“Hosting of Draped Seated Woman” was an unlikely request to see advertised by a local council this winter, alongside tenders for the provision of litter bins and parking enforcement. But the London borough of Tower Hamlets is in a quandary: it needs to find a new home for “Old Flo”, the £20m Henry Moore sculpture that will finally return to the borough after a lengthy legal dispute over its ownership.

Acquired by the London County Council in 1962 to adorn the Stifford Estate in Stepney, the seated bronze figure was loaned to the Yorkshire Sculpture Park in 1997 when the estate was demolished. It made headlines in 2012 when then-mayor of Tower Hamlets Lutfur Rahman tried to flog it to raise funds for the cash-strapped council; but after a successful campaign by the sculptor’s daughter and film director Danny Boyle, the new mayor has vowed to keep the bronze in public hands.

“We need to find a location that’s safe where people can see it, and where it’s not going to get nicked and melted down because it’s worth a lot of money,” said current mayor John Biggs. Old Flo’s return will mark a welcome addition to the East End, but there are many other such lumps of “public art” that you might wish would be hauled off to the furnace and boiled back down to the gloop from whence they came.

Sadly, gone are the days of the London County Council, with its Patronage of the Arts scheme, which saw council estates bestowed with works by top sculptors of the time. Now, public art is usually the physical manifestation of a developer’s guilty conscience, forced out of their pockets through Section 106 agreements or similar “percent for art” schemes.

Facebook Twitter Pinterest Henry Moore’s sculpture Draped, Seated Woman, in its original position on the Stifford Estate. Photograph: PA

You know it when you see it. It’s the stuff that’s plonked on ring-road roundabouts and shopping centre forecourts, decorating the echoing courtyards of university campuses and the desolate plazas of luxury apartment schemes. It erupts in bold, brash, eye-catching forms, shrieking at full volume but rarely with anything to say.

It represents a double crime, given that it is not much wanted by the public, nor appreciated by the art world either. It’s also usually hated by the architects on whose buildings and spaces it is bolted, as if to suggest the architecture isn’t artful enough on its own. That’s probably true, but these baubles rarely help.

Such dispiriting decorations have become institutionalised as part of the Faustian pact of Section 106, aka “planning gain” – the mechanism by which the public supposedly benefits from the arrival of a commercial development, which means that expensive sculptures of sequinned horses are ladled from the same small pot of money as affordable housing, public space and highways improvements. It is probably fair to say that most people would rather have a few more affordable homes in the neighbourhood than a big metal turd – sorry, “marrow” – sculpture by Sarah Lucas.

But in the high security residential enclave of Nine Elms’ Embassy Gardens – a place where £50m penthouses are to be connected by glass-bottomed swimming pools – developer Ballymore has not only succeeded in installing what indeed looks like a “turd on the plaza” (to use James Wines’ term for such vapid public sculpture), but proved it is eminently possible to polish one. Meanwhile, the developer agreed to provide 15% affordable housing, when the borough’s target was 50%.

Facebook Twitter Pinterest The Kelpies, two statues of horse heads by artist Andy Scott in Falkirk, Scotland. Photograph: Murdo Macleod/The Guardian

The institutionalisation of the decorative decoy strategy has spawned an entire industry of art consultancies who are commissioned to write lengthy strategies and matchmake developers with artists, along with finding local galleries eager to pedal their middlebrow works to unsuspecting councils.

But are public artists eternally destined to be exploited as developers’ patsies, applying diverting coats of lipstick on to oversized pigs, and filling the imagination deficit of local authorities?

Not necessarily; there can be another way. When the city of Chicago offered artist Theaster Gates hundreds of dead ash trees in the hope that he might make some nice sculptures with them after they were killed by an infestation and felled, Gates decided to set up a sawmill instead. The result isn’t a series of folksy carved tree trunks, but a substantial number of apprenticeships and jobs for unemployed residents of the city’s deprived South Side, who are now being trained in carpentry and joinery.

It adds to the library, cinema and gallery spaces that Gates has already built in the area, cleverly funded by raising money from the art world – such as selling etched marble plaques to collectors – in a Robin Hood community business model.

In Peterborough, artist Jessie Brennan has shown how public art can play a similarly powerful activist role by working with the Green Backyard, a community growing project threatened with development by the council. “If this were to be lost,” reads a 20-metre long sign in bright yellow capital letters, positioned so that it’s very visible to passengers on the East Coast mainline train from London to Edinburgh.

Facebook Twitter Pinterest ‘We questioned the capitalist logic of the proposed development’: Jessie Brennan’s If This Were to Be Lost in Peterborough

It’s a phrase taken from one of the 100 oral recordings of local residents’ feelings about the green space and why it’s so important for the area. “We questioned the capitalist logic of the proposed development,” says Brennan, “and offered alternative evidence for the current social use and value of the land.”

In the Olympic hinterland of east London, artist Verity-Jane Keefe has recently been trundling around the streets of Barking and Dagenham in her Ford Iveco Mobile Library van, retrofitted as the Mobile Museum.

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Starting out at the Becontree estate, the world’s largest public housing estate when it was built in the 1930s, Keefe’s museum has been touring 12 such estates. She stops off for a series of workshops and events with archaeologists, archivists, writers and historians, gathering information and making, collecting and cataloguing artefacts to produce a vivid insight into this place of extraordinary flux. The result is an intriguing cabinet of curiosities on wheels, with a collection spanning everything from embroidered protest banners to samples of pebbledash and intricate architectural models of the estates.

These examples demonstrate a growing culture of self-initiated projects, sage commissioning and engaged public art that is willing to get down off its plinth and find its way into the places where it can actually make a difference. The results might not be as glitzy for the photo opportunity, or as easy to show the shareholders in the annual report, but they’ll have a longer-term impact than another ArcelorMittal Orbit, B of the Bang or spangled horse head.

Oliver Wainwright will be chairing a debate on public art on 16 February at Central Saint Martins, London, as part of the Fundamentals debate series

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