The Financial Times Calls The City Of London Council Undemocratic: This Local Authority Will Remain That Way Until Westminster Passes Legislation To Abolish Its Business Vote

Within hours of the Financial Times publishing a long weekend piece entitled Undemocratic, Anachronistic, Fantastic. How The City Of London Survives by Patrick Jenkins on 14 June 2024 (full piece here), the City of London lie machine creaked into action and cranked out a weak press release in response. There’s analysis of that below.

The entire FT piece on the City council is worth reading since it draws out the huge gulf separating this local authority from the square mile’s financial and professional services industry, thereby counterbalancing the dubious claim made by council ‘leader’ Chris Hayward – the FT use the term ‘wide boy’ when describing him – that ‘we speak for the United Kingdom on financial and professional services’.

Anyone who didn’t know better who saw the above quote out of context would think that at the very least Hayward was Chancellor of the Exchequer, if not the UK Prime Minister. This local authority leader has a hugely inflated sense of his own importance.

The ‘leadership‘ of the City council has no mandate to represent the financial and professional services industries and what it does voluntarily has no measurable results – see below for more on this. Many who work in the financial City are blissfully unaware of local politicians like Chris Hayward. Before returning to our take on Hayward and his self-serving chums, here we will cut to the chase and reproduce the end of the Patrick Jenkins FT piece.

Liz King, a slight, bespectacled retiree, does not look much like a crusader. She sits, nursing a whisky sour in the Barbican Centre’s magnificently retro Martini Bar. But this New Jersey native, who settled in the UK in her student days before building a career in the steel and energy sectors, is passionate about another of the City of London’s old ways of doing things, the nature of democracy here. She’s not shy about saying so.

“The way the City views us residents, it’s that we’re a nuisance,” says King, one of nine elected representatives of the City’s Cripplegate ward, which encompasses the lion’s share of the Barbican, a landmark of 1970s brutalist development comprising 2,000-plus apartments and an avant-garde arts centre.

Some 615,000 people work in the Square Mile, but fewer than 9,000 people live here. So the perennial question for the local council is how much weight should it give to residents versus the companies that bring jobs and money to the district. Uniquely in the democratic world, the City of London operates an elaborate kind of corporate voting mechanism. (Melbourne in Australia has a comparable system. It is far smaller, albeit similarly contentious.) According to data cited at a corporation committee meeting in March, there are now twice as many “corporate” voters as resident voters in the City, 13,748 versus 6,475.

Even though the City is the wealthiest local authority in the country, residents feel just as aggrieved by the quality of services they get from their council as those in far poorer areas. King, who has lived in the Barbican for decades, describes residential service charges as “crazy”. (They average £6,461, excluding penthouses, for which charges top £30,000.) The council has failed to make up for years of poor maintenance, resulting in leaking roofs and other avoidable wear and tear. The situation across the road on the Golden Lane Estate is worse still. King reckons that is partly because the flats there are still mostly social housing. “They’ve been talking about replacing the windows on that estate for over 20 years. It’s shocking.”

Chris Hayward, the man who runs the corporation day to day via his chairmanship of the Policy and Resources Committee, is a career-long councillor. But on the day I meet him, he looks every inch the City-wide boy. Outside his office in the corporation’s Guildhall headquarters, he strides towards me, arm outstretched in the kind of broad pinstriped suit that embodied the bravado of a 1990s banker. He insists he cares about all his constituents, pointing out that the local investment that he and his predecessors have overseen, including the Elizabeth Line tube stations, is “beneficial for the whole City”.

But when I describe the corporation as a local authority like any other, he bridles. “I would challenge that,” he says, insisting only 20-25 per cent of the organisation’s work comprises local authority functions. He reels off a list of extracurricular activities, including managing 11,000 acres of green spaces across Greater London, from Hampstead Heath to Epping Forest, operating 11 public-sector schools and three private ones and building a new Museum of London.

I ask him how he feels about managing the corporation’s conspicuous wealth and spending power at a time when other local authorities are struggling to stay afloat. Is he not likely to come under pressure to help poorer regions? Hayward looks cornered for a moment. “I mean, yes, there were always opportunities to invest in appropriate things,” he says, citing a recent trip to the north-west of England. “It gives us an even greater sense of responsibility as to how we discharge expenditure of those funds,” he says, referring to the assets, worth about £5bn in total, the corporation manages directly. (The City Bridge Trust, a charity, oversees a further £1.6bn, accumulated from centuries of tolls charged on the bridges crossing the Thames into the Square Mile.) “We do that in a number of different ways . . . First of all, we do it by a significant capital building programme . . . And the second, of course, is that we speak for the United Kingdom on financial and professional services.”

Questions about the City’s governance remain. Four years ago Lord Lisvane, the former clerk to the House of Commons, delivered a scathing report about overdue modernisation. He suggested it appeared “inefficient, lacking diversity, transparency and good modern governance”. Barely half of Lisvane’s 80-plus recommended reforms have been acted upon.

The most obvious oddity is the extreme size of the council. In any other square-mile district in the country, there would be only a handful of councillors. There are 93 committees of one kind or another, ranging from the supremely powerful to the abstruse (my favourite is the Efficiency and Performance [Finance] Working Party). Many of them have dozens of members.

A second quirk, call it quaint if you’re a historian or anachronistic if you’re a reformist, is the two ranks of elected officials, councillors and aldermen. Hayward defends the system with pride as “the oldest working democracy in the world”, pointing to 11th-century roots that predate the British parliament.

A third is the almost complete absence of political parties in the Square Mile. Refreshing perhaps, but critics say the system is an invitation to perpetuate an old-boys’ club. Candidates for both councillor and alderman roles are typically encouraged to stand for election by those they know through livery companies or other closed networks. Though some livery companies are relatively progressive, aiding female career development, for example, most remain overwhelmingly male and white.

Fourth, and probably most controversially, the City operates an idiosyncratic system of “corporate democracy”. At best it is flawed, at worst a recipe for abuse. The Square Mile is the last “rotten borough”, according to Reclaim EC1, a well-read blog by disaffected residents. Councillors and aldermen are elected by votes cast by corporate representatives, or “electors”, as well as residents. An estimated 90 per cent of the City’s adult resident population is registered to vote (in line with the national average), but the percentage of eligible electors who are registered is far smaller. The corporation will not say exactly how many more employees it believes are eligible to vote compared with the tally of 13,748 currently registered, though it is probably about double that number, according to some officials.

The rules state that at small companies, one elector is granted for every five members of staff. For bigger companies, a further elector is granted for every 50 members of staff. That would entitle one of the City’s biggest employers, Goldman Sachs, with about 5,500 staff at its Shoe Lane headquarters, to about 120 elector votes. The only snag is that Goldman has a policy of non-participation in political processes. The same goes for other big employers, particularly American companies. Despite the corporation’s efforts to boost participation, many companies do not bother.

A connected problem is the scant choice of candidates. For every councillor position, there are just 1.3 candidates on average, radically fewer than in London’s 32 local boroughs. The aldermanic voting system is particularly open to manipulation. While terms of office last up to six years, it is up to an alderman to trigger an election. “Some people abuse the system,” says (Nick) Lyons, Lord Mayor until last November, without elaborating. Diversity is lacking. Only six of 25 aldermen are women. All, bar one, aldermen are white. The corporation said it was committed to promoting diversity.

An old acquaintance and former Lord Mayor once told me that one explanation for the City’s sometimes reactionary instincts is a “shadow hanging over the whole structure” of the corporation’s supposedly democratic governance, Freemasonry. Close to a third of councillors are declared masons, including the chairs of nearly all the major committees. Three-quarters of Lord Mayors over the past century have been masons. “If a Freemason has a choice between appointing a Freemason and a non-Freemason to a role,” my acquaintance pointed out, “they are very likely to go with the Freemason, regardless of other issues.” Women cannot be masons, a topic frequently raised by some of the more reform-minded councillors.

King is one. The evening we meet is shortly after the row over male-only membership of the famous Garrick Club has hit the news, finally leading to the admittance of women, and King sounds hopeful that the attention could spur closer scrutiny of the role played by Freemasonry in the City. “All the people who are in the [City] establishment, yes, they’re all masons. This whole place. It’s a throwback. But it will change.”

Undemocratic, Anachronistic, Fantastic. How The City Of London Survives by Patrick Jenkins, Financial Times, 14 June 2024. See the full piece here.

Aside from freemasonry another factor that should be addressed in relationship to the lack of diversity at the City council is its drinking culture. As Monidipa Fouzder reported a few days ago in the Law Society Gazette, a prevalent drinking culture is leaving British Muslims feeling excluded at work and this is clearly applicable to the City council with its boozy dinners and receptions.

Fouzder concludes their Law Society Gazette piece by stating firms – we’d add local authorities – should review their approach to organising work socials: “Whilst it is not possible to dictate how people choose to socialise in their free time, it is possible for managers and leaders of organisations to set a precedent of organising inclusive socials when those social events are deemed to be an essential part of a programme or team building exercise.”

Moving on, the FT feature acknowledges that Reclaim EC1 is a “well-read blog”, which undermines the long-standing smear promoted by the City council’s ruling clique that this website should be ignored because it is little read, although that clique has recently been undermining its own smear by its hysterical responses whenever this website is mentioned in council meetings: see, for example, here and here.

The  FT feature states that:

“The aldermanic voting system is particularly open to manipulation. While terms of office last up to six years, it is up to an alderman to trigger an election. “Some people abuse the system,” says Lyons, Lord Mayor until last November, without elaborating.”

The quote from Nick Lyons reveals his breathtaking hypocrisy, as it was he himself who most recently abused the system by overstaying in office for five months without an electoral mandate and in flagrant breach of a convention introduced decades ago to try to democratise the office of alder. When Alder Martha Grekos exposed his delinquency, the other alders passed a resolution to try to retrospectively validate it allowing an alder to overstay in office by up to six months if a majority of the other alders (not the electors) agreed that they could.

Lyons has been rewarded for his rule breaking, hypocrisy (more than once) and his attempt to bully a woman councillor in his ward by being given a knighthood in the Birthday Honours’ List 2024. This is more proof, though none is needed, that the honours system is sleazy beyond reform.

The announcement of Lyons’ knighthood must add to the bitterness of Vincent Keaveny, who was Lord Mayor before Lyons and was only awarded a CBE, making him one of very few Lord Mayors not to get a knighthood after their term of office ended. But Keaveny should reflect that even his CBE was undeserved. The puppet role of Lord Mayor can be performed by anyone who is able to turn up to lots of meetings and dinners on time, read bland and boring speeches written by council propagandists and smilingly say “Hello, very nice to meet you”. 

The Birthday Honours’ List 2024 also included an undeserved CBE for Alder Alison Gowman. She was presumably recommended for this honour by the City Remembrancer as consolation for her being blocked from standing for Lord Mayor after three decades of loyal service to the City council, a loyalty she still shows in spite of its brutal treatment of her.

Alder Sue Langley already holds an undeserved damehood for doing some unimportant work for a government department, and is on course to become Lord Mayor in November 2026. The secret of her success is self-promotion by using her gender, humble “background” and above all making clear she won’t rock any boat she’s in. Hence the final paragraph of the feature:

“As she prepares to become the Lady Mayor next year, Langley (herself an Essex girl, who went to a state school and Southampton university) judges that the pluses of historic tradition outweigh the anachronistic frustrations. “I think it’s fair to say,” she concludes, “that if you were designing a lot of the City today, you might take a different path. But that’s both the intrigue and challenge of a tangled history”.

In other words, she’ll present herself as a breath of fresh air, make a lot of using the title “Lady Mayor” instead of ‘Lord Mayor”, invite future audiences (as she’s already done with past ones) to admire her because of her “background’ – but do nothing to promote radical reform which the City council so obviously needs. She ignores the fact that many other people from more underprivileged backgrounds have achieved far more than her.

In fact it’s hard to see what Langley’s achieved at all in the City council. She’s certainly done harm, like supporting the council’s shameful appeasement of the genocidal regime in China, voting against the timely renovation of the City council’s dilapidated social housing estates and turning a blind eye to the bullying of women members who – unlike her – actually challenge the council’s masonic ruling clique.

Returning to the press release City Corporation Responds To Financial Times Article, the council’s lie machine sounds like a stuck record. It is a text book example of this local authority’s stock response to criticism – evade the real issues and reiterate a list of things that make it sound good as long as no one questions the fake claims it makes about itself.

This City of London council press release asserts: ““We are delivering on the things that matter: driving economic growth…” Our local authority does not drive UK economic growth but falsely credits itself with achievements like this in the hope that those hearing such claims will identify the City council with the entirely separate financial City, a misapprehension that this civic authority does everything in its power to foster. Most of the 125 ‘elected’ members of the council have nothing whatever to do with representing the financial City, and a majority of them have no background in the financial City.

Only the Lord Mayor and the Chair of Policy and Resources for the time being, plus a handful of other elected members and a small number of staff, have anything to do with the financial City. They have no mandate to represent it – that is done by bodies like UK Finance. Instead they draw on the City council’s substantial “private” (but really quasi-public) endowment, which runs to a couple of billion pounds, to fund voluntarily:

– some peripheral PR for the financial City through publications that have the tone of propaganda, and

– sumptuous banquets in Mansion House and Guildhall which they claim are an exercise of the council’s “convening power”, but produce no measurable results and are a lower grade duplication of the role of royalty in the business sphere.

The City council does a monumentally poor job of the things it boasts of doing – and it is a greenwashing rogue planning authority that makes terrible policies and decisions. A great many bodies could do what the Corporation does far better if they had access to its City’s Estate (formerly City’s Cash) endowment and its Bridge House Estate fund. The entirety of City’s Estate should, in fact, be used to benefit the people of London rather than being wasted on sumptuous banquets and peripheral propaganda for the financial City, which doesn’t need this help.

Aside from splashing far too much of what’s not really its own cash on itself in the form of dinners and receptions, the council wastes huge amounts of money on its oversized and underachieving PR department. As a typical example of what the City of London lie machine does, the City Corporation Responds To Financial Times Article press release shows that this local authority’s spending on PR represents extremely poor value for money. A Best Value Inspection and statutory intervention at the City of London Corporation is long overdue, the way this local authority wastes public money is a national scandal.

The header contains photos of a 2011 Reclaim The City protest against the business vote during the Lord Mayor’s Show. Criticism of the business vote as undemocratic is nothing new!