. They were determined to avoid the
workerist orientation they thought had dominated the Labour Party
through the trade union bloc vote (Wainwright, 1987). Many were also
intent on finding a path to socialism that avoided the pitfalls of the
Keynesian and corporatist tracks. At the local level, they experimented
with policies inspired by the Labour left’s &dquo;alternative economic strategy&dquo;
that sought to intervene in the process of economic restructuring on
behalf of working people (Boddy, 1985). In the boldest of these efforts,
the GLC devised complex sectoral plans and set up a Greater London
Enterprise Board to make strategic investments (Eisenschitz and North,
1986).
During the early 1980s, while the national Labour Party was in disar-
ray, the London Labour Party was an intense irritant and a source of
considerable political embarrassment to the Thatcher government. The
first battle occurred shortly after Labour took control of the GLC in
1981. Labour had won the election with a manifesto pledged to increase
the rates so that it could lower fares on London Transport. After the
GLC enacted its &dquo;Fare’s Fair&dquo; scheme, an outlying Conservative borough
(Bromley) challenged it in court. &dquo;Fare’s Fair&dquo; was ruled &dquo;illegal&dquo; by the
Law Lords on the grounds that such an action was not in accordance with
the good business practice implied by the word &dquo;economic&dquo; in London
Transport’s Charter. This action had two significant consequences. The
House of Lords ruling demonstrated the Thatcher government’s intent to
use judicial authority to enforce the principle that market criterion
should have priority over social need. However, at the same time, it
allowed the GLC to cast itself as a defender of democratic process, to
question the impartiality of the judiciary, and to blame the Thatcher
government for the large fare and rate increases that were then required
to wipe out London Transport’s deficits.
The rate increase had significant repercussions. It gave the GLC a new
and higher base of revenues from which to operate. This freed the GLC
from any dependence on government grants and gave the London Labour
 69

Party the opportunity to pursue a range of ambitious new initiatives

designed to highlight the inequities of Thatcherism (Mackintosh and
Wainwright, 1987; Lansley et al., 1989). The GLC began to make exten-
sive use of billboard advertising for public information campaigns on
such issues as the futility of government exercises on civil defense in the
event of a nuclear strike. Most importantly, the new revenue stream
enabled the GLC to fulfill its pledge to open the party and local govern-
ment by empowering groups normally left on the margins of electoral
politics (Gyford, 1985). The GLC made grants to women’s groups, immi-
grant organizations, gays, lesbians, and peace activists among others
(Carvel, 1987:202-14). It funded cultural festivals in an attempt - remi-
niscent of Italian eurocommunism - to bring these groups together with
young people and other politically under-represented groups the GLC
also targeted, like the unemployed and the low-paid (Mackintosh and
Wainwright, 1987). It is true that many of these initiatives offended the
social mores of the traditional working class. But they were at least the
beginnings of an attempt to weld together the new social movements and
the disparate groups of people with no property and few skills who make
up the ranks of the lower class in the 1980s (Wainwright, 1987:105; S.
Hall, 1988:236).
The reactions of the national political parties to these developments
were in stark contrast to one another. The Labour leadership was horri-
fied that the tabloid press had been given an endless stream of copy for
such stories as GLC grants to &dquo;Babies against the Bomb.&dquo; The Conserva-
tives, however, took a more hard-headed view. In London, Conservative
councilors saw Labour building a new organizational base and recruiting
an army of volunteers for elections (Carvel, 1987:208). In government,
Thatcherites saw the GLC making a mockery of their public spending
targets for local government and, above all, of their attempts to transform
the way local government worked (Duncan and Goodwin, 1988:188). It
was in this context that Mrs. Thatcher took the decision to include in the
1983 Conservative election manifesto the pledge to abolish the GLC (and
the six other Labour-controlled metropolitan counties).
The abolition of the GLC was to prove as protracted and politically
costly as the furor over &dquo;Fare’s Fare&dquo; (Duncan and Goodwin, 1988 :188-
223). The abolition legislation required a separate bill to extend the life
of the GLC for one year beyond the election scheduled for 1985, but to
replace sitting councilors with appointees. The action of abolishing a
council largely because it was held by the opposition enabled the GLC to
take a strong stand on the principle of local democracy. This was an ideal
issue for creating a common identity for all the disparate groups they
were struggling to unite. They responded with a barrage of posters,
commercials and events under the slogan &dquo;Say No to No Say&dquo; through
which they defended the right of Londoners to vote them out of office
(Carvel, 1987). The campaign transformed Labour’s public standing in
70

the capital. It was so successful that it changed the GLC’s young leader,
Ken Livingstone, from a figure of public loathing (largely identified with
his support for the Republican cause in Northern Ireland) to a champion
of democracy. In June, 1984, it also led to a humiliating defeat for the
government in the House of Lords when it lost the bill to postpone
elections because Conservative peers absented themselves from the vote.
The government returned to the next session of parliament with
another bill, and this time shepherded its built-in hereditary majority in
the House of Lord more carefully. The new bill permitted existing GLC
councilors to stay in office through the date of abolition. By allowing
elected representatives to stay on, the government weakened Labour’s
argument about the right to vote them out. It was also became harder for
the GLC to sustain active public support as the campaign dragged into its
second year. The Conservatives successfully side-tracked public ex-
changes into a futile debate about economic efficiency (Flynn et al.,
1985). At the crucial juncture in March, 1985, as the bill was passing
through the House of Commons, the London Labour Party was torn
apart by in-fighting over tactics in the show-down on &dquo;rate-capping&dquo;
(Lansley et al., 1989). The GLC was finally abolished in March, 1986. Its
functions were transferred to the 32 borough councils and to a range of
semi-autonomous public bodies appointed by the Secretary of State for
the Environment.
Having established its writ, the Thatcher government was not about to
linger on the point that it had just abolished the largest city council in
Europe largely because it was held by the main opposition party, and that
it had done so only after giving a thorough airing to all the creaky joints
in Britain’s constitutional system. Even though it had abolished the GLC,
Labour still controlled the Inner London boroughs. The Conservative
Party therefore targeted the London Labour Party with a propaganda
campaign designed to inflame working-class anxiety over the GLC and
Labour’s inclusive policies toward new lower-class groups. This campaign
had the effect of inciting racial and homophobic prejudice (Lansley et al.,
1989).
The Thatcher style was always adversarial. After the mineworkers’
defeat, the so-called &dquo;Loony Left&dquo; in London became the new &dquo;enemy
within&dquo; standing in the way of the national destiny. With Britain’s press
barons in an aggressive mood (breaking printers’ unions on Fleet Street
and moving to new automated plants in the Docklands), a stream of
stories began to appear about books celebrating homosexuality in schools
and the domineering practices of anti-racist and women’s committees.
For national Labour leader Neil Kinnock, condemning the &dquo;Loony Left&dquo;
replaced expelling the Trotskyist &dquo;Militant Tendency&dquo; as the true test of
his party’s credibility in the broadsheet middle-class press (The Times,
The Financial Times, The Independent, and The Daily Telegraph).
 71

After their gains in London in the 1987 general election, the Conser-
vatives began another legislative assault on local government (Lansley et
al., 1990). This moved on two fronts simultaneously. The first assault
consisted of a series of narrowly focused provisions aimed at forcing
councils to change the way they operate to be in line with Thatcherite
principles. For example, the government introduced &dquo;compulsory
competitive tendering&dquo; to force councils to privatize many services
provided by in-house unionized departments. New legislation prohibited
councils from spending money to publicize their policies on any &dquo;matter
of public controversy&dquo; (they had already been prohibited from promoting
homosexuality as &dquo;an acceptable lifestyle&dquo;). Taking aim at able London
councilors, the government removed the right of senior local government
civil servants to stand for election in the borough where they live.
The second assault moved on a much broader front. The &dquo;poll tax&dquo; was
nothing less than an attempt to construct an entirely new relationship
between the center and localities and between local government and the
British people. After the embarrassment of abolition, the &dquo;poll tax&dquo; was
designed to cower recalcitrant Labour Councils for good.
The Poll Tax

The &dquo;community charge&dquo; as the government called it, was meant to

reduce local autonomy in the implementation of government legislation
to an absolute minimum (MacGregor, 1988). Under the &dquo;poll tax,&dquo; and
the nationally administered &dquo;Uniform Business Rate&dquo; that accompanied
it, the proportion of local revenue coming from the center was to rise
from an average between 50 and 60 percent to more than 80 percent. As
with the rates, the government gave itself the option of &dquo;capping&dquo; the
&dquo;poll tax&dquo; of councils deemed to have exceeded budgetary targets. The
official rationale for the &dquo;poll tax&dquo; was that is unfair for people who pay
little or no rates (i.e., lower class households who could get rebates) to
impose high spending councils on rate-payers (i.e., middle-class
homeowners and businesses). A flat-rate fee, so the reasoning went,
would give everyone an equal stake in efficient government. The fact that
people do not have equal means to pay the &dquo;poll tax&dquo; or equal needs from
local government was not ignored: it was the very point of the policy. The
&dquo;poll tax&dquo; was supposed to act as a striking demonstration to voters of a
new understanding of the rights of citizenship and of government’s

obligations to the British people.

This new understanding was evident in several other initiatives the
Thatcher government took early in its third term. The bastions of what
Thatcherites call &dquo;the welfare culture&dquo; - the schools, the remaining
public housing and the National Health Service - were to be opened up
to the bracing winds of market competition. Parents and tenants were
given the right to opt out of local government control, and head teachers
72

and hospital administrators were given charge of their own budgets and
told to compete for students and patients. Seen in this light, the &dquo;poll
tax&dquo; was but the leading policy in a new set of initiatives intended to work
a cultural transformation as broad and as deep as the social changes

wrought by government economic and urban strategies (MacGregor,

1988). In the same way that the 1979 pledge to sell municipal housing to
tenants had helped give substance to what Thatcherites meant by
&dquo;popular capitalism,&dquo; the &dquo;poll tax&dquo; was supposed to bring home to
voters their role in what Thatcherites called the &dquo;enterprise culture&dquo;
(Worcester, 1989).
It is a role they rejected decisively. Tenants have refused to vote for
private landlords; reforms of the National Health Service proved so
unpopular that they were scaled down and delayed, and the education
reforms show few signs of remedying Britain’s shortage of skilled school
leavers any time soon. The &dquo;poll tax&dquo; went down as one of the biggest
legislative disasters in modern political history. When confronted with
lump sum demands for every adult in the house (rather than a single rate
bill for the household), voters were very quick to figure out what their
place would be in the Thatcherite vision of British society. Lower-class
youths ran riot in London after a demonstration in March, 1990, and
many middle-class homeowners, already burdened by high mortgage
interest rates, were among the many millions paying their &dquo;poll tax&dquo; late
or missing installments. Conservative confidence in Mrs. Thatcher’s lead-

ership began to crumble, and in November, 1990, when senior Cabinet

ministers moved against her on the issue of European union, confidence
collapsed and she was unceremoniously deposed.
Ironically, in the end, even if the Thatcher government did restore the
&dquo;smack of firm government,&dquo; Thatcherism could not overcome another
archaic feature of British society: the peculiarly intense status distinctions
that were intertwined into British class culture during the imperial era. In
many ways, the &dquo;poll tax&dquo; revolt was a rebellion against the revival of old
status distinctions, implied by the abolition of the universal social rights
promised by the welfare state, and their replacement by a division of the
population into those who can, and those who cannot, pay the &dquo;poll tax&dquo;
under the &dquo;enterprise culture.&dquo; One of the Major government’s first acts
was to announce plans to replace the &dquo;poll tax&dquo; with a new local tax based
on property values.
In 1991, in the run-up to a general election, the Conservatives’ at-
tempted to shift the focus of public debate to Major’s &dquo;Citizen’s Charter&dquo;
for public services. In line with the party’s headlong rush back to the
political center, early reports of the Charter suggested that it would
attempt to identify the language of citizenship and rights with some of
the less brazen reforms the Thatcherites proposed for education, health
care, housing and local government.
 73

Conclusion

This paper has examined the politics of urban development in

London. We have seen how the Thatcher government’s economic strat-
egy steered growth to certain groups and regions and how its urban poli-
cies shaped the form that social polarization took in London. The strate-
gic effect of urban policies intended to make local government more
responsive to market forces was to consolidate a shift in the sociological
bases of the British class system. Expansion in middle-class occupations
was channeled into gentrification in Inner London by policies sponsoring

owner-occupation, while policies fostering market-rate commercial

development corralled growth in high profile additions to the built envi-
ronment, particularly in the Docklands. At the same time, the London
Labour Party’s efforts to mobilize opposition were inhibited by a
campaign to cut spending and reduce local autonomy, by the forced sale
of municipal housing, and by propaganda aimed at exacerbating divisions
between the traditional working class and new lower class groups.
However, Thatcherism was not infallible. It was far from an organic
expression of capital organizing the mode of regulation for a new regime
of accumulation. Thatcherism was a movement of the suburban middle
class: less a master plan for restructuring, than a potent concoction of
petty bourgeois prejudice intent upon recreating a vision of morality and
political order. For the better part of the 1980s this project was a political
success. The Conservatives worked skillfully with the extraordinary
amount of power that Prime Ministers can wield under Britain’s archaic
constitutional system to exploit the opportunities afforded by economic
restructuring. Opposition was either intimidated (by the tabloid press
and the police) or legislated out of existence (by a rubber-stamp parlia-
ment) or both. In the end, though, Mrs. Thatcher was goaded into taking
one step too far with the &dquo;poll tax.&dquo; It is a sorry sign of &dquo;new times&dquo; in
Britain (Hall and Jacques, 1989) that a national Labour party leadership,
intent on recovering its traditional working-class vote, still identifies the
London Labour Party with the &dquo;Loony Left,&dquo; rather than with the work it
began to do in consolidating old working class and new lower class
groups.

Notes

1. It would be unfair to single out any one writer; however, the idea for this paper origi-
nated at the conference "Tiger by the Tail: Economic Restructuring and Political Response"
at SUNY Albany in April 1989. Most of the papers and the plenary discussion focused on
the political response to global restructuring. As Peter Marcuse pointed out the role of class
and class politics in the constitution of restructuring was seldom explicitly discussed.
2. A distinction is made in the remainder of the paper between working class and lower
class. This denotes the generational transition between the traditional working class, whose
majority experience of the labor market was that of the unionized family-wage line worker,
74

and the new lower class, whose majority experience is in the service economy, and which is
much more fragmented and disorganized in terms of gender, ethnicity, work hours, benefits
and duration of employment.

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