You've got to have a straight face to tell a good joke, and he did that very well, but I would guess that the reason that it didn't get a huge laugh was that it didn't have enough pain hidden behind it. Or perhaps you would need to understand London's politics surrounding street preservation in order to fully get it. Perhaps the politics are painfully embarrassing.
I loved your story, by the way. When I see people who just know instinctively how to put together a story like that, it reminds me of what a hack I am. I haven't absorbed the logic of a novel enough to hammer one out in the way that the pros do. Instead, I try to make up for my hacking methodology with satirical humor that I'm worried people won't get. My hope is that even though it is a risky way to write, risks sometimes pay off.