Sir Sadiq Khan made quite an impression during his first-ever appearance at the MIPIM property conference last week. Property industry figures queued up to welcome his visit, and the high-profile Mayor, according to one report, was “regularly stopped for selfies”. More significantly, he met investors from across the world, including sovereign wealth funds in the Gulf and north American pension funds.
How successful will Khan’s trip turn out to have been? It will be some time before that can be assessed. But the Mayor was certainly sounding particularly business-friendly. “In the real world you’ve got to understand there’s nothing wrong with profit,” he told the Times.
We can expect more action designed to put City Hall on the side of “the builders not the blockers” on top of its recent interventions in Wandsworth and Wimbledon. For example, a streamlining of the Mayor’s policy-heavy London Plan, the development blueprint for the capital, is anticipated over the course of this year.
Getting money flowing in will be the big prize, though. Khan’s pitch, set out in the London Investment Prospectus, features 20 projects seeking a potential £22 billion, ranging from a domestic energy network in Islington to major schemes at Earl’s Court, Brent Cross, Enfield, Camden, Ealing, Docklands, Barking and Old Oak Common.
Many of these are long-standing. Most eye-catching were the inclusion of newer projects such as Network Rail’s plans for Liverpool Street, Waterloo and Victoria stations, as well as the Euston HS2 terminus and Khan’s own plans for the Bakerloo line and Docklands Light Railway extensions and the West London Orbital.
Those three mayoral schemes have long been at the top of Transport for London’s shopping list when negotiating for government funding. Now, as the prospectus states, London is “seeking opportunities to partner with private finance to enable their delivery”. Is this the new normal for infrastructure projects?
The need to supplement public largesse with private cash was spelt out by the then Network Rail chair and former TfL chief Lord Peter Hendy when the controversial Liverpool Street scheme emerged in 2023. This proposed putting a million square feet of office space over the station to finance much-needed upgrades. There was “no likelihood of such a significant improvement in the station without this injection of private sector capital,” Hendy said.
With Hendy now installed as rail minister, that position doesn’t seem to have changed. The same is true of Euston, where the government is relying on private cash to build the new HS2 terminus and update the existing station. Add on Victoria, Waterloo, Khan’s extension plans and the Old Oak Common HS2 station, and we could be about to see a new “golden age” for rail in the capital, rivalling that of the 19th Century, substantially backed by private money.
However, tapping the private sector isn’t new. And it has rarely been a silver bullet. The Jubilee line extension almost never happened when Canary Wharf developers Olympia and York collapsed, putting their promised £400,000 contribution to what was then a £1 billion scheme at risk. When costs escalated, public money filled the gap, as was the case with the Elizabeth line, despite significant business contributions overall.
Just last month MPs on the public accounts committee warned, as Khan had before, that with no detailed arrangements in place, the government’s plans for the private sector to take the strain at Euston carried “huge risk”, potentially leaving taxpayers on the hook for a significant proportion of the estimated £6 billion cost of the scheme.
With other projects, public money has been deployed early on. At the 6,700 home Brent Cross town development the new station, vital to its, progress was built by Barnet Council using £40 million of government funding. And the new station serving Enfield’s potential 10,000-home Meridian Water development was paid for by the council and City Hall.
Old Oak Common, according to new research, is now a “development hotspot”, supporting more than 22,000 homes and almost 19,000 jobs, with a £10 billion boost to the local economy over the coming decade. But that’s on the back of £1.67 billion government money paying the bill for its new HS2 station.
Even at King’s Cross, often seen as the model for urban regeneration, the site’s location at an existing major transport hub underpinned its success, along with government cash for infrastructure and public bodies “de-risking” the scheme by taking up early occupancy, as research by the Centre for Cities think tank points out.
While wooing the private sector, Khan will no doubt be reminding the government of those Old Oak and King’s Cross lessons and hoping he isn’t playing a zero-sum game.
OnLondon.co.uk provides unique coverage of the capital’s politics, development and culture with no paywall and no ads. Support it for just £5 a month or £50 a year and get things for your money other people won’t. Details HERE. Follow Charles Wright on Bluesky. Photo from Deputy Mayor Howard Dawber’s LinkedIn feed.