Category: London

A slightly less simple plan.

So, Create Streets. Inside Housing has the story, pointing out that the thing campaigning for knocking down high-rise social housing in south London is basically a group of Tories. But there’s a bit more, or less, to it than that.

Their wesbite won’t tell you whether they are a company, a charity, a lobby, or just a bunch-of-guys who all happen to have a substantial vested interest in knocking stuff down and building new stuff. Neither will their twitter feed, however much I shout at it, although it’s doing some frantic linkwhoring and general pud-knocking (224 tweets since 13th of December).

Like so many things, it seems to be Policy Exchange’s fault, which suggests that PX now has a new role as a constructor-class for wanktanks:

But anyway. From their wesbite:

Heneage Stevenson worked for Schroder Salomon before becoming a partner at Bee Bee Developments, specialising in urban regeneration. He now runs his own property business. He has lived in South London for most of his life.

So, you’re a property developer and you just happen to feel south London could do with a massive urban regeneration programme? How could it happen? Like this. Here’s Bee Bee Developments, boasting about their massive development scheme from 2006, Players Square, in Dublin. O RLY. Property developer from 2006 Dublin? What could possibly go wrong with that?

Players Square, the property company proposing an alternative site for the national children’s hospital, owes €77m to the National Asset Management Agency (Nama) and has not made any loan repayments for two years. The company has written down the value of its land in central Dublin from €82m to €10m — an 88% haircut. The land, adjacent to the Coombe hospital off the the South Circular Road in Dublin, had permission for a development of almost 1m sq ft during the property bubble.

The project was to have included 754 apartments and townhouses, a new school, leisure centre, medical centre, offices and shops. No development has taken place, and Nama took over the Players Square loans from AIB in 2010. The company recorded a €74m loss in 2010 after writing down the value of its site, which left it in breach of its loan covenants…

This Irish Times story suggests that what’s going on here is that the Players Square developers are now trying to wriggle out of the deal by hawking the site to the Irish taxpayer, specifically to put the children’s hospital there. So, the debts ended up on NAMA’s books, they’ve had two years’ loan forbearance off the state, and now they’re suggesting that the public fork out and buy the site off them. Cute, in the Irish sense of the word.

Interestingly, back in the boom years, friend Heneage didn’t mind tall buildings so much; Players Square was meant to be 8-10 stories. That’s not Centrepoint but it ain’t terraced cottages either.

Moving on from Heneage, here’s his mate Nicholas Boys Smith* at Tory Kennel, arguing for doing something to housing benefit, with a canny bit of racism (polygamists? *dogwhistle*) thrown in.

Does anyone else see a plan taking shape? One thing we know about the October 2013 London housing bomb is that it’s going to hit private landlords and also housing associations like a hammer. The problem is voids; not the blog, or the howling emptiness of outer space, but just the fact that someone who has a fixed cost of capital and no tenants has a serious problem.

So, the Create Streets lot pile in to the fire sale, decant everyone to somewhere else, bulldoze everything, and create nice Poundbury-compliant streets for a far smaller number of far richer people. Profit!, as the Underpants Gnomes would say.

Profit for who? Here’s friend of the blog and Yorkshireman, Jones the tax:

*Yes, that’s the guy who was Peter Lilley’s bag-carrier.

TYR Rewind: slip inside this house and fuel the fire

Birdy! For it is he, back out of the woodwork to tell us that there might be a surge in homelessness, up or rather down to the depths of the 80s. Well, that’s grim, and only surprising in that the Tories took just two-and-a-half years to get back to mass homelessness.

Unlike Birdy I promise not to take off to LA with this project, as it is entirely free software and indeed in the public domain. Under conservative assumptions, the annual flow of Local Housing Allowance into rents for the 133,000 London households targeted by the Tories is around £2.3bn, even at the Tory-imposed 30th percentile rate. The rate at which local authorities can borrow from the Government over 10 years is currently 2.8%. This is probably above market, as investors are desperate for anything that pays a nonzero interest rate with any security at all, but it’s a safe assumption.

The present value of this stream of money, at that rate over 10 years, is £21.5bn. Put it another way – the LHA stream for the next 10 years, just for the people affected, at the rate the Tories have imposed, would be enough to pay down a £21.5bn loan.

Now, the Greater London Authority – i.e. Boris Johnson – has a further £2bn housing fund it is doing nothing with.

Depending on how desperate you think landlords will be to sell in the light of the coming slashing of LHA, we can use this to buy between 75,000 and 133,000 properties and incorporate them into the council housing stock, while keeping a billion as a maintenance sinking fund. The council housing departments can manage them. So could a housing association, or whatever, but I prefer the simpler solution.

It would even be possible for the London Labour councils to go ahead without waiting for the Tories, but it would be better to bring them along via the London Councils structure, which is currently Labour controlled.

The structure I envisage would be a company controlled by the participating councils. It would bid for the GLA money. It would raise the rest in a succession of covered bond issues. The participating councils would sign a management contract with it over their share of the property. At the end of the 10 years, the property might simply revert to the shareholders, that is, the councils, and the rents charged might revert to the social rates.

I see this plan preventing the coming housing disaster. I see it seeing off the bankruptcy of an unknown number of landlords, and the banks who love them. I see it using no more money than the government has already committed. I see it vastly increasing the council stock over time. I see it kicking the Tory initiative of moving 400,000 or so non-Tories out of the capital right back at them. I see it creating £20bn worth of rock solid securities for a market that is desperate for them.

The plan is very simple. It may seem radical. That’s because it is both. I contend that it is no sillier, though, than the very respectable Tory Sir George Young’s 1990s doctrine of letting housing benefit take the strain.

‘Housing benefit will underpin market rents – we have made that absolutely clear,’ he said. ‘If people cannot afford to pay that market rent, housing benefit will take the strain.’

This plan simply hoovered up cash from the productive forces of the economy (that’s us) and sprayed it on landlords. My plan hoovers up rather less cash, and sprays it on bankers (I think I see the problem!), or possibly on savers. There is no particular reason why the bonds could not be sold to the public, although that would be more complicated and slower at a moment when speed is important. The worst case scenario is April 2013, the best case is October 2013. I trust Rentergirl more than Polly Toynbee, but anyway, the bomb is going to go off between 6 and 9 months from now.

But the nice thing about doing it this way is that it eventually stops, while the Young plan just kept pouring your money on landlords, and actually paid over the odds to do so. So, let’s buy the houses, quick.

If you’re a conservative concerned about deficit reduction, this is cheaper and depending on the structure it might take borrowing off the headline metrics. If you’re Labour, it is socialism in action and a direct riposte to neo-Shirley Porterism. If you’re a Liberal, it’s local democracy and citizen activism doing stuff off their own hook. If you hate the banks, surely you hate landlords, and anyway we might be able to raise some of the money in the retail market. If you hate special investment vehicles of residential mortgage backed securities, well, so do I, but it looks like I reinvented one.

I have no financial or other direct interest in this plan. I would even offer it to Francis Maude.

A simple plan to save the world and win the elections

Everyone’s talking about the coming housing disaster again, after this Polly Toynbee column. Here’s the thread at Jamie Kenny’s in which we predicted how this would all turn out way back in July 2011, and here are the StabPrin posts from October 2010, including this valuable collection of links. Here’s some more early warning.

Anyway, the problem is simple enough. Buy-to-let landlords can’t actually cut their rents, because they are leveraged and they have to pay the carrying-cost of their investment, i.e. the mortgage. In fact, as most of them are in it for capital gains, the tenants are rather beside the point – they have them to pay the carrying cost of a leveraged bet on housing.

Therefore, the decision to slash Local Housing Allowance down to the 30th percentile of rents in your area, and also to impose a cap on an irrelevantly small number of people for PR reasons, implies evictions, an exodus from London, a wave of bankruptcies, repossessed properties rotting around London, and quite possibly one or more major financial failures. Way to go, Shapps! Perhaps I’ll take business advice from somebody else.

Now, Polly Toynbee reckons the crisis bursts in April. Rentergirl thinks there’s enough money in the sop fund and enough play in the system to get us to October 2013, rather as the second engine on a small plane is there to get you to the crash site.

London Councils, the umbrella organisation for the London boroughs, which is now controlled by Labour, reckons that all in all there are some 133,000 households impacted directly. That’s a lot of people.

So, what are we going to do about it?

Well. The government has set the amount of money it’s willing to pay in LHA at the 30th percentile of the rent distribution for properties of each size. How much money is that? In my area, which is part of the Valuation Office Agency’s Inner North London Broad Rental Market Area, it’s £290 a week for two bedrooms, £340 for three. The numbers are similar for most of the inner-ring of London. You can get the data here.

Skimming London Councils’ valuable research report Does the Cap Fit?, from November 2011, I couldn’t find an immediate number for the average number of bedrooms per household, although I think it could be derived from their tables. One conclusion that was clear was that the problem was skewed to the upper end of the distribution. So let’s use the £340 figure for now.

133,000*340*52 = that’s an annual flow of LHA into rents of £2.3bn. Quite the chunk of change.

OK, so we’ve sized-and-scoped the problem and identified the available resources. Here’s a really interesting article in Public Finance, regarding councils issuing bonds rather than borrowing from the Treasury’s Public Works Loan Board. Note especially that part of Comedy Eric Pickles’ Localism Bill provides for councils getting to keep their rent income.

So, here’s my simple plan. London Councils launches a company, Ponyco, controlled by its member boroughs. This minimises Tory obstruction. If necessary, just the Labour boroughs could go ahead, rather like Ed Miliband’s electricity company plan. We bid for Boris Johnson’s £2bn housing fund as Ponyco’s initial capital. Ponyco raises a covered bond issue, to be repaid out of the LHA-rent stream, secured on property. What property? Obviously, the failed BTLers’ investments, which Ponyco will buy and assign to the respective borough’s housing department to manage.

PWLB loans are made at the 10 year gilt rate plus 1%. At Friday’s rates, that’s 2.8%. As yer man points out, it might be possible to beat that in the market. Over 10 years, at that rate, the 30th percentile LHA income stream would be worth £21.5bn today, plus the shower-jobby fund. Daniel Davies reckons you could buy 12,000 homes with the Boris fund alone:

Using the same pro-rate, and keeping a £1bn back as a maintenance sinking fund*, that would mean a purchasing capacity of 135,000 gaffs. I think D^2′s number is low, though. At £300,000/house (i.e. what I paid for mine give or take a few grand) that would be 75,000. Much of the difference will come down to how desperate the BTLers are to sell and how hard a bargain the councils drive on them.

Either way, though, it’s either a complete solution to the problem or it’s a big chunk of the problem, and the limiting factor isn’t so much financing as the supply of properties. (We could up the capacity of Ponyco by extending the term of the bonds or by squeezing harder on the rate.) And, if you see the original policy as a Tory strategic initiative, it would boot it right back at them. If Boris or Shapps whines, I suggest sending teams of Labour activists to follow them around with the dealbook and a giant comedy biro. Make them wear it. After all…

Which reminds me I could have titled this post Girl, I’ll *House* You, like so. Jungle Brothers ftw, the year after the 1987 Rent Act.

Over time, turnover will lead to some of the properties becoming available. As this happens, the social housing waiting list can be relieved into them. As the bonds are paid off, the rent could even fall to social rented levels. Other UK councils could of course join Ponyco.

So, this proposal:

1) Solves the problem.
2) Does so at no extra cost to the taxpayer over and above the LHA budget as originally planned.
3) Vastly increases the London social housing stock.
4) Renders the Tories’ Porterism futile.
5) Provides the BTLers with a relatively dignified exit.
6) Sees off the possibility of a policy-induced bank failure and inevitable bailout.
7) Prevents the urban consequences of mass landlord failure.
8) Creates a whole bunch of paper that would be Bank of England eligible collateral.

Problems I see include finding enough large properties, due to the stereotype BTL two-bed flat, and the fact that the plan basically re-invents a special investment vehicle for residential mortgage-backed securities, which makes me wonder if I shouldn’t just climb a statue in Whitehall and stay up there until Francis Maude agrees to discuss the policy with me. Up the statue. Skyclad.

Of course, if Iain Duncan Smith doesn’t want me to nationalise everything, he can simply put the whole mess off to the indefinite future. He’s put it off before. He can cave and do it again.

*By definition, the properties have sitting tenants, and there is a waiting list, so I don’t think voids are a problem.

it’s personal, but not in a good way

Anyway, so Tom “Boris Watch” Barry was having at the Grauniad’s Nicholas “He Said” Watt over thinking that Boris Johnson really is a frightfully nice chap. I responded, recapping a point I’ve made earlier, which is that Johnson skates because the national press doesn’t report London politics and the locals focus on their borough councils:

Tom responded:

I responded:

And then I had an idea. The feminist doctrine that the personal is the political applies here. For someone like Watt, there is a public, political city, centred on Westminster but with outlying colonies, where politics happens. There is also a private, personal city, called London, where the rest of his life happens to occur.

But the two are kept apart by a wall, or perhaps they manage to co-exist in the same space without interacting, as in China Mieville’s book. Boris Johnson, as a vaguely amusing television celebrity, falls into category 2, even though consensus geography puts his house within a few hundred metres of the paper’s offices.

Of course, the point of firewalling off the personal from the political is to avoid having to behave in private with the virtues you are expected to display in public. The point is to avoid the sort of scrutiny that is expected in the political, public world.

Now, thinking of Mieville, and also Peter Schneider’s classic Die Mauerspringer, another point comes up. Draw a border and you create a smuggler, someone who manages to operate on both sides or somehow in between. Boris Johnson, by placing his character and identity in category 2 and his ambitions in category 1, manages to escape and triumphantly wobble on his folding bike over the Glienicke Bridge.

But the trick is only feasible because others are willing to accept it.

it’s a taster of the legacy experience

Here’s a good piece on Tobacco Dock, where the soldiers covering for “can we call them Group Snore again?” G4S are camping.

Wikipedia points out that it’s a building of great historic significance, marking the transition between buildings that incidentally used iron and ones that used it in their structure, and being the work of John Rennie. But its role in recent history is as a marker of the exact high-water mark of 1980s urban regeneration.

The Docklands project got this far and no further. After part of the actual dock was filled in, the building was refurbished (to Terry Farrell’s design, no less) as a glossy shopping destination surrounded by posh flats. As part of this, it got three replica sailing ships out the back. It opened in 1990 and immediately ran head-on into the recession, plus the problem that the waterside location cut it off from the posh flats and there’s not much public transport.

Then it got really weird. Although only one shop survived, a sandwich maker (apparently there to this day), the Kuwaiti money behind the project insisted on toughing it out. Supposedly, for years, they refused even to discuss it. So, ever since then, the whole thing has been scrupulously maintained and guarded. Marooned fake pirate ships included. There have been some vague proposals, but then aren’t there always?

I walked around it with my godfather Dave Part in 1998, and the weirdness was intense. The building’s waterside terrace was slowly drying and bleaching in occasional sun. A couple of very, very bored security guards patrolled and watched some of Britain’s most boring CCTV. Across the water, an occasional remote-controlled garage door moved. It was quite clear that Farrell’s refurb had put it exactly at the cutting edge of style…eight years ago. I hadn’t read much Ballard at the time, but when I did, I immediately recognised it.

In many ways, the experience was very like walking around…the site of a past Olympic Games, or something similar. A preview of the legacy, if you like. At least it’ll keep the rain off.

The Project 3.0 – where are we going from here?

Adam Bienkov has an excellent piece out on Guto Harri, Boris Johnson, and the Murdochs. Harri was one of the alternative candidates to Andy Coulson for the No.10 press job, of course, then he worked for Johnson, and now he’s off to work for Murdoch.

Bienkov points out that there is an increasing tendency for the survivors of The Project, 2.0 to rally around Boris Johnson’s City Hall. Partly this is the long-standing Murdoch procedure of hopping on the bandwagon and then pretending to have been the horse all along. The Shower Jobby has won something recently and that’s more than any other Tory has.

At the same time, I think I notice a slight change of tone from Harri. Rather than admitting error, there’s a swing back to denialism and whining.

It’s also true that Boris Johnson’s career as mayor has been a preview of the future that the national-level Tories had planned for. Bienkov:

Under his guidance, Johnson has fought against Labour’s stereotype of him as a swivel-eyed Tory

Well, you could say the same about David Cameron’s late-property boom designer cupcake Conservatism. The operational art is more interesting. However cupcakey the warm words, Johnson’s media and political management relied on positively Ukrainian oligarch politics. When the opposition on the London Assembly wanted to ask questions, the Tories walked out and rendered the assembly inquorate. Every time. Harri dealt with Johnson’s blabbermouth side by simply refusing interview requests or press questions. I’ve said before that London politics is not poorly reported, it is not reported. This suited them right down to the ground. The capstone was the appointment of Sarah Sands as editor of the Evening Standard, which was submitted to Johnson (or possibly Harri) for prior approval.

Meanwhile, Harri put in huge amounts of effort to threaten the BBC London operation with a campaign from “friendly newspapers”. Let’s not be too naive here. The ones he means will be the ones who now employ him and he was probably already on a promise. This is well worth reading.

If you wanted information, you had to rely on the blogs and the problem there is that the fuckers, you know, them out there, just won’t do it.

Now, where has the toast of VDARE and former policy wonk to the Jobby, Anthony Browne, ended up? At the British Bankers’ Association. Surely useful. Is that an improvement over the Met as a place to store spin doctors?

All mayors are not the same. All columnists, however…

Rebuttal is futile, but sometimes it is necessary, and at least you can help people update their lists of people to ignore. Here’s Zoe Williams wilfully misleading the readers.

From two completely different sources – Ted Reilly, a road safety campaigner, and Alice Bell, a lecturer in science and society and part-time Sack Boris campaigner – I heard astonishing things about air quality in London. They say it correlates, not vaguely but absolutely precisely, with the traffic volume, that it is the largest threat to public health after smoking (seriously!), and that once you get any distance from its source – 20 yards – it vanishes.

In other words, if you pedestrianised major thoroughfares from 8am til 8pm, if you dropped speed limits, if you made public transport cheaper, if you consolidated deliveries to the periphery and got one provider to bring it all to the centre (“We used to call it the Royal Mail,” Reilly remarks, erm, wryly) you could do as much for the health of London as the person who discovered that smoking caused cancer.

Economically, it comes up repeatedly in living wage analyses that the cost of transport is not just a pest, it changes people’s lives. The tube has become a luxury, a young professional’s option. For someone with two separate cleaning jobs, most likely the only way to make that work economically would be by bus. Say that adds an hour (it’s probably more) to the commute, that will ricochet into that person’s stress levels, their parenting, their mental health, everything.

The mayor, whoever it is, can do a lot more with the powers he (or she, ha!) has than Boris Johnson is doing, or Ken Livingstone is suggesting. But it is also worth considering that, paradoxically, if they had more power, we would probably hate them a lot less.

Strangely, one mayoral candidate has in the past dramatically cut public transport fares, imposed a tax on motor vehicles in central London, and set up a low emissions zone to restrict how much poison lorries can emit in the city. That would be Ken Livingstone. I put it to you that someone who is unaware of congestion charging or Fares Fair shouldn’t be writing about London politics.

Another mayoral candidate gave up on the low emissions zone, abolished the western extension of the congestion charge, and put up the fares. That would be Boris Johnson. I put it to you that someone who is unaware of this hasn’t been paying attention and shouldn’t be writing about London politics.

On page three of Ken Livingstone’s manifesto, he explicitly promises to cut public transport fares by 7% immediately and reduce pollution. The next eight pages consist of nothing but public transport. Page 8 contains the following quote:

Faster, greener, more efficient freight
I will ask TfL to look seriously at the possibility of more freight consolidation centres for London. This would mean deliveries are taken to hubs and aggregated together before being taken into central London, saving on costs and cutting traffic.

The next page is about cycling, and the one after that about the necessity of investing in public transport in order to reduce pollution.

Page 66 is devoted to air pollution, including the creation of clean air zones with much lower speed limits and a ban on idling cars around schools, and the issue of smog alerts by SMS (something Boris Johnson directly refused to do). I could go on.

The sad facts are that a lot of journalists, Zoe Williams included, are evidently just fine with the largest threat to public health after smoking so long as their petty personal elite vendettas, the ego wars of media London, get took care of.

A quick look back to the riots

Reading through tehgrauniad’s riots deep-dive, the impression that I get is that the whole “riots as an insurgency” idea wasn’t that far off. I’ve been indisciplined in that I took notes but didn’t keep links (a problem with paying for and reading the actual newspaper), so you’ll have to trust me on this. Obviously, blaming the whole thing on “criminality” is about as useful as blaming rain on “water falling from the sky”.

The first common factor that struck me was that pretty much everyone they interviewed had a grudge against the police. Not in any broad theoretical sense, but a grudge – a specific and personal memory of perceived injustice and especially incivility, cherished over time. Now, it’s in the nature of policing as a public service that nobody enjoys it. If you’re interacting with policemen on duty, it’s either because they suspect you of being a criminal, or because something bad has happened to you. Generally, everybody would quite like to minimise their lifetime consumption of policing.

There is something that motivates people to put up with it, though, and that something is legitimacy.

The second common factor was the attitude towards property. Quite a lot of the people the Guardian spoke to reported looting goods from shops, and then giving them away, or witnessing others doing so. Stealing goods is one thing, but immediately giving them away is rather different and very much a political act. So much so that there is a word for it (and I’m not the only one to notice this).

Of course, police legitimacy comes in a very large degree from their role as protectors of property, so this was a way of directly challenging their claim to provide security and to employ legitimate force.

Eyewitnesses often described a tactical, practical implementation of this – small groups of rioters harassing the police, in a sort of screening or covering operation, while many more looted or destroyed property. It’s very interesting that this could all happen so quickly.

Protection….

Update: I originally didn’t want to publish this because I didn’t think it was good enough, but I hit the wrong button. Anyway, Alistair Morgan read it and thinks one of the premises of the whole thing is wrong. Namely, the weapons were going in the same direction as the drugs, not the other way around. Well, at least the story moved on a bit, but this renders mostly useless a whole additional post I put together from reading a lot of crazy-but-interesting stuff out of the bottom of the Internet. Also, despite the Jessie J reference there’s better music at the bottom if you get that far.

So, Alistair Morgan’s twitter feed frequently hints at “cocaine, weapons, and Ireland” as well as police corruption as being factors involved in the case of his brother, Daniel Morgan, the private detective murdered in 1987, probably by people who were since employed by News International. It’s often been said that Morgan was on the point of publishing some sort of huge revelation when he was killed, but nobody knows what it was beyond his brother’s hints based on what the police told him at the time.

Since the eruption of the phone-hacking scandal, a number of sidelights have come up which linked the News of the World, its cadre of ex-police gumshoes, and its contacts inside the police force. Notably, it seems to have spied on the former Army intelligence agent-handler, Ian Hurst, on an NGO, British-Irish Rights Watch (because documents of theirs were on Hurst’s computer when they hacked it), and perhaps on the chief of police, Sir Philip Orde. It would have been hard for people working for the press not to have covered at least one Northern Irish story in the last 20-odd years simply because it was such a news staple, but it’s worth noting their interest.

The War Economy of Northern Ireland

So, what might link Morgan, cocaine, weapons, Ireland, and policemen? There are some fairly well-known stylised facts or stereotypes about the economy of the Troubles. The IRA mostly funded itself from money collected in the United States, from bank robberies, and from unofficial taxes it collected in the North. It also got contributions from friendly countries, specifically Libya. The Loyalists didn’t have a reliable source of their own money abroad like NorAid, and so specialised in protection and drugs. Both sides also got involved in smuggling across the border as a commercial exercise.

That’s a glib summary ‘graf; obviously, I collect a revolutionary tax for the struggle, you impose fines on drug dealers and dishonestly stick to some of the money, and they are merely thugs operating a protection racket. Traditionally, both Sinn Fein and the British tended to stereotype the Loyalists as basically criminal and the IRA as proper insurgents – there may be some truth in there, but the distinction is one of emphasis and degree and also of propaganda rather than of kind.

Having obtained money, they both needed to convert some of it into arms. The IRA got a famous delivery in the 80s from Libya in its role as Secret Santa, and also often bought guns in the US over the counter and smuggled them back. I don’t know how well characterised the sources of Loyalist arms are, which of course gives me license to speculate.

Permanently Operating Factors

Now for the cocaine, which has often been known to land in bulk quantities on the wilder, less populated bits of the Atlantic coast that also offer good harbours. This is a rare combination, as people live near ports. Two of the best bits on that score are northwest Spain and southwest Ireland. Having landed, you can move it on anywhere in the UK-Ireland common travel area without much more trouble. Since the creation of the Schengen area, Galicia is even better for this because there is such a choice of markets you can reach without a customs inspection. But in 1987 this was an un-fact, so you might as well go to Ireland.

This transit trade had important consequences – notably the rise of Martin “The General” Cahill, the assassination of Veronica Guerin, and probably a substantial chunk of the Irish property bubble via the laundering of profits and also by the boost to those ol’ animal spirits the drug provides.

Imagine, then, that an important criminal actor supplying the London market with cocaine also had access to a reliable surplus of weapons. There is the potential for trade here.

However, it’s not that simple – the famous Libyan shipment would have fit in a couple of shipping containers, and it kept the IRA going up until peace was signed, with a fair bit left over to be buried in concrete by the international commissioners on decommissioning. It is very unlikely that any plausible flow of arms to Northern Ireland would have paid for the flow of cocaine into the South-East.

We Don’t Need Your Money, Money, Money, We Just Wanna Make The World Dance…

There’s something else going on – Diego Gambetta would have already pointed out that you need to understand the trade in protection. To sell protection, you need weapons, which are the capital equipment of the business of private protection. In so far as the buyers in the UK were paying in guns as well as cash, they were arguably expressing a protector-protectee relationship. While on our territory, we protect you, and license you to provide protection. This was also reciprocated. In accepting them, were the sellers of the cocaine undertaking to protect it in transit on their own territory?

Another way of looking at this, which Gambetta would also approve of, would be in terms of costly signalling. Being both a supplier and a protector is a powerful position, but it might be worth letting the other side have it as a guarantee or hostage, to signal that you didn’t intend to break the agreement and deal with some other supplier. This makes even more sense given that you still have a regular supply of guns you could cut off or use against them, and therefore both parties have something to lose.

Now, Gambetta’s work mostly deals with Sicily, where a very important protection supplier has often been irrelevant. London is a very different society from this point of view. Whatever you think of the police, you can’t just ignore them as a factor. In some other societies, the police might be protection consumers, but here, police corruption usually takes the form of policemen selling protection. (In a sense, the more effective the police, the more tempting this will be. Nothing sells like the good stuff.)

So, gazing down on this complex, neo-medieval exchange of cash, credit, and protection, there is a sort of Sun King whose permission is required for any protection contract to be signed. It’s like a feudal society. My liege lord is only so, because he is the King’s subject, and the King at least theoretically owes duties to the Emperor, or later, directly to God. Our buyer is in a position to offer protection for his end of the business because he enjoys protection supplied by the police.

Who were the recipients, the sellers? They might have been drug dealers who needed to buy protection from one or other paramilitary group. They might have been drug dealers who wanted to build up enough arms that they could stop buying protection, or rather, change protector. Or they might have been paramilitaries who sold protection to the drugs trade. The distinction is surprisingly unimportant.

So, to put the pieces together, there was some group of South-East London villains importing cocaine from transit providers in Ireland, who were also exporting weapons in the opposite direction as part of an exchange of protection for their common business. This required buying protection from the police. Where did the weapons come from? And why is News International involved?

Protection….

Update: I originally didn’t want to publish this because I didn’t think it was good enough, but I hit the wrong button. Anyway, Alistair Morgan read it and thinks one of the premises of the whole thing is wrong. Namely, the weapons were going in the same direction as the drugs, not the other way around. Well, at least the story moved on a bit, but this renders mostly useless a whole additional post I put together from reading a lot of crazy-but-interesting stuff out of the bottom of the Internet. Also, despite the Jessie J reference there’s better music at the bottom if you get that far.

So, Alistair Morgan’s twitter feed frequently hints at “cocaine, weapons, and Ireland” as well as police corruption as being factors involved in the case of his brother, Daniel Morgan, the private detective murdered in 1987, probably by people who were since employed by News International. It’s often been said that Morgan was on the point of publishing some sort of huge revelation when he was killed, but nobody knows what it was beyond his brother’s hints based on what the police told him at the time.

Since the eruption of the phone-hacking scandal, a number of sidelights have come up which linked the News of the World, its cadre of ex-police gumshoes, and its contacts inside the police force. Notably, it seems to have spied on the former Army intelligence agent-handler, Ian Hurst, on an NGO, British-Irish Rights Watch (because documents of theirs were on Hurst’s computer when they hacked it), and perhaps on the chief of police, Sir Philip Orde. It would have been hard for people working for the press not to have covered at least one Northern Irish story in the last 20-odd years simply because it was such a news staple, but it’s worth noting their interest.

The War Economy of Northern Ireland

So, what might link Morgan, cocaine, weapons, Ireland, and policemen? There are some fairly well-known stylised facts or stereotypes about the economy of the Troubles. The IRA mostly funded itself from money collected in the United States, from bank robberies, and from unofficial taxes it collected in the North. It also got contributions from friendly countries, specifically Libya. The Loyalists didn’t have a reliable source of their own money abroad like NorAid, and so specialised in protection and drugs. Both sides also got involved in smuggling across the border as a commercial exercise.

That’s a glib summary ‘graf; obviously, I collect a revolutionary tax for the struggle, you impose fines on drug dealers and dishonestly stick to some of the money, and they are merely thugs operating a protection racket. Traditionally, both Sinn Fein and the British tended to stereotype the Loyalists as basically criminal and the IRA as proper insurgents – there may be some truth in there, but the distinction is one of emphasis and degree and also of propaganda rather than of kind.

Having obtained money, they both needed to convert some of it into arms. The IRA got a famous delivery in the 80s from Libya in its role as Secret Santa, and also often bought guns in the US over the counter and smuggled them back. I don’t know how well characterised the sources of Loyalist arms are, which of course gives me license to speculate.

Permanently Operating Factors

Now for the cocaine, which has often been known to land in bulk quantities on the wilder, less populated bits of the Atlantic coast that also offer good harbours. This is a rare combination, as people live near ports. Two of the best bits on that score are northwest Spain and southwest Ireland. Having landed, you can move it on anywhere in the UK-Ireland common travel area without much more trouble. Since the creation of the Schengen area, Galicia is even better for this because there is such a choice of markets you can reach without a customs inspection. But in 1987 this was an un-fact, so you might as well go to Ireland.

This transit trade had important consequences – notably the rise of Martin “The General” Cahill, the assassination of Veronica Guerin, and probably a substantial chunk of the Irish property bubble via the laundering of profits and also by the boost to those ol’ animal spirits the drug provides.

Imagine, then, that an important criminal actor supplying the London market with cocaine also had access to a reliable surplus of weapons. There is the potential for trade here.

However, it’s not that simple – the famous Libyan shipment would have fit in a couple of shipping containers, and it kept the IRA going up until peace was signed, with a fair bit left over to be buried in concrete by the international commissioners on decommissioning. It is very unlikely that any plausible flow of arms to Northern Ireland would have paid for the flow of cocaine into the South-East.

We Don’t Need Your Money, Money, Money, We Just Wanna Make The World Dance…

There’s something else going on – Diego Gambetta would have already pointed out that you need to understand the trade in protection. To sell protection, you need weapons, which are the capital equipment of the business of private protection. In so far as the buyers in the UK were paying in guns as well as cash, they were arguably expressing a protector-protectee relationship. While on our territory, we protect you, and license you to provide protection. This was also reciprocated. In accepting them, were the sellers of the cocaine undertaking to protect it in transit on their own territory?

Another way of looking at this, which Gambetta would also approve of, would be in terms of costly signalling. Being both a supplier and a protector is a powerful position, but it might be worth letting the other side have it as a guarantee or hostage, to signal that you didn’t intend to break the agreement and deal with some other supplier. This makes even more sense given that you still have a regular supply of guns you could cut off or use against them, and therefore both parties have something to lose.

Now, Gambetta’s work mostly deals with Sicily, where a very important protection supplier has often been irrelevant. London is a very different society from this point of view. Whatever you think of the police, you can’t just ignore them as a factor. In some other societies, the police might be protection consumers, but here, police corruption usually takes the form of policemen selling protection. (In a sense, the more effective the police, the more tempting this will be. Nothing sells like the good stuff.)

So, gazing down on this complex, neo-medieval exchange of cash, credit, and protection, there is a sort of Sun King whose permission is required for any protection contract to be signed. It’s like a feudal society. My liege lord is only so, because he is the King’s subject, and the King at least theoretically owes duties to the Emperor, or later, directly to God. Our buyer is in a position to offer protection for his end of the business because he enjoys protection supplied by the police.

Who were the recipients, the sellers? They might have been drug dealers who needed to buy protection from one or other paramilitary group. They might have been drug dealers who wanted to build up enough arms that they could stop buying protection, or rather, change protector. Or they might have been paramilitaries who sold protection to the drugs trade. The distinction is surprisingly unimportant.

So, to put the pieces together, there was some group of South-East London villains importing cocaine from transit providers in Ireland, who were also exporting weapons in the opposite direction as part of an exchange of protection for their common business. This required buying protection from the police. Where did the weapons come from? And why is News International involved?