Hackney Fashion Hub: A parallel universe of tourist wealth, launching in 2014

A tsunami-sized wall of cash is heading to Morning Lane, a shabby thoroughfare in Hackney - but who will benefit from it?

Two years after the riots, a tsunami-sized wall of cash is heading towards Morning Lane, a shabby thoroughfare in Hackney.

The local council secured £5m from the Greater London Authority’s regeneration fund for areas affected by the riots and it is being spent on a project costing tens of millions and called the “Hackney Fashion Hub”. Fashion outlets, a café and design studios will be housed in two new seven- and five-storey buildings and 12 railway arches located opposite and adjacent to the old Burberry factory, which has attracted busloads of Japanese tourists since it opened as an outlet store in the 1990s.

The developers are the Manhattan Loft Corporation, “the company who brought loft living to London” and whose recent projects include “67 of the most unique apartments in London, on the top floors of the Grade I-listed St Pancras Renaissance Hotel”. The architect is the trendy David Adjaye and work starts in 2014.

As well as big-brand fashion salesrooms, the development will include design studios “where locals can show their work”. The stress is on the word “local” and the council is keen to persuade us that this project is not just to attract tourists and investment from the Far East.

So we, the locals, should be over the moon about it, shouldn’t we? I spoke to Lia, who lives in Hackney and works at a vegan, volunteer-run café on Clarence Road, a focus of the London riots. She knew nothing about the development. But some local people do know and are into their designer brands – as the discerning young men who looted the Carhartt outlet near London Fields showed in 2011. Perhaps this is why David Adjaye’s shops on Morning Lane have massive, futuristic-looking riot shields on the front. I asked Adjaye Associates about them and got this reply: “No, those are simply shutters; all shops have shutters on them. They are shutters that cleverly also function as rain shields.”

Hackney Council claims that the new hub will be physically integrated with and encourage visitors to go to “other areas of Hackney” (such as the betting shops and pawnbrokers on the Narrow Way) and “new signage” will encourage them to do that. But in reality it is separated from Hackney Central by the bus station on Bohemia Place, while retailers on the Narrow Way in central Hackney, a site of rioting, are excluded from the party.

They are somewhat disgruntled. So the council has painted bright geometric shapes on the road outside their premises. “Next week we’re getting some pot plants,” said Ayub, who owns a local clothes shop. “They’re trying to kill us.”

So everyone has been catered for: the underclass in the ghetto of the Narrow Way and Clarence Road; the Chinese, South Korean and Japanese visitors in their parallel universe of tourist wealth on Morning Lane; and those who can afford the new flats on Chatham Place. If the shopkeepers still feel dissatisfied, they could participate in a scheme the council has set up called Hackney Is Friendly; it’s a “place to find a friendly face on the Narrow Way. Come in and say hello if you’re passing.”

 

It's all no change in Hackney: a simulated view of the new fashion hub. Photograph: Getty Images.

This article first appeared in the 12 August 2013 issue of the New Statesman, What if JFK had lived?

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Let's turn RBS into a bank for the public interest

A tarnished symbol of global finance could be remade as a network of local banks. 

The Royal Bank of Scotland has now been losing money for nine consecutive years. Today’s announcement of a further £7bn yearly loss at the publicly-owned bank is just the latest evidence that RBS is essentially unsellable. The difference this time is that the Government seems finally to have accepted that fact.

Up until now, the government had been reluctant to intervene in the running of the business, instead insisting that it will be sold back to the private sector when the time is right. But these losses come just a week after the government announced that it is abandoning plans to sell Williams & Glynn – an RBS subsidiary which has over 300 branches and £22bn of customer deposits.

After a series of expensive delays and a lack of buyer interest, the government now plans to retain Williams & Glynn within the RBS group and instead attempt to boost competition in the business lending market by granting smaller "challenger banks" access to RBS’s branch infrastructure. It also plans to provide funding to encourage small businesses to switch their accounts away from RBS.

As a major public asset, RBS should be used to help achieve wider objectives. Improving how the banking sector serves small businesses should be the top priority, and it is good to see the government start to move in this direction. But to make the most of RBS, they should be going much further.

The public stake in RBS gives us a unique opportunity to create new banking institutions that will genuinely put the interests of the UK’s small businesses first. The New Economics Foundation has proposed turning RBS into a network of local banks with a public interest mandate to serve their local area, lend to small businesses and provide universal access to banking services. If the government is serious about rebalancing the economy and meeting the needs of those who feel left behind, this is the path they should take with RBS.

Small and medium sized enterprises are the lifeblood of the UK economy, and they depend on banking services to fund investment and provide a safe place to store money. For centuries a healthy relationship between businesses and banks has been a cornerstone of UK prosperity.

However, in recent decades this relationship has broken down. Small businesses have repeatedly fallen victim to exploitative practice by the big banks, including the the mis-selling of loans and instances of deliberate asset stripping. Affected business owners have not only lost their livelihoods due to the stress of their treatment at the hands of these banks, but have also experienced family break-ups and deteriorating physical and mental health. Others have been made homeless or bankrupt.

Meanwhile, many businesses struggle to get access to the finance they need to grow and expand. Small firms have always had trouble accessing finance, but in recent decades this problem has intensified as the UK banking sector has come to be dominated by a handful of large, universal, shareholder-owned banks.

Without a focus on specific geographical areas or social objectives, these banks choose to lend to the most profitable activities, and lending to local businesses tends to be less profitable than other activities such as mortgage lending and lending to other financial institutions.

The result is that since the mid-1980s the share of lending going to non-financial businesses has been falling rapidly. Today, lending to small and medium sized businesses accounts for just 4 per cent of bank lending.

Of the relatively small amount of business lending that does occur in the UK, most is heavily concentrated in London and surrounding areas. The UK’s homogenous and highly concentrated banking sector is therefore hampering economic development, starving communities of investment and making regional imbalances worse.

The government’s plans to encourage business customers to switch away from RBS to another bank will not do much to solve this problem. With the market dominated by a small number of large shareholder-owned banks who all behave in similar ways (and who have been hit by repeated scandals), businesses do not have any real choice.

If the government were to go further and turn RBS into a network of local banks, it would be a vital first step in regenerating disenfranchised communities, rebalancing the UK’s economy and staving off any economic downturn that may be on the horizon. Evidence shows that geographically limited stakeholder banks direct a much greater proportion of their capital towards lending in the real economy. By only investing in their local area, these banks help create and retain wealth regionally rather than making existing geographic imbalances worce.

Big, deep challenges require big, deep solutions. It’s time for the government to make banking work for small businesses once again.

Laurie Macfarlane is an economist at the New Economics Foundation