News Analysis: Prescott can plan what he likes, but London does its own thing

New survey of the capital warns against politicians trying to redraw city patterns that have developed over the centuries

In Birmingham, at his so-called Urban Summit conference, John Prescott was holding forth in his usual way yesterday, about housing and urban regeneration. Now that he's grabbed back these ministerial responsibilities, the Deputy Prime Minister is like a child with a pile of wooden blocks. Anything can be done.

But can it? In the real world, he's known as the target king, not as a hero of high achievements. Much is promised, little delivered. The summit, which ends today, gazed back at the report of Mr Prescott's Urban Task Force, headed by the architect Lord Rogers of Riverside three years ago, and its 35 principal recommendations. Truth is, most are gently gathering dust. And as the Deputy Prime Minister began to orate, a new social and economic survey of London was published, which puts the final land mine under the rhetoric.

Focusing on the city at the heart of Britain's most vigorous region, the survey undercuts the pervasive devotion to top-down action, which is unrelated to how cities actually work. The research demonstrates that it's not enough, for example, to wave a magic wand and say: build houses closer together for greater "vibrancy" or "sustainability".

Mr Prescott and his bitter enemy, the Mayor of London, Ken Livingstone, are at one in making such pronouncements. But people have their own views on how they want to live and work. Cities, also, seem to have an in-built dynamic (or lack of it) which boasting and boosting can hardly touch.

The new London survey is entitled Working Capital. The message it conveys – from a potent combination of statistical analysis and face-to-face interviews – contrasts sharply with the orthodox wisdom. It was researched over four years by a high-powered team led by Professor Ian Gordon of the London School of Economics and Professor Sir Peter Hall of University College London.

Intriguingly, for a man with his finger on the button of this explosive survey, Professor Hall was a member of Mr Prescott's Urban Task Force and an adviser to the Mayor's recently published strategic plan for London. But "Ken's Plan", as everyone calls it, lies in ruins after the survey's findings, which are a formidable exercise in intellectual honesty.

The research echoes Bill Clinton's wall-sticker when he was first running for President: "It's the economy, stupid!" So many predictions turn on London's continuing economic growth. This leads to assumptions on future revenue and also about how easy it is to shift around London's centuries-old urban patterns. If everyone is desperate for land, you can tell them they can only build on brownfield sites in east London. But what if the dynamic is cooling? In terms of employment and investment, it may be. The best laid plans of mice, men and ministers gang aft a-gley.

The research team argues that the nature of London's economy is widely misinterpreted. Mayor Livingstone advocates high-rise landmark buildings to boost London's global image. But the survey dismisses the easy cant about globalisation. Most of the city's economy isn't global at all, it shows. The death of the nation state has been greatly exaggerated. London has more American banks than New York but "its continuing role as a national centre", the survey reports, far outweighs any global or European role.

You cannot, though, be sure that economic growth will deliver fairness, the survey warns. In London, the greater the wealth, the greater the inequality, though research suggests this may be a function of any dynamic city. London was once a largely blue-collar city. The research team sees Ford's closure of its car manufacturing in Dagenham, earlier this year, as a bell tolling the end of London's traditional working-class life and culture.

London is a beast that's hard to control. That's its strength. One of the most potent forces for social change has been gentrification, the survey observes, pushing a middle-class way of life into the most unlikely corners of London. Hoxton, with its unplanned art galleries and loft living, may tell us more about the future than Canary Wharf. No one organised gentrification. It sprang from thousands of individual decisions on where people wanted to go.

The researchers paint a picture of a London largely at ease with itself. No ghettos, for example, along American lines. But even gentrification doesn't happen without discomfort. The established working-class riverside district of Bermondsey in south-east London contains some of "the unhappiest neighbourhoods in contemporary London", the research finds. Residents feel squeezed between white gentrifiers and African immigration.

Education, everyone agrees, must be sharply improved if London is to continue to flourish. But in Battersea, another old working-class territory, the researchers note that the gentrifiers only use state primary schools. Then they mostly buy into the private sector. The sharp elbows of the middle class don't jostle secondary schools into better results.

And so it goes on. People in cities make their own lives. London's suburbia has blossomed because millions of people prefer to live or work there. There's no stopping them and any viable policy depends on recognising this. If John Prescott, for example, insists on trying to force developers and buyers into houses on smaller plots of land within, or close to London, they'll just emigrate even further out. Already, you could argue, "real London" stretches from Reading to Chelmsford and from Stevenage to Crawley. It could end up stretching from Cambridge to Brighton and from Oxford to Colchester.

London is not the only city that's misperceived from on high. Manchester's urban regeneration is widely touted. The city centre has an appealing buzz. Very nice for tourists and folk on a night out. But walk a couple of hundred yards away from the clubs, the galleries, the gay bars and you see dereliction on a scale that almost matches New York's notorious South Bronx. The 2001 census shows that in the past 20 years, Manchester's population has fallen by 25 per cent, the biggest drop recorded for any English city. Some regeneration.

Rhetoric and photo-calls are not enough. Tony Blair's first public speech as Prime Minister was delivered in 1997 at Southwark's dire Aylesbury Estate, in North Peckham. But that estate remains almost as dire as it was.

Nothing has filtered down to it from the glitz of Tate Modern, Shakespeare's Globe and Ken Livingstone's bulbous new City Hall, all new developments in the north of the same borough.

Yesterday, Blair went walk-about in Newham, east London, which the survey says is the most deprived borough in London, with the lowest house prices and highest proportion of refugees. As for North Peckham, Newham won't change overnight. But this convincing research shows that, like the rest of London, it will fare better if people are allowed to shape their own future in their own way. They always have. Let's hope they will do so again.

'Working Capital', published by Routledge, can be ordered for £20.00 (inc. p&p) by phoning 01264 343071. Bookshop price, £22.50.