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A tale of two cities, before and after Covid

It would be a big mistake to imagine we can simply reset the clock to 2019

London

The commuter trains are almost empty. The sandwich and sushi chains are giving notice on their leases. Office blocks have emptied out, and most of us have already got used to working on our laptops or over Zoom. As the Covid-19 crisis drags on, working from home has become the new normal. Companies have already started to work out that there are huge savings to be made from letting their staff work remotely, and many employees have already decided they prefer it, especially if the office is a place where you have to wear a mask, wipe down the PC with sanitising gel every ten minutes, and walk up 30 flights of stairs because lifts aren’t safe any more.

There is a problem, however. Huge swathes of the economy depend on traditional offices. From transport networks, to cafés and shops, to property companies, to the less tangible chemistry that comes from lots of bright people clustering together, the city was the productive engine of the country. The Government will be tempted to try and keep it alive. But that would also be a big mistake. Instead the city needs to be reinvented, not rescued.

Next week, the Government will start doing what governments usually do when confronted with a crisis: try to get back to the way things were. The trouble is, it isn’t likely to work. Lockdown has made many companies realise they don’t need the expense of running a huge building in an expensive city centre, while workers have decided – and the British, according to the surveys have reached this conclusion more decisively than workers in any other developed country – they prefer the flexibility of home working. With big companies such as JP Morgan and Linklaters switching to a hybrid home/hot-desking system it doesn’t look as if the office is coming back.

No amount of persuasion from the Government will change that.

We are already seeing pain in the “office economy”. The sandwich chain Pret A Manger is closing branches permanently. Many of its rivals will soon feel compelled to follow suit. Landlords are typically protected by long leases, but that won’t insulate them forever, and there will be very few renewals. Order books will dry up for suppliers. Busses and trains that already lost money when commuters were packed like suited sardines will be in even worse financial shape now they are three quarters empty.

The city, led by London in particular, but also by revived and vibrant regional hubs such as Manchester, Birmingham, Bristol, Leeds and Liverpool, along with university/start-up clusters such as Oxford, were the growth engine of the British economy, as were the major commercial centres in every developed economy. It is easy to think we desperately need to bring them back. Perhaps we do, but it would be a big mistake to imagine we can simply reset the clock to 2019. Too much has changed over the last six months. Instead, we need to reshape the city economy. How? Here are three places we could start.

First, accelerate change of use. Planners are far too reluctant to let properties switch from one use to another (a major reason why high streets are already in so much trouble). Big office buildings need to be converted to open-plan, hot-desking centres, with plenty of space for cafés and meeting rooms, for staff who come in two or three days a week. That will require far less space, so the top floors could be turned into flats, and ground floors into gyms or nightclubs.

Next, we should stop vast subsidies for commuter networks and spend the money on making city centres more liveable instead. We throw billions every year at train and bus companies, none of which has any hope of ever making money again. It would be far better to mothball them and spend the money instead on green spaces, cycle lanes, police, and cultural events.

Finally, we should reform business taxes and most of all rates. They were already way too high, but it is now even crazier than ever to impose levies on city centre locations that no longer have any value. If necessary, we should consider a local income tax.

None of that is going to be easy. The “office economy” has plenty of vested interests who will fight hard for subsidies and bailouts. And yet, it is always better to embrace change than to fight it. It is harder in the short term but healthier in the medium term.

The city isn’t coming back, at least not in the same form as before. Instead of fighting that, we need to start figuring out how cities need to change, and work out how we maintain their vibrancy and creativity even when we are no longer at our desks from nine to five any more.