The New Statesman Profile - Southwark borough

Once the stupidest borough in London, it is now a model of Blairite enterprise for a new Britain. Th

I stand on the roof of a ten-storey car park in the middle of Peckham. The view is stupendous. Northwards it stretches from Battersea power station, right across to the Millennium Dome. Bang in the middle is St Paul's. The London borough of Southwark has its town hall in unlovely Peckham Road. It has started to advertise itself, with admirable chutzpah, as a "part of central London". But from my concrete eyrie, in the heart of Del Boy and Rodney's territory, those familiar metropolitan landmarks are on the far, misty horizon. Below me, in mile after mile of depressing public housing, I see the size of Southwark's task in trying to pull itself up by its bootstraps.

With all the kerfuffle about John Prescott's future at the environment department, the Prime Minister's royal progress through Liverpool and Manchester and new statistics on just how much poorer (relatively) the poor are getting, urban regeneration is one of the hottest subjects on the political agenda, and Southwark gives the best clue to what new Labour means by this. It is to Blairism what Wandsworth was to Thatcherism: a local test bed for new ideas. It's engaged on a major project of social engineering.

The map shows one vast borough - 11 square miles, 232,000 people, 30 per cent of them from ethnic minorities. But it's really three very different places, in uneasy disharmony.

In the north, along the Thames, is Pushy Southwark: the jazzy strip of old and converted wharves and docks, running from the new Tate Gallery of Modern Art on Bankside, through the "Conranland" around Tower Bridge (where the new London mayor's HQ is due to go up) and on to the bright new private estates of Surrey Quays (the former Surrey Docks).

In the distant south of the borough, Polite Southwark glitters: the smart homes and private schools of Dulwich Village, with gentrifying Victorian tracts around it.

But in between lies the endless-seeming terrain of Poor Southwark: Walworth and Peckham - which are now starting to darken below me, under the night sky. Southwark's much admired, Michigan-born director of regeneration, Fred Manson, and his chief ally, Bob Coomber, the borough's chief executive, are trying to operate a kind of urban vice. Between the two worry-free outliers, Poor Southwark must be squeezed into a new shape.

"Our goal is simple," Tony Blair said, describing his ambition to reduce social exclusion, "it is to bridge the gap between the poorest neighbourhoods and the rest of Britain." Blairite Southwark aims to achieve this, at least in part, by bringing in more of the well-to-do. The sharp elbows of the middle classes would nudge up standards in public services; and bring more money in their wake.

The Old Testament version of Labour Party social engineering mainly consisted of building more council houses and flats. The New Testament version attempts to remould character by remoulding urban space. "So long as the borough was seen as Councilville - however much public money was spent - there'd be no regeneration," says Tony Travers, director of the Greater London Group at LSE. Southwark is more than 60 per cent public housing. It's the largest landlord in London, responsible for 59,019 properties, of which 90 per cent are flats and maisonettes (the national average is 19 per cent). Like a street-corner preacher, Southwark puts its hopes in psychology, rather than bricks and mortar.

"We have to believe we can change attitudes," Manson says. "We're trying to move people from a benefit-dependency culture to an enterprise culture. If you have 25 to 30 per cent of the population in need, things can still work reasonably well. But above 30 per cent it becomes pathological."

Southwark works tightly with the Pimlico-based Government Office for London and its "Mr Regeneration", John Sienkiewicz - a senior civil servant whose name everyone among Southwark's top brass knows, but no one can spell. Manson is the key figure. He's close to the Blairite elite and advised on Richard Rogers's Urban Task Force report, which contains much Southwark-style chapter and verse.

In Pushy Southwark, there's now a genuinely metropolitan buzz. The Thatcher-Heseltine London Docklands Development Corporation began it. Capitalist wealth from the City was sucked across the river. The cavernous wine vaults of Vinopolis recently opened on Clink Street, next to a new fish restaurant and along from the ANZ Investment Bank and the Minerva House river-view "residences". Norman Foster's Millennium Bridge - from St Paul's Steps to the new Tate - is a highly symbolic change. It will bring the bankers across to get a better view of their money.

The new riverside people are under 35; once they have children, they move. Southwark's four new Jubilee Line stations - more than any other borough - are all in the river-lands strip. They will winch in more gentrification and professional jobs.

But go south. On the 64-acre Aylesbury estate, Blair launched his welfare-to-work programme in a handy photo-opportunity (which underscored Southwark's Blairite symbolism). The estate includes the longest block ever built in western Europe by industrialised methods. In the shadow of this greyness, an older south London attempts to flourish. East Street market touts cheap fruit ("juicy Valencias, five for 60p"), cheap flowers, cheap trainers, cheap mobile phones. Southwark, hereabouts, touches 90 per cent public housing. Only two Southwark wards are below the London average for unemployment. They're both in leafy Dulwich.

When it was run by old Labour, Southwark was the stupidest borough in London. The turnround to common sense began under the political leadership of Jeremy Fraser. Fraser remembers that as new-broom councillor he had to sign a £13 million cheque in 1990 for the borough's legal costs in defending a ludicrous local plan. This had designated the entire riverside for industry and warehousing; Sam Wanamaker's proposed new Globe theatre was rejected as a bourgeois ruse. "If that was a socialist victory," Fraser says, "I was determined it would be the last."

Manson, Coomber and Fraser were all set on the road to a Blairite Damascus by the way things used to be. Manson worked for years as a Hackney council architect. Fraser stood for Southwark council to oppose misguided demolitions that gave rise to estates like Aylesbury. Coomber, as a junior finance official, had to help draft the plan that excluded Wanamaker's dream. All three dashed away from planning and towards the market. Arguably, Blairism owes as much to Southwark as Southwark owes to Blairism.

Coomber shows me a borough map, ringed and dotted with regeneration schemes, action zones, partnership projects. Outside his windows, Peckham is halfway through a £260 million scheme that will demolish or revamp estates where, once, the milkman wouldn't even call.

Bankside is a chirpy monument to the economics of the market (but a market oiled by public money); the Aylesbury estate is a gloomy monument to the all-powerful plan. But the attempt to squeeze the urban vice is beginning to raise questions about even the best intentions of modern regeneration. Is public purpose always compatible with profit? And may we be once again falling into the trap Blair decried when he looked back at past policies of renewal: "Too much has been imposed from above"?

Southwark's close-knit group of like-minded local officials and politicians foreshadows the cabinet administration Blair would like to see elsewhere in local government. They turn the social-engineering screw with increasing vigour. Public housing blocks are being demolished. Private housing will come in.

Along the Thames, new uses are being poured into the abandoned space of wharves and docks. But in the middle swathes of Poor Southwark people must be got out. The number of council flats must be cut. "The borough's simply got more than it wants for local needs," one planner says, from behind the veil of anonymity. "It just sucks in refugees and other people with problems."

Some people are beginning to feel dragooned. Within the local Labour Party there are anxieties about devaluing public housing. How many of the poor will be precipitated into private rentals, whose low quality caused the council estates to be built in the first place? There's also a political penalty. Southwark is within a whisker of being a hung council. The Liberal Democrats, closely guided by Simon Hughes, are capitalising on local anxieties. Nobody loves a landlord, whether public or private.

Just across from where the London mayor's offices will be, Southwark is proposing to demolish three small council estates simply for the land values. The price has soared, thanks to riverside regeneration. Southwark plans to plough the cash into drearier tracts, further inland. The financial logic is clear; the human logic less so. Bulldozers are a dispiriting agent of change.

The council claims it carries out wide consultation. But many tenants seem never to have encountered it. At one estate off the horrendous Elephant and Castle swirl of vans, lorries and cars, the council notes happily that demolition, in a survey, was the most favoured option. But, looking at the small print, I see that only 42 per cent returned the questionnaire. Of these, only 24 per cent favoured demolition. That is 10 per cent of the tenant total.

None of this is to deny the good that new-model Southwark is doing. "I can't make people come to Peckham," Coomber says. Ambitious parents "can't cope with areas with no hope". But, he adds, "I can make sure we don't carry a reputation for incompetence. It has to be a place where you can do business." Once, Southwark had 360 dustmen. It now has 80. They make more collections than they did before.

Blairite Southwark needs to remember its history, as well as gazing into its future. Estates like Aylesbury were built by councillors who also believed they were building a brighter tomorrow. The trouble came when a good idea was pursued too doggedly, on too large a scale. As I buy a bag of oranges in East Street market, I hope we're not going that way again.

The writer is a Senior Fellow of the Institute of Community Studies