Privatisation and Gentrification, Reaction and Resistance, in Hackney's 'Regeneration State' – Black Flag

"You Can't Live On A Web Site"

Gentrification is having the effect of social cleansing of working class communities across large swathes of inner city London, and other major cities. In Black Flag #220 we covered the effects of gentrification in Berlin, Germany and explored strategies used by German activists to fight back. Below is an edited version of an article documenting the sweeping gentrification of Hackney, an east end London Borough. In the next issue we will explore the strategies used by local activists to deal with the privatisation and take-over of their services and communities.

The London Borough of Hackney in the past few years has been the last word in municipal incompetence, swingeing cuts, privatisation, and eastern European levels of poverty - a standing joke amongst most Londoners. A range of 'regeneration' anti-poverty programmes had been underway since the 1990s and the highest number of housing privatisation ballots in the country had been held.

But by 2001, what was new was the booming real estate market not just of trendy Hoxton in the south, but across the whole Borough. May 2001 saw the New Labour Council emerging from a period of coalition rule with the Conservatives - Hackney was after all the home of some of New Labour’s leading ideologues1 and is now the testing ground for New Labour's restructuring of the Inner City.

This piece will argue that the collapse of the local Council and its replacement by a skeletal 'regeneration state' has furthered gentrification and the gradual eviction of the existing multi-cultural working class community by:

• further property sales with fewer controls on development leading to a population density which excludes low income families with children
• reduction in support services for working class people, especially women
• low income people [especially younger people in the private rented sector] being driven out of the Borough by the chaos accompanying housing benefit privatisation
• housing privatisation [stock transfer] leaving families [led generally by women] with almost no access to Council housing and a nightmare scenario with which to threaten existing Council tenants

Meanwhile, large developers are increasingly crass in their proposals. The initial pioneer 'arty' gentrifiers are now finding themselves under threat from the office development needed for the reinforcement of London as the financial centre of the European Union.

There have been some efforts [e.g. by Mayor Ken Livingstone] to extract some of the profits from these developments to restructure social structures around the City. But instead of existing working class multicultural communities, a new 'worthy poor' of key workers [mostly white] will receive semi-subsidised housing providing a safe social mix for the new rich.

The response of the left to this crisis has been disappointing – in fact the populist right around 'Hackney First' are making the most clear gains. With the defeat of a determined UNISON campaign largely due to lack of a sustained second front... community campaigners need to reassess strategies.

Hackney - a sketch:

Hackney is an inner city London Borough bordering The City. It has a population approaching 300,000 of which over 50% are from ethnic minority communities. Hackney has also the biggest lesbian population in Britain and allegedly the most artists in Europe.

The average income is half that of the London average and 40% of the population live on Income Support. Some 40% of households are Council tenants, about 10% are tenants in the private rented sector, another 10% live in recently privatised ex-Council flats. The remaining 40% include some Yuppies but also a significant number of working class owner-occupiers.

Without wanting to over-generalise - the south of the Borough (Hoxton, Shoreditch and Haggerston) has both more Council housing than the north, and more of the 'digital yuppies' in renovated lofts along with a few streets of bourgeois housing in De Beauvoir. The south of the Borough was a National Front stronghold in the 70's, with the fascist's national HQ located on Shoreditch High Street in 1979.

It's now a successful multicultural community, although older white residents often dominate residents associations and other local groups.

Stoke Newington in the north of the Borough has much of the rest of the gentrified housing, mostly terraced street property. Clapton and Stamford Hill in the north east have more working class owner occupiers. Homerton and Hackney Wick in the east are similarly poorer. Large estates and small pockets of terraced housing and mixed industrial and warehousing estates are found throughout the Borough.

A Council in financial collapse:

The UK's first ever 'Section 114' notice of impending bankruptcy was posted in late October 2000. All non-statutory spending was cancelled - and all casual staff were immediately dismissed. For example, up to 50% of bin men were sacked. A temporary reprieve was granted with a batch of sales, cuts and privatisations. But the summer of 2001 saw the threat of Central Government takeover once more.

Residents don't enjoy low levels of tax to go with the low level of services. Council tax rates are amongst the highest in the country, yet it makes up less than 10% of the Borough's income - most of the rest comes from government subsidies which have been cut by over £100M in the past few years.2

As seen below, the cuts due to the Council's financial crisis have been to services for working class people, and the skeletal ('regeneration') local state is unable to regulate a gentrification building boom. However, even in the late 1990s before the latest round of cuts, the Council was an albatross around the neck for anti-privatisation campaigners... after defeat in 7 stock transfer privatisation votes it's clear that working class tenants would do almost anything to get away from Hackney Council. Defence of the status quo was never a route to popular support.

Privatisation of property and services:

The Section 114 notice was the lever used in the most difficult privatisation - that of waste disposal. This part of the workforce was traditionally the most militant - UNISON demonstrations often were led by 'borrowed' garbage trucks. In August 2000 these workers had defeated an attempt to privatise the service3 . But by December the waste management contract was sold to Service Team. The much reduced and now isolated workforce was willing to give their new employers a chance and didn't join in the industrial action4 . But in early 2001, Service Team sold their whole company to the American TNC Cleanaway.

Since then the pace of privatisation has if anything quickened, particularly with the defeating of industrial action and the Labour group winning and then keeping a majority. Privatisation is increasingly targeted to facilitate gentrification and cut services for local working class people, especially working women.

June 2001 saw a total of 135 different properties listed for sale to raise an estimated £70M including: a community arts venue, two nurseries, a community boat club, part of a school and maintenance depot, at least two semi derelict open spaces used by their communities as parks and a plot used by a school for kids with special needs.

Most of these sales were in gentrification 'hot spots' like Hoxton and De Beauvoir. Ironically a road garden in an area of the already gentrified Stoke Newington was saved after protesters 'planted a tree as a symbol of their commitment'.5

At the same time a further two nurseries and a play group were closed.6 The Borough's two remaining swimming pools were put out to private tender whilst the pool in the heart of Haggerston remained closed7 . Instead, opening a brand new pool in the gentrified north remained a priority for the Labour group despite being £15M over budget at £26.7M.8

Other services were also under threat - for example two arts centres were under threat of closure - so that in the Borough 'with the most artists in Europe', working class people were not to have access to any arts facilities ... except for the newly opened Ocean (see below).

Compared with the demos of the year before, the level of resistance to these cuts was minimal. A small demo was called by Hackney Fightback. Pensioner activist Myrna Shaw pointed out that:

"... Hackney Council continues to sell off property to speculators and developers. The presence of more and more of these speculators, interested mainly in developing profits, mean they have an overloud voice in deciding what the 'open market' is in Hackney. The voice of tenants and residents is on the way to being wiped out. This is more serious, as the Fair Rents Officer takes the open market into consideration when he sets the rents for remaining Council and housing association tenants." 9

The reality of privatisation was underlined by Nord Anglia, who run the privatised parts of the education department and overcharged the Council £400,000 for their 'services.'10 However it was on the privatised estates and in the effects of the contracted out Housing Benefit service that the effects were most severe.

Hackney Council had a long, well documented history of corruption.

Under regeneration schemes, what controls there were on political and financial corruption were even more limited and safeguards of good services for local people were non-existent. ITNET, who won the Housing Benefit administration contract in the late 1990s, understood this well. Their first act after taking over was to cut the workforce by a third.11

Within months the service, which was never very good, plunged to being disastrous.

The details of ITNET need their own article - but I can identify three major different effects:

• enormous pressure was put on the finances of the Council and the Housing Associations in the Borough

• enormous stress was put on every Council and Housing Association tenant on benefit due to their being continuously in rent arrears and receiving notices of Seeking Possession from their landlords. (In addition tenant reps and Councillors had their democratic rights curtailed due to ITNET related rent arrears. e.g. a Clapton tenant rep was sacked from the CCHT Board for rent arrears12 and an independent Councillor lost voting rights due to ITNET related rent and Council tax arrears.13 )
• in the private rented sector safeguards against evictions did not apply... and while many tenants already in place hung on, private landlords tended to refuse to take on Housing Benefit dependent tenants.

In April 2001 the contract with ITNET was broken, leaving the Council holding the baby. While the service has somewhat improved, the longterm effect on low income people's access to the private market rents sector in Hackney is likely to remain - the already fertile field is left clear for further gentrification.

Gentrification in Hoxton

"The chic-est place in the inhabited universe" - The New Yorker:

Around 1990 when the Shoreditch triangle in the south of Hoxton was still largely semi-derelict ex-clothing industry warehouses, the Dalston City Challenge corridor was drawn to include a large part of this area. The regeneration programme was varied:

• A new cinema for the London Film Makers Co-op (The Lux)14
• Redevelopment of Hoxton Square15
• Renovation of the Arches under the 'Tube line to be'
• Funding for basic refits of warehouses given to private landlords such as Glasshouse

Consciously or not, this provided the fuel for the gentrification of Hoxton. At first abandoned warehouses were converted into lofts and a couple of existing bars became busier. Ill effects were seen early - with lofts pumping their sewage onto the Pitfield estate and stairwells being used as toilets and places to have sex by people using the bars.16

A gentrification whirlpool, aided by central government subsidy, began. By the late 1990s larger scale developments were more common.

Some were wholly private and prices for lofts were now topping £400,000. Others were 'market rent schemes' from 'charitable' housing associations - beginning with the award-winning Shepherdess Walk scheme in 1999, where rents were a minimum of £145 a week. In response to local tenants saying that it was "fancy flats for yuppies" a spokesperson said:

"The building will be clad in cedar wood and terracotta and will look very nice."17

Meanwhile on Council estates funding for repairs was particularly tight. On estates primed for privatisation no repairs were done at all in the lead up to ballots and estate managers were not replaced. On the other [better] estates tenant representatives were supporting:

"... people with cockroach infestation or people who have to live and sleep in rooms that are so damp they're covered in fungus and the wallpaper is falling off ..."18

By 2001 market rents in social housing were reaching £200 a week.

While larger Housing Associations such as Peabody led on market renting - other HAs began to get in on the act. But even Peabody couldn't get rid of everything - it had to sell a block to Metropolitan after finding that yuppies weren't willing to pay market rents to live opposite the Haggerston estate!

'Shared Home Ownership Schemes' were used to sweeten the pill and to ease planning objections. The effect of this development was that tenants who had exercised their 'right to buy' and then let out their ex-Council flats could also charge rents of £200 plus a week for a basic three bed flat, further boosting the impetus behind right to buy.

Speculators actively leafleted estates with offers to buy out secure tenant's 'right to buy.' They would provide cash [sometimes as little as £5,000] to a tenant who would buy the flat [with the speculator's money] signing over the rights to let it out to the speculators, and selling it on after the waiting period of two years.

This meant two bedroom flats could be picked up for as little as £20,000 plus the payment to the tenant.

By 2000 the London property market had heated up to such an extent that a new round of tower blocks was being proposed for the inner city. Ken Livingstone, the newly elected mayor, gave his support for these so long as they provided subsidy for social housing schemes and transport in east London19 . However, rather than affordable rented housing, it was more of the not very affordable shared home ownership schemes for 'key workers'20 .

The long-term plan is clearly to replace the City's poverty-stricken necklace of estates in Finsbury (Islington), Shoreditch and Whitechapel (Tower Hamlets) with a mix of the new rich and the new 'deserving poor' of key workers.

The estates are just a stone's throw away:

By 2000, developers were increasingly confident and using all available loopholes to cash in. Even when leases held rents for 3 years, service charges could be jacked up and added to the original rent21 . Sometimes this meant that tenants wanting to break leases lost not only their three months deposit but had to pay extra to get out of the lease. David Nicholson of Glasshouse - who with government cash developed many of the early lofts said:

"We are not a charity, we are a commercial business ... Market rent in Shoreditch has risen considerably in the last 18 months. We've got tenants who are willing to pay ... and are not going to take up hours of our time complaining about the nitty gritty." 22

And it wasn't just businesses evicting tenants on cheap leases. In August 2000, the charity running Shoreditch Town Hall Trust terminated the leases of 20 small businesses and charities to allow the building to renovated. As the Daycare Trust commented on their eviction – "we thought we were a part of [the Town Hall Trust's] long term plans. It's obvious we're not."23

By 2000, not only were the concerns of Hoxton's majority – working class Council tenants - irrelevant but the concern voiced in the local media was primarily that gentrification would "spell the end for the arty atmosphere that began the revival." 24 The Hackney Society voiced concerns that the

"huge increases in land and property values [...were] threatening the future viability of local charities, community groups and small businesses ... small businesses are also being hit hard in particular new businesses in the IT and creative sectors – the very businesses Hackney is keen to attract."25

Working class people appeared in this discussion only as an ungrateful or criminal element. The project director at Shoreditch Town Hall spoke of 'resentment' from older residents over £500,000 lofts next to their run down Council flats, while a gallery director from Hoxton Square said:

"What's becoming more apparent are the crime levels. The estates just off Hoxton Street are just a stone’s throw away. There's increasing resentment. More and more [very large!] windows are being smashed."26

Reports that homeless families were again being put into bed and breakfast - in part because the Council had sold the estates where they had been placed previously began to provide a context for this. By February 2001, while the 380 hostel places were full and 450 families were in bed and breakfast, often outside the Borough27 , at least 15% of the 7,000 privatised flats28 were standing empty (following a pre-privatisation policy of running down the estates) and at least another 100 street properties had been sold to subsidise privatisation schemes 29 . The clear losers in all of this were working class women and their families - they were not welcome in New Labour's Hackney.

Who runs Hoxton then?

In March 2001 Shoreditch's new elite attempted to ban Abba's Dancing Queen! Residents of live-work units in Redchurch Street complained about the Village People's YMCA as well as the Conservative Party's Annual Winter Ball which were held in marquees on the Bishopsgate Goodsyard.

"We cannot sleep because it goes on until one in the morning and in the summer we cannot relax on our rooftop garden without having to listen to Chris de Burgh's 'Lady in Red' or some other dreadful tune.”30

'Traditional' East End culture in the area had no chance then – the Brick Lane Music Hall faced closure at the end of 2000 when its rent went up 400% to £100,000 a year. The landlord said: "unfortunately we are not a charity ..."31

More celebrated, is the case of Spitalfields market – "a vivid antidote to the blandness that corporate culture brings in its wake" - next to ABN-AMRO's32 headquarters and Liverpool Street Station. Half of the market has already been lost to an office development and the rest is under threat despite the protests of market owners. Luminaries such as Terrence Conran are weighing in to protect the creative hub of gentrification and are willing to trade a bigger development elsewhere to protect it. 33 While the new residents fight a losing battle against Europe's finance capital or prepare to move to the next chic scene, the interests of the working class majority are nowhere to be seen.

"...it's so close to the City, firms won't even know they're in Hackney."34

The 'Regeneration' of the Town Hall Square

Broadway Market is a narrow street market between two parks. It makes a geographical link between Hoxton and the Town Hall precinct and is already showing the Hoxton effect. Five years ago it had one pub and a listed pie and eel shop which baked veggie pies on demand. Now there's two expensive restaurants, a Japanese noodle bar, one yuppie bar, a health food bar and half a dozen boutiques. Not far away, 'regeneration' money was used to do up a derelict church, where a trendy club is now based.

Facilities for local people have not similarly expanded - as indicated earlier it is here in the south of the Borough that cuts in provision are tending to be targeted.

Further north, just south of the town hall, is Ellingfort Road. Here until 1999 were around 30 squatted homes - which have now voluntarily incorporated themselves (keeping just over half the homes) into an existing Housing Association35 . The rest of this area is now booming with loft live/work units.

And on to the Town Hall Square - the site of another regeneration programme. Directly opposite is the new Ocean music venue, opened on the site of the old Hackney Library and Museum. It has already attracted criticism over the price of tickets (up to £27), the wages of the director [£80,000] and its function as an oasis for a "rich young elite."36 Relations with local people started poorly with complaints of sexual harassment and parking problems. Noise complaints were dismissed as "whinging."37 The Ocean started with high hopes for participation and access ... it'll be interesting to see how it evolves. I suspect that the social pressures from gentrification and the regeneration of the rest of the square will force it in a less and less accessible direction.

The Town Hall Square, previously frequented by local street drinkers and the odd demo against the Council, became subject of Labour Council plans to spend £1.1M doing it up. Critics pointed out that four different types of limestone wasn't perhaps the aim of Neighbourhood Renewal funding which paid for over half of the scheme.

The Hackney tree wardens mounted a vocal campaign against the planned loss of 15 trees and pointed out that meetings were not open to the public and minutes were kept secret.

Complaints about how the regeneration of the Square was going could be assuaged by promises of a new Technology and Learning Centre [a rebuilt library]. But cuts in the Learning and Leisure budget meant that "the Council can barely afford to buy books for the new library... and has set aside £150,000, warning that it may cut the Borough's book fund."38

Opposite the TLC lies the Hackney Empire and the Samuel Pepys Bar. The Pepys was for years the late opening 'alternative' bar in Hackney. It was shut along with the Empire for refurbishment in May 2001 ... the ensuing street party in the Town Hall square got a bit out of hand - although participants commented that it was more simulacra than reality. What's clear is that they didn't want to go to the Ocean!39

Resistance and Reaction:

Hackney UNISON members fought a determined campaign against Council cuts and attacks on their wages and conditions from 2000 - 2001. This needs a separate analysis but Hackney Council workers showed well into 2001 that they were willing to take unofficial action particularly against victimisation. 40 In addition the current Hackney UNISON officials have been willing to continue a dispute in an attempt to carry it through to victory.

But what was stressed to me by a number of UNISON members however was that their campaign would fail without a 'second front' being opened by militant community struggle. This never came despite a series of local disputes over specific closures - some of which were successful - Burbage School in Hoxton for example.

The attempt to have a united front of community struggles through an organisation called Hackney Fightback fell apart with open splits between the Socialist Workers Party and the Socialist party - leading to separate candidates standing in Council by-elections in June 2001.

Worse still, the Council by-elections showed that the main beneficiaries of Hackney's crisis far from being the left were the populist right wing formation Hackney First - who achieved 546 votes in two wards versus Socialist Alliance's 513 in 3 wards. In 2001, the BNP showed that given a crisis in political life – the riots in Oldham as much as the crisis in Hackney - the English electorate would be willing to vote for a 'radical' political alternative. In Hackney, with an organised membership of nearing 1,000 the far left working together could not do the same. So much for electoralism...

And what about the grassroots?

There were a number of other positive local community campaigns over the last two years namely:

• Occupation of two of the threatened nurseries (see Black Flag #220)
• Rent Freeze Campaign
• Organising on privatised estates.

In Shoreditch, community activists working within the New Deal Trust, alongside the Hackney Independent Working Class Association conducting mass leafleting work, have now turned the tide on stock transfer in the south of Hackney. Looking at this combined approach of confrontation inside and outside the structures of the regeneration state can begin to answer the question of how to build mass support for progressive alternatives to gentrification and privatisation.

In the next issue of Black Flag we look at grass root responses to gentrification and privatisation in Hackney and elsewhere. We welcome contributions.

• 1 Such as Michael Barber who has moved from Education honcho to be a top advisor at Number 10.
• 2Unison leaflet for 7th of March Strike 2001.
• 3 Hackney Gazette 24/8/00.
• 4 It’s unclear to what extent the SWP declaring that the waste workers were victorious in the fight against privatisation in October, didn't help in this situation. There could be a certain - thank fuck we've escaped from Hackney Council - factor linked in with experienced social democrat managers to explain the waste workers 'giving Service Team a chance’.
• 5Hackney Gazette 14/6/01 and 28/6/01.
• 6 Hackney Gazette 21/6/01 and 19/7/01.
• 7Hackney Gazette 5/7/01.
• 8Hackney Gazette 1/3/01.
• 9Hackney Gazette 5/7/01.
• 10Hackney Gazette 21/6/01.
• 11Personal conversation with HB staff.
• 12See report in Inside Housing February 2000 and Housing Today 24/2/00.
• 13See ‘Whose Benefit’ leaflet from Hackney IWCA.
• 14For criticism of the Lux see letter in Hackney Gazette 9/12/99 where Dave Young [from Geffreye Estate not the Haggerston labour Councillor] says "I think the Lux is a perfect example of 'regeneration.' Our money goes into it. It is of no use to us, but only serves to pull more rich young people into the area - the same people who are gradually taking over our pubs, our shops and even our homes.”
• 15A letter in Hackney Gazette 14/9/00 pointed out the reality of the square's use as an open air drinking area for yuppies.
• 16Hackney Independent Spring 2000.
• 17Hackney Gazette 1/7/99 and Hackney Independent Spring 2000.
• 18Eugene Francis in Hackney Independent Spring 2000.
• 19The Observer 3/6/01.
• 20e.g. teachers and nurses, although behind these paradigms of virtue, technicians and even housing workers are sneaked in.
• 21Hackney Gazette 23/3/00.
• 22Hackney Gazette 23/3/00.
• 23Hackney Gazette 17/8/00.
• 24Hackney Gazette 29/7/00.
• 25Spaces Spring 2001, issue #8.
• 26Hackney Gazette 29/7/00.
• 27Hackney Gazette 15/2/01.
• 28The three Estates for which I have precise figures the total was (including squatted homes) over 20%.
• 29Hackney Gazette 10/12/98 and 14/1/99.
• 30Hackney Gazette 1/3/01.
• 31Hackney Gazette 16/11/00.
• 32The main Dutch bank ... also known for attacks on inner city communities in Amsterdam.
• 33The Observer 15/7/01.
• 34Hackney Independent. Summer 1999 quoting developer Peter Moreno (or Moron as the spellchecker suggests) from the Hackney Gazette.
• 35See Hackney Gazette 16/8/01.
• 36Hackney Gazette 29/3/01 - see also letters from staff and the director defending the venue on 12/4/01.
• 37Hackney Gazette 31/5/01.
• 38Hackney Gazette 26/7/01.
• 39 Hackney Gazette 24/5/01 and Evening Standard 21/5/01.
• 40See Hackney Gazette 29/3/01 for Transport Workers, and 5/7/01 for dustmen as well as the ongoing actions over Noah Taylor who was sacked by the Council in August 2001.