You are using an outdated browser.
Please upgrade your browser
and improve your visit to our site.
Skip Navigation

A City Apart

London's financial center faces an electoral insurrection

Getty/Dan Kitwood

The terrace on the east side of the street called Norton Folgate is one of the grimmest in central London: a closed department store, a defunct catering company, the headquarters of something once called the British Atomic Nuclear Group. It was shuttered even before austerity struck Britain, and it is dirty and shuttered now.

But the west side of the street is dazzling: The sheer, clear glass of the world’s mightiest financial center towers above you. It is as if you are staring not across a two-lane highway, but into a different dimension.

That is the City of London. The City is not to be confused with London, although they share a name. The City is much smaller and far older. London is the capital of England, but the City, the ancient heart of Greater London, is the capital of capital—and when the offices glow with light on a dark March evening, it looks the part.

Some 350,000 people work in this square mile of real estate, but the City is not just a money machine. It has the oldest representative body of local government in the world, and is a unique combination of private company and public authority. This hybrid entity, called “the Corporation,” is vastly wealthy, and has used that wealth—and its attendant connections—to charm friends and buy off enemies for centuries. Though its electoral freedoms long predate those of the rest of Britain, the City is also swathed in the kinds of mystery and ritual rarely seen outside the Vatican.

But north of Norton Folgate is a warning for anyone about to enter these canyons of glass and steel. There on a brick gable beyond the City’s limits is some white graffiti. Written out in block letters, positioned to be legible to the office workers, it says: “We will ask nothing, we will demand nothing, we will take. Occupy.”

The City has survived many challenges over the years—water-borne piracy, rat-borne plague, rapacious kings—but those words represent a threat it has never known before: grassroots citizen democracy. Angered by the City’s greed, by the financial crisis, and by the bankers’ failure to respond to it adequately, an ad hoc coalition of socialists, Christians, and neoconservatives is taking the opportunity of elections on March 21—which will decide the Corporation’s 100-member Common Council—to challenge the cozy establishment that has ruled the City for so long.

What we now call London was founded by Romans 43 years after the birth of Christ. They were looking for a secure base on the River Thames, whence they could control Britain and trade with mainland Europe. Two hills on the north bank of the river—Cornhill and Ludgate Hill—provided a well-drained defensible location, while the empire’s engineers could bridge the tidal estuary to allow access to the south.

The Saxon invaders who displaced the Romans 400 years later initially disliked the City, preferring the open spaces outside its walls, but they realized the benefits of a defensible site when attacked in turn by the Vikings. Here the Saxons were safe, and here they stayed, holding their folkmoot—their parliament—in the old Roman amphitheatre, and patching up the old Roman walls.

It was under the Anglo-Saxon kings that the City gained the privileges it still enjoys. While the royal palace was upriver in Westminster (today the site of the Houses of Parliament) the City was home to merchants and craftsmen, to foreigners and to Englishmen. It did not bother itself with national politics, but with the more substantial control won through trade and finance.

Its street plan dates from the first millennium. Those streets may now house lawyers, restaurants, commodity exchanges, and trading floors, but they still bear the names of the trades that made them—Ironmonger Row, Oat Lane—or of the minorities who once traded here—Jewry Street, Lombard Street.

When William of Normandy invaded England from France in 1066 and killed its king, he approached the walled City with his army. The City held out long enough to make a deal: swearing allegiance but keeping its old privileges, so business went on as usual. Sometimes trade was harmful, such as when it introduced the rats that bore the Great Plague to England in the 17th century, but the rest of the time it made Londoners richer than anyone else in Europe.

The City operated as a free economic zone exempt from the taxes and duties imposed on ordinary Englishmen. It governed itself via its own elected representatives, and it regulated its own industries. Its powerful guilds ensured goldsmiths, glovers, tailors, and dozens of other craftsmen upheld high standards before being allowed to trade.

Its wealth won it great privileges, and the City still has an official in parliament—the Remembrancer—who can review legislation to guard against any adverse effect on its interests. When the government introduced police for London two centuries ago, the City objected. To this day, it has its own officers with their own command, entirely surrounded by, but separate from, the Metropolitan force.

Every year the City’s Common Councilmen, who are elected every four years, pick one of their fellows to rule over them. The current and 685th Lord Mayor is Roger Gifford who, on March 7, walked into the Common Council, preceded by men bearing his ceremonial sword and mace, and wearing an ostrich-trimmed triangular hat 18 inches along each side.

Though grand, that occasion was nothing compared to the annual Lord Mayor’s Show, which has marching bands, horses, soldiers, magnificent headwear, and all the other magic of medieval pageantry. Most Londoners only associate the Lord Mayor with such grand occasions, but Gifford is a private banker by trade and spends far more of his time travelling the world drumming up custom than he does wowing the crowds. Last month he visited the United Arab Emirates, Saudi Arabia, and Qatar, and was met with all the pomp of the Gulf. London is the world’s dominant money market, as well as a major center for trading in shares, debt, oil, and other commodities, so it has a lot to offer a wealthy sheikh, oligarch, or tycoon. The City spent close to $20 million promoting its financial services last year, almost half as much again as it gave out in charitable grants.

Gifford is not the only banker on the City’s administration. Among the Common Councilmen who specify their occupation, almost half are in financial services of some kind, and more than a fifth are lawyers. Attending a recent meeting of the Finance Committee felt like being sent back to Victorian times. All 39 of the people at the long table were white. Their accents were middle class, and only six of them were women. Several of them looked round with a mixture of horror and surprise when Chairman Roger Chadwick announced that a journalist—or “member of the public,” as he described me—was present.

“A lot of this information has been covered at the informal members’ suppers and at the chairman’s briefing, so nothing of substance has changed,” Chadwick said when he introduced discussion of the City’s medium-term financial strategy. That kind of comment would have a politician rebuked in a less cozy setting, but it fit very nicely in a forum that was largely a formality, and his suggested strategy went through on the nod.

The Finance Committee is a comfortable berth thanks to the City’s private wealth, which it has been hoarding for centuries. It has more than $3.1 billion in two funds, and it invests the cash in more than a dozen countries in the same way a money manager might. Unlike a money manager, however, it pays no U.K. tax, and it uses the resultant income to lobby for the banks, to subsidize council services such as education and parks, and to hold lavish parties.

When Britain’s debt lost its AAA status from the Moody’s rating agency last month, local authorities across Britain were downgraded too, but the City had no cause for concern. Chadwick was able to reassure his fellow councilmen that, since the City borrows no money, it has no debts to be rated. A satisfied chuckle spread across the room, and they had reason to be pleased. While London’s poorest regions are cutting spending to meet the squeezed budgets of austerity, the City was able last year to spend almost $100 million subsidizing private schools.

It differs from other local authorities in other ways, too. Where elections are usually contested by political parties and decided by local residents, the City prides itself on being above politics. Its franchise is surely unique in the world. Its 8,000 residents get to vote as they would anywhere, but they are swamped by some 30,000 voters nominated by the City’s companies. Although these voters have to work in the City, they can live anywhere. The members of the Council are not paid for their time, and thus only a certain kind of Londoner can afford to take part.

It was not always thus. Until the 1830s, the City was more democratic than anywhere else in Britain. In those days, more than 100,000 people lived there, and participated eagerly in the political events of the day. But over the 19th century, national politics moved to the left, proposing slum clearances, land for poor Irish peasants, and a host of other policies that threatened the City’s margins. The bankers took over and, after a controversial 1878 Lord Mayor’s election, have held power ever since.

Since the City has billions in reserves, is elected by a process certainly opaque and possibly corrupt, and sees its first duty as supporting the U.K.’s financial services industry, it is hardly surprising that activists appalled by the excesses of modern capitalism should have chosen to campaign for its reform.

William Campbell-Taylor, the vicar of a liberal Anglo-Catholic congregation in the borough of Hackney north of the City, is the unlikely face of the campaign. Although his cut glass accent and double-barrelled surname give him away as a member of the same class that dominates the City, he approaches it from a very different angle. On leaving Oxford University in 1987, his bishop advised that he had better delay becoming a priest and “learn a little humility.”

In response, he threw himself into the East End of London, the streets east of the City where Jack the Ripper once stalked, and which remain home to some of the most deprived communities in the country. He worked as a porter at Spitalfields Market and as a pub barman, and came to love the community he was part of. There his Christianity gained a campaigning edge. (His Twitter account says he is “breaking the bad news, preaching the good news”.)

Those were the years after the Big Bang, when Margaret Thatcher reformed the City: allowing electronic trading, scrapping fixed commissions, and removing many of the other regulations that had stopped the financial institutions from doing whatever they wanted. Banking boomed, spreading beyond the City proper, driving up property prices and driving out residents. Campbell-Taylor campaigned to stop the City from turning Spitalfields Market, an ancient community of barrow boys and traders just outside the City, into an office complex and a mall.

“We were always going to lose but we were able to put up a fight. As we were going through the process we realized the interest behind the market deal was a joint venture between the Corporation of the City of London and a private developer and we began to ask how can a public authority go into a venture partnership with a developer in a jurisdiction that is not its own?” he asked.

“It’s a powerful institution that has a demon. It can either serve the interests of liberty or domination. We need to encourage it to be its better self.”

Houses began to be built outside the City walls in the years before William Shakespeare was born. As the inhabited area expanded, the Corporation had the option of expanding its jurisdiction, but decided not to, fearful of the difficulties involved in ruling lawless areas packed with teeming workers. That was when the Corporation ceased to govern in the interests of all London, and began to govern in its own. By acting as a private developer in Spitalfields Market, it was destroying a community to provide yet more of the wine bars, offices, and boutiques beloved of its workforce. It made a profit, too.

Campbell-Taylor and I were sitting in a café across the road from the Bank of England, where he was taking a break from campaigning for this week's elections. He has held seats on the Common Council before, never for long, but this time he is hopeful he will bring some allies in with him, because he is no longer fighting the City on his own.

In October 2011, a group of Londoners, inspired by events in New York, resolved to occupy the open space outside the City’s St Paul’s Cathedral and campaign for a better form of capitalism. They did not achieve much over the course of their nine-month stay, but they did become acquainted with the ancient, murky, and wealthy Corporation when it tried to evict them, and it became a focus for their campaign against the barons of banking and the destruction of the world’s economy.

“The City of London is at the center of a really unpleasant nexus of lawless institutions that syphon off funds and harms the welfare of people all over the world,” said Naomi Colvin, one of the Occupiers.

She, Campbell-Taylor, and others banded together to form the City Reform Group to contest the City elections. They asked candidates to promise to ensure transparency in the City, particularly with regard to how it spends its money. By normal political standards their demands, which are that the City should be fully open and should speak out against financial malpractice, appear modest. But they would amount to radical change in a Corporation that has long shielded its dealings from view, and boosted the financial sector as a whole without enquiring into its dealings.

Their campaign and the high profile it gained—it was even joined by David Davis, a member of parliament from the ruling and traditionally pro-business Conservative Party—caught the City by surprise. For the first time, it released some details of its property portfolio (that is where the $3.1 billion figure comes from) and Mark Boleat, head of its Policy and Resources Committee (and thus effectively the Lord Mayor’s prime minister), agreed to a debate in the crypt of St. Paul’s on February 14 with the City Reform Group’s David Pitt-Watson, a management consultant who left business to work for the left-of-center Labour Party.

Although Boleat avoided the tetchy tone of Gifford’s predecessor as Lord Mayor (who damned reform of the banks as a “mood and fad of the day”), he was by turns patronizing, patrician, and impatient. His performance provided another glimpse back into Victorian times, when democracy was an irritating distraction from getting on with the job at hand: to make money.

“I have another four and a bit years in office,” he said. He was referring to his role in the City, but holds two other jobs: chairman of the Jersey Development Company and chairman of the Competition and Regulatory Authorities in the Channel Islands—both key positions in the islands in the English Channel that act as offshore banking outposts of the City of London.

“I have no wish to spend any of that time playing political games that are of no interest to our stakeholders. My day is packed full of meetings with people who want to talk to me about almost every issue, except the structure of the City of London Corporation. And if such games have to be played it will detract from the far more important work that we are doing and will continue to do.”

His reform-minded and less experienced opponents struggled to respond to him, perhaps stunned by their argument being disparaged as “games” and perhaps thrown by a style of debate that elsewhere died with the 19th century. Also, he was at least partly right. Although the power of the City worries activists, most Londoners are more concerned about issues closer to home—something I discovered when I went out on the stump with Labour Party campaigners in the Golden Lane housing project on Saturday.1

At door after door, the team of four canvassers would ask if the residents had any issues with the way the City was run, only to hear again and again that no, everything was fine. And, when I looked around me, I could see why. The project was clean, tidy, and well maintained. It had a swimming pool, a fitness club, and a tennis court for its residents. I wished I lived there.

Indeed, the whole City is like that, like a different country in the middle of Britain. Where streets in outer London have potholes, litter, and grime, the City’s streets are repaired and clean. The City’s workers and its residents have no reason to complain.

And this is why the reformers are wrong, said Martin Dudley, another vicar. A member of the Common Council for eleven years, he said that if Campbell-Taylor wanted to improve the world, he should stop agitating, roll up his sleeves, and get on with it.

“While he’s been sniping, we have improved housing, improved health facilities, and are developing an education policy,” he said over tea in the café attached to his church, which is dedicated to St. Bartholomew the Great.

I asked him whether he was not concerned to be part of an authority that lobbied around the world for the City at a time when it had done little or nothing to change the culture that produced JPMorgan’s London Whale, AIG’s disastrous Financial Products Unit, the trades that brought down Lehman Brothers, the LIBOR scandal, and a host of smaller but no cleaner episodes in this long financial crisis. Was not the existence of feral banks at the heart of Britain something that concerned him?

“I don’t know much about that, to be honest,” he replied, before pausing to think.

“The question here is: what do you actually want out of this? What is the point of reform? A lot of things have been reformed and once you reform them you messed them up beyond belief.”

That is a question that Alex Deane has no trouble in answering. Previously chief of staff to Prime Minister David Cameron, Deane is an activist on the right of the Conservative Party, and representative of the third part of the anti-establishment coalition. He dislikes the European Union, and wants London to act as a centerpiece for the kind of low-tax, low-regulation, globalizing neoconservatism favoured by many in the U.S. Republican Party. Already a member of the Common Council, he hopes that he and his allies will have captured a tenth of the 100 seats when the votes are counted.

“I want the authority to be transparent. The City should set an example of best practice, with regard to itself and with regard to the financial institutions,” he said.

The alliance between his neoconservatives, Campbell-Taylor’s Christians, the Labour Party, and the Occupiers is a fragile one. Campbell-Taylor wants the City to take on a regulatory role similar to that played by ancient guilds who obliged members to obey the highest standards. This medieval dream could hardly be less designed to appeal to a neoconservative, so their alliance is doomed to die after the election.

Nonetheless, they only have to hold together until March 21, when they should gain a presence on the council: They've fielded around 30 of the 150 candidates, making these elections the most fiercely contested in living memory. Twenty-one of the 25 wards are contested, compared to just 13 at the last elections in 2009.

But that is when their fight really begins.

A few hours after I spoke to Deane, I attended a lecture by Ricken Patel, founder of the global activism website Avaaz, which has 20 million members and campaigns for many of the same issues as Colvin and Campbell-Taylor do. He spoke for an hour in the Guildhall, the magnificent soaring chamber at the center of the City. It is built on the same site as the amphitheatre. Indeed, the City of London has run itself from this exact same place since the time of the Romans.

“I am speaking in the hall that is the beating heart of the world’s largest, most powerful and unaccountable financial industry and I come here to tell you that we are coming, democracy is coming,” he said, his figure dwarfed by the vast stained glass windows behind him.

The guests clapped politely, then withdrew to the Old Library to drink sparkling wine and eat exquisite canapés served by impeccable waiters. The City, with centuries of experience in charming critics, had put on its best show for this new threat and was deploying all its resources.

The Reformers are well intentioned and motivated, but it is hard to imagine them breaking this formidable opponent. They might put it on the defensive for a while, but if they imagine they have triumphed, they should remember the experience of the two 17th-century kings called Charles.

Bored of having to ask parliament for taxes, Charles I tried to rule directly, and succeeded until he alienated the City. It refused him loans, then took the lead in deposing him and cutting off his head in 1649. The Commonwealth that followed proved no friendlier to business, however, so the City invited the king’s orphaned son to come back to rule as Charles II.

This City overthrew both king and republic alike to protect its margins, and it will take more than a group of well-intentioned dreamers to scare it now.

  1. Of the City’s 25 wards, four are predominantly residential, and this is one of them.

Correction: A previous version of this story wrongly identified Martin Dudley as Robert Dudley.