Oligarch money is embedded in London. Beware the big talk of a ‘crackdown’ | John Harris

In some of London’s most exclusive neighbourhoods, you can suddenly sense the kind of unease that wealth usually keeps at bay. As the government talks up its determination to crack down on Russian oligarchs, a much wider shift may be afoot. On Friday the Financial Times quoted the chair of Aylesford International, a Chelsea estate agent whose current offerings include a four-bedroom apartment in Cadogan Square, SW3, going for the best part of £12m. “The severity of these sanctions is the beginning of a new world, a new market,” he said. “I don’t think you can hide any more.”

On Monday, the House of Commons will debate the government’s economic crime (transparency and enforcement) bill – first drafted four years ago, since subjected to serial delays, but now finally revived thanks to Vladimir Putin’s invasion of Ukraine. Ministers say they want to tackle the tangle of secrecy and deception that has long surrounded money stripped out of overseas economies and poured into British property, assets and banks, and thereby smooth the way for even harsher action against people linked to the Russian government. Whether this will do anything to halt the current killing and chaos is rather more doubtful than some people are making out, but Boris Johnson insist the bill will “continue to tighten the noose around Putin’s regime”.

Among its other measures, the new legislation will create a public register of the owners of overseas interests that buy and sell property in the UK, to lift the veil provided by shell companies. There will be reforms to the system of unexplained wealth orders that will supposedly allow the UK authorities to seize criminal assets without the need to prove criminal activity, and a new specialist “kleptocracy cell” in the National Crime Agency to pay close attention to issues around sanctions.

But the intended impression of resolve and determination does not quite hold up; indeed, an array of last-minute amendments shows how sensitive Johnson and his colleagues are to accusations of weakness and foot-dragging. Though the government has previously suggested that judicial restraints on its power ought to be swept away, it now insists that, for fear of legal action, any serious moves against certain Russian individuals may take months – even as France, Germany and Italy seize Putin associates’ yachts. The bill has seemingly been through four years of preparation, but any plans to insist on better checks on records filed at Companies House – also a factor, incidentally, in fraudulent claims for loans and grants during the pandemic – are still not ready, and will only surface in further legislation. Given that the National Crime Agency is at the heart of many of the plans, it is also worth bearing in mind that Britain’s supposed equivalent of the FBI has suffered real-terms funding cuts over the last five years, and is viewed by experts as not having the resources to recruit and retain the right people.

Recently I spoke to Susan Hawley, the executive director of Spotlight on Corruption, a British charity that monitors the UK’s role in the intersection of criminality and power in the UK and across the world. The new bill, she said, is being talked up as a huge potential blow against dirty money and the secrecy it demands, but it is really a set of tentative first steps. The changes it outlines are limited, she told me, because a long history of indulging oligarchs and kleptocrats has settled into deep groupthink, and even if ministers’ intentions are serious, leaving that behind will take time and effort. “The trouble is that they’ve been obsessed with opening up and making Britain the easiest place in the world to do business,” she said. “And that made them complacent.”

Underneath all the hype, this is the basic reason why Britain has become a haven for so much dirty money. To understand that in an instant, consider the system of “golden visa” that the UK used for more than 25 years, allowing people to live in the country in return for investment in UK-registered companies. In 2014, the level of cash required was doubled from £1m to £2m; on February 17 this year, the scheme was scrapped. But between 2008 and early 2015, to quote from a report by the thinktank Chatham House, “checks that were carried out on applicants were the sole responsibility of the law firms and wealth managers representing them”. This became known as the “blind faith” period. Twenty-three per cent of applications over that time came from Russia; last year, it was estimated that in the 11 years up to 2019, only 9% of golden visa applications were rejected, compared with 42% of requests for asylum.

In 2006, the same year that the Putin critic Alexander Litvinenko was murdered in London, the city’s then-major Ken Livingstone said that he wanted “Russian companies to regard London as their natural base in Europe”, and his office established a small department aimed at attracting Russian money to London. Five years later, David Cameron went to Moscow and told his audience that Britain was open to their money as a matter of design. “The whole point about trade is that we are baking a bigger cake and everyone can benefit from it and this is particularly true, perhaps, of Russia and Britain,” he said. He went on: “Governments need to remember that businesses don’t have to invest in our country – they choose to. And we need to help them make that choice. It means minimizing the burden of regulation so that business and entrepreneurship can flourish.” Late last year, Boris Johnson addressed a Global Investment Summit at the Science Museum in South Kensington, and when told that the people in the room represented $24tn of wealth, Gushed: “I want to say to each and every one of those dollars: you are welcome to the UK and you have come to the right place at the right time.” Such was the cash-hungry mindset built into London’s branding for decades: the levels of dirty money in the capital are not its unintended byproduct, but exactly what this kind of approach was always going to invite.

In terms of the everyday experience of Londoners, a great hoovering-up of often ill-gotten billions has had very visible consequences. Far too many streets are now full of houses and flats bought by absent individuals, while the boom at the very top of the capital’s property economy has accelerated the rise of prices and rents to completely impossible levels. Russia is hardly the only country whose wealthy citizens are at the heart of these changes, but as they put down roots in London, post-Soviet oligarchs have represented a kind of doubled inequality. The 500 Russians with a net worth of more than $100m control 40% of their country’s household wealth. And once great chunks of that money were pumped into London, the capital’s own inequalities inevitably worsened.

This only compounded the jarring mixture of exclusiveness and deathly quiet you now experience on the streets of Belgravia, Knightsbridge, Holland Park, Highgate, Kensington, Chelsea, Notting Hill, Bayswater and all the rest. Some of these areas have always been dominated by vast wealth, but in others, there were once diverse, confident communities of comparatively ordinary people who created the cultural vitality that is still used to sell London to the world. As the international billions began to pour in, big money was hailed as yet another boost to the capital’s energy. But that was usually a con: besides a few donations to art galleries and museums, what much of London ended up with was both an awful moral murkiness, and silence. This is what happens when dizzying, often secretive wealth shuts out the people who actually make cities thrive, and it highlights a very topical question: why did it take a war for so many of our politicians to even begin to wake up?

We all know the answer. As all this played out, estate agents, private schools and luxury goods retailers made hay. Shamefully, lawyers took huge fees to go after investigative journalists who were set on revealing the worst aspects of what was going on. Donations to the Conservative party rolled in, and too many peers and MPs luxuriated in yet another connection to wealth and power. Now, many of the same people who allowed everything to happen suddenly tell us that the party has to end. Whether they are even halfway sincere is something that all of us – including ordinary Londoners, people long since priced out of the capital, and the kleptocrats nervously marking time behind their stucco facades and security gates – are about to find out.