Due south

Not long after Labour's disastrous defeat at the hands of John Major in 1992, Giles Radice, MP for Chester le Street, wrote an influential Fabian pamphlet entitled Southern Discomfort. He set out a simple electoral truth: Labour had to win more seats in the Home Counties, south Midlands, Wessex and East Anglia if it were ever again to form a government. "If we are to achieve a Labour victory at the next election," it said, "we have to be prepared to adopt a new identity which is in tune with the times."

That became the Blairite mantra. Clause Four was ditched, policy renewed and much of the old lumber junked.

In 1997, you will recall, the strategy paid off. In 1992, Labour held only three seats in the South-east outside London. In 1997 it won 31 seats to add to its augmented strength in London itself. It mostly held those last year.

Yet London and the South-east remain oddly marginal. The South boasts only two out of 23 Cabinet ministers and both of them are London MPs: culture secretary Tessa Jowell (Dulwich) and Treasury chief secretary Paul Boateng (Brent South). In the seats of power there is a concentration, still, of MPs from the North-east, including Blair himself, and Scotland. With Nick Raynsford, Barbara Roche and Tony McNulty, the South – or at least London – could be said to be well represented inside the Office of the Deputy Prime Minister. But where is the South in terms of Labour thinking about economic growth, regeneration, the right to buy, construction or the balance between buying and letting? The answer is, once again, marginal.

For much of the 20th century, Labour housing policy could safely be summarised as "more". One of the party's most acute disappointments was registered in the early 1950s when not it, but Harold Macmillan and the Tories, pushed annual housebuilding rates beyond the magic number of 300,000. Over the long haul, Labour administrations saw as many private as public sector dwellings constructed, but the political story was straightforward: out of the slums, escape from non-Parker-Morris housing into the bright uplands covered by new brick.

Reality bites
But by the last quarter of the century that had become passé. Labour couldn't quite work out whether or not owner-occupation was conducive to voting Conservative.

The shortcomings of municipal landlordism were all too evident in its heartlands. Labour MPs were ready, of course, to make a song and dance about growing rooflessness under the Tories but they knew the cases coming to their surgeries were not really to do with under-supply of public rented accommodation, more a reflection of its inadequacies.

On housing price booms, the British sport, Labour had little to say – who wants to alienate voters by telling them their gains are ill-gotten and bricks and mortar inflation is destabilising the macro-economy?

Against that background, housing retreated as a Labour issue. It barely figured in the run up to the 1997 election: there were no rash promises to restore the huge cuts in capital investment in social housing seen during the Tory years and no commitments to control rampaging house prices by some rational scheme of property taxation.

Housing stayed on the backburner until last year when the potential consequences of the combination of rocketing house prices and the under-supply of affordable rental property in the South suddenly hit ministers. But while the rational policy analysis in their heads told them one thing, their hearts sang another song.

"What John would really like is Hull council building houses," says one close observer of the deputy prime minister. But Hull has too many rental properties and those owned by the council could, according to all objective evidence, be a lot better managed.

Labour’s lack of strategy will soon be exposed; already the imbalance in property values is having damaging effects

Yes, Labour says, and we now have a "Southern strategy". Look at the Challenge Fund, and the Housing Corporation's allocations for 2003/04, a significant slice of which is heading southwards.

But Labour's problems with the South run deeper. You can argue with Richard Best of the Joseph Rowntree Foundation and Alan Holmans of Cambridge University about the exact figures for household formation and the proportion of dwellings that will have to be affordable – though local government minister Nick Raynsford has not – but the big picture is undeniable. New dwellings in large numbers are going to be needed in London and the South-east because that is where people are going to want to live and work.

Listen to a New Labour sympathiser such as Will Hutton of the Work Foundation and you will hear him say there is no way the government could "redirect" economic activity away from the region that drives GDP growth. Some economists say the North-east could go down the Taiwan road and turn itself, within a generation, into a GDP driver, but that would require not just a massive change in the attitudes of residents and their MPs, but huge social dislocation. Economic reality, in the short to medium run, says people will indeed be living and working in London and the South-east.

But that's not what Labour's regional or regeneration strategies say. Elected regional assemblies are, implicitly, about reviving the regions. The New Deal for Communities and various Treasury initiatives all rest on the idea that social and economic regeneration can take place in the cities of the North, pulling population back into them and, at some point, requiring investment in new housing.

Many Labour MPs have to believe that, given the location of their political support, they cannot write off the very areas they represent. But their failure to look at economic prospects disinterestedly may also mean that they cannot "see" the South nor steel themselves to vote for the huge allocation of social spending towards the South implied by its relative importance in driving the UK economy.

The Livingstone problem
Of course there are other problems, one of them Ken Livingstone. He is, truth to tell, one of the principal obstacles to any enthusiastic ministerial participation in envisioning the future of the South.

For years, the regional planning drawing board has been decorated with a grand project for the Thames Gateway, with its relatively abundant supply of brownfield land. Where is its ministerial champion? Where is the senior Labour figure to speak knowledgeably about population expansion in the rings around London and its consequences for the cost and location of housing? The chancellor appears more concerned with economic prospects in Dunfermline; the prime minister's vision of Britain is rarely "territorial" while his interest in urban policy is strictly limited.

Does it matter that ministers lack geographical imagination if they are prepared to do what is necessary in policy terms? Aren't they making a fair-enough job of squaring a circle, providing resources to put the Northern stock of affordable housing on, at least, a care and maintenance basis while underwriting some expansion of the Southern stock and pursuing alternatives to municipal landlordism? The Housing Corporation will, after all, secure some redistribution of housing support towards where physical shortage is greatest.

Yes, it matters. Labour's lack of strategy will be exposed in the medium to long run. Already the imbalance in owner-occupied property valuation is having damaging social, economic and fiscal effects. Blair blandly said this week in his pamphlet on public service reform that Labour was no longer much interested in the distribution of income; its focus was rather equality of opportunity.

But equalising life chances and opportunities entails dealing with London property inflation beyond a few stabs at housing for key workers or perilous reliance on planning agreements. Who, in Labour ranks, is saying that, beyond a handful of London MPs? Who is worrying about the balance within the ranks of registered social landlords between South and North? Too many Labour MPs seem to have been sold the pup of regional assemblies, as if they are going to be able to address fundamental questions of economic growth and attendant social provision.