Understanding the City of London

Occupy London has set up a second camp and, come Monday morning, are going to have to decide just how serious they are. I’m really looking forward to getting a chance to visit  this week, and will report back on what I find. If nothing else, this occupation could be extremely helpful in bringing to light the secretive world of the City itself, and the Corporation which runs it’s affairs. Don’t worry, I haven’t gone all conspiracy theory on you, but am getting  this from the pretty respectable Treasure Islands by Nicholas Shaxson, who looked into the City of London Corporation (the authority that runs the Square Mile) in his final chapter.

Shaxson offers an excellent summary of some of the arguments here: http://www.newstatesman.com/economy/2011/02/london-corporation-city and there is more in Treasure Islands. What follows is an even briefer account of some of the main points, although I would recommend also reading the full account.

1)   The City of London Corporation is not governed by the Crown.

The City has maintained independence from the Crown since 1191 when it was established as a commune. It is governed by a Lord Mayor, distinct from the Mayor of London and the Corporation’s Remembrancer sits opposite the Speaker in Parliament to lobby on it’s behalf. It has retained this independence simply because, at various times, Monarchs and governments have needed the City’s money. This separation facilitates the grand practices of ‘offshore’ banking whereby money is both funnelled out of Britain into tax havens in the Crown dependencies – in Jersey, Guernsey and the Isle of Man – and into the Cayman Islands and Bermuda. By providing a short circuit to escape regulation and tax, the City attracted business from Wall Street during the 1980s and in turn contributed to deregulation in the United States.

2)   The Authority is not democratic

Other any other borough, the authority is made up of the Court of Common Council. The candidates are all independents, and elected by Businesses as well as indiivduals. To quote Shaxson:

“Before 2002, the 17,000 business votes (only business partnerships and sole traders could take part) already swamped the 6,000-odd residents.”

This corporate franchise was in turn extended by Blair, who overruled the Labour Party’s prior commitment to abolishing the Corporation:

“Blair’s reforms proposed to expand the business vote to about 32,000 and to give a say, based on the size of their workforce in the Square Mile, to international banks and other big players. Voting would reflect the wishes not of the City’s 300,000 workers, but of corporate managements. So Goldman Sachs and the People’s Bank of China would get to vote in what is arguably Britain’s most important local election.”

3)   The Corporation is, unsurprisingly,  pretty rich…

…and, unsurprisingly, rather secretive about it. Shaxson has been digging around here, too. He reckons that they own around £3 billion, but is convinced that possession of 20% of the property in the Square Mile would mean slightly more than this:

“I came up with figures of 70-80 million square feet of rental property in the square mile (see here), with a current going rate of about 50 pounds per square foot – this figure would produce property income adding up to something like 3.5 billion annually overall in the City. 20 percent of that would be 700 million, a 25ish percent rate of return on 3 billion. That’s a lot.

So I would question the City’s basis for valuing its property. Let’s be generous and round that income figure down to 500 million, and assume a five percent rate of return on property, which is reasonable. That puts City assets at 10 billion pounds inside the Square Mile.  What is more, the City owns quite a lot of property outside the Square Mile, which is presumably worth quite a bit too – so that widens the question.”

Unfortunately, such speculative research is the best we’re going to get as the City is not subject to FOI requests regarding it’s funds. As Our Kingdom report:

“Fittingly, the City was excluded from the Domesday Book, William’s national survey of assets and revenues for the purposes of taxation.  New Labour has continued the tradition, confining FOI requests for information to it “as a local authority, police authority and port health authority only” – emphasising the last word in bold.  And so the Corporation was able to rebuff all Glasman’s FOI attempts to investigate its City Cash, “a private fund built up over the last eight centuries”.”“

There is a lot at stake here, as the Corporation predates Parliament and has seen off efforts to reform it throughout the centuries, even when there has been political will. It is largely invisible, secretive, archaic and aloof from the rest of the UK. This raises the stakes considerably as, if democracy is to mean anything, it is in it’s power to overturn of precedent with will.

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