London

By Mike Raco and Frances Brill

As one of the fastest growing cities in Europe, London has become a mass generator of employment and a magnet for inward migration. Yet London is also a divided city, whose expansion has generated many planning challenges.

This book explores the tensions, complexities and difficulties in mobilizing policy agendas in London, but it also argues that public policy still matters and makes a significant difference to outcomes. The authors show how the market-led development of London has meant that the state supports more private-sector-led governance and this has given rise to widespread privatization of the city’s decision-making processes and policy implementation. As a key command and control centre in the global economy, London’s privatized model has become one for other megacities to emulate.

• Language: English
• Publisher: Agenda Publishing
• Release date: Jul 28, 2022
• ISBN: 9781788213080

Mike Raco

Mike Raco is Professor of Urban Governance and Development at the Bartlett School of Planning, University College London. His books include State-led Privatisation and the Demise of the Democratic State (2016).

Book preview

London

Megacities

Series Editor: H. V. Savitch

As drivers of economic growth, demographic change and consumption, hyper-conurbations offer unique opportunities to their hinterlands and national economies, as well as huge challenges of governance, planning and provisioning. Each book in this series examines the political and economic development of a specific megacity and explores how and why they have evolved and how policy decisions, couched in geopolitics, have shaped their outcomes. The series covers both paradigmatic mature megacities of the developed world, as well as the fast-growing emerging megacities of South and East Asia, and Latin America.

Published

London

Mike Raco and Frances Brill

Paris

Christian Lefèvre

London

Mike Raco and Frances Brill

© Mike Raco and Frances Brill 2022

This book is copyright under the Berne Convention.

No reproduction without permission.

All rights reserved.

First published in 2022 by Agenda Publishing

Agenda Publishing Limited

The Core

Bath Lane

Newcastle Helix

Newcastle upon Tyne

NE4 5TF

www.agendapub.com

ISBN 978-1-78821-305-9 (hardcover)

ISBN 978-1-78821-306-6 (paperback)

British Library Cataloguing-in-Publication Data

A catalogue record for this book is available from the British Library

Typeset by Newgen Publishing UK

Printed and bound in the UK by CPI Group (UK) Ltd, Croydon, CR0 4YY

Contents

Acknowledgements

1Planning in the shadow of the market: the emergence of a London model

2Public regulation and planning for the global city

3Private regulation, governance and the rise of the parastate

4Political representation, community politics and the right to regulate

5Governing the development, financing and funding of the London model

6London’s housing crisis and emergence of new residential landscapes

7Planning for tall buildings: global ambitions and local discontents

8Major infrastructure projects: building, financing and delivering the Thames Tideway Tunnel and Crossrail

9Planning without growth: what next for the London model?

References

Index

Acknowledgements

The book draws on over a decade of research during which we have examined different aspects of London’s planning and development. Much of it was written and researched during the Covid-19 pandemic and we wish to express our deep gratitude to all of those who made the work possible during a time of unprecedented difficulty. In particular we would like to thank two Sarahs – Sarah Read and Sarah Hughes-McLure (and Oslo) – for their perfect balancing of inspiration and distraction during the lockdown.

Many of our ideas were developed collaboratively and would not have emerged without the intellectual engagement of, and ongoing encouragement from, a range of people – too many to mention. But we would like to express particular thanks for the great conversations with Tuna Tasan-Kok and Sara Özogul at the University of Amsterdam and Patrick Le Galès and colleagues at Sciences-Po Paris. Thanks especially to the WHIG research team at UCL for all their constant encouragement, intellectual engagement and support – Claire Colomb, Dan Durrant, Jess Ferm, Sonia Freire-Trigo, Iqbal Hamiduddin, Nicola Livingstone, Paul Moawad, Danielle Sanderson, John Tomaney, Callum Ward and Annie Webb. The book could not have happened without you.

For the arguments around new investors, we would like to thank all those who supported Frances’s PhD research in the Department of Geography at UCL, especially Jenny Robinson and Ludovic Halbert, and Phoebe Stirling whose stint in Cambridge has proven particularly inspirational.

Arguments developed in the book were discussed at a variety of events, conferences and seminars and we would like to thank all those who asked questions and raised comments. Allan Cochrane, the late John Henneberry, Maria Kaika, and Jennifer Peters also acted as hugely valuable respondents and contributors to WHIG sessions. Special thanks also to the various reading and writing groups at University of Cambridge’s Geography Department and the Bartlett School of Planning, UCL. In particular we would like to thank Joe Penny for his wise words and reminding us it is not how to publish but why publish that matters.

Many thanks also to Hank Savitch, the series editor and Alison Howson of Agenda Publishing, for their input and support over the last couple of years and their patience in the wake of the pandemic. We also gratefully acknowledge the comments of referees on the original draft – their insights and thoughts were incredibly valuable.

Formally, we also wish to acknowledge the support of the Economic and Social Research Council UK [Grant Number: ES/S015078] under the project WHIG What is Governed in Cities: Residential investment landscapes and the governance and regulation of housing production.

Mike Raco, Petts Wood, Kent

Frances Brill, Trumpington, Cambridge

1

Planning in the shadow of the market: the emergence of a London model

This book addresses what, on the face of it, seems a straightforward question: who is governing London and how? Similar questions are being asked in cities and societies across the world in an era that is shaped by relentless processes of globalization, multiple crises and insecurities. The book is therefore an assessment of the governance arrangements that shape the city’s planning and development, who controls them and whose interests they serve (and whose they do not). We show that over recent decades there has been a slow but steady corrosion of the public realm, in which powers, resources and responsibilities have been voluntarily ceded to a range of players at multiple scales, found mainly in the private sector. There is a lot to be learned from London. It is a context in which there has been a deliberate and purposeful agenda to generate dependency on private finance and service providers. All planning deliberations and political choices are now conducted in the shadow of the market, with an eye to what these new groups of players – what we term the parastate – want and need. There is nothing inevitable about what has happened. We begin by setting out the simple story that dominates policy and (some) academic thinking about London before turning to some of the wider difficulties that policymakers, businesses and citizens increasingly face in the wake of decades of change.

London’s simple story: from the city of decline to the triumphant city

During the 2000s many hailed London’s economic and demographic expansion as an archetype of a broader narrative of urban triumphalism. For a range of commentators, politicians, academics and planners its recent experiences can be captured in a simple story of change that explains the much-lauded transformation from an earlier period of structural decline. The story begins with a view of its imperial past that acted as a driver of growth in the early modern and industrial eras but left the city ill-suited to the demands of post-war economic and social change. Its urban environments were characterized by poorly planned and maintained infrastructure, with dilapidated housing and commercial property stock and a misfunctioning postwar welfare state that had been responsible for the delivery of poor-quality modernist estates and declining private sector dynamism.

By the 1980s critics presented London’s governance arrangements as sclerotic, unable to cope with the demands of the modern political economy, particularly the role of finance, and lacking the technical and managerial capacities to bring about a much-needed transformation of the city’s infrastructure. Its politics was perceived as being over-dominated by left-of-centre political elites, hostile to globally oriented forms of investment and over-focused on old-fashioned, municipalist approaches to urban management (see Hatherley 2020 for a wider discussion). These elites, it was claimed, were unable to grasp the opportunities opened up by the internationalization of trade and associated flows of people and commerce. Worse, London was seen to be falling behind competitors, with a persistent seeping away of people and economic and cultural activity. There were serious discussions in the 1970s and 1980s over its position as a leading example of cyclical counter-urbanization: the world’s first million-plus city in the nineteenth century and the first to decline in the twentieth (Hall 1982). Its experiences seemed to chime with the visions of urban commentators on the political right who predicted the end of ungovernable large cities (Buchanan & Tollison 1984; Yates 1977). As political entities, cities were simultaneously portrayed as too centralizing to enable effective citizen control and too decentralized to facilitate strategic and effective planning interventions. Moreover, London’s politics could be captured by elite interests who posed as representatives of urban populations, but in practice consisted of local oligarchies for whom urban politics was a vehicle for the pursuit of political power. At the same time, many analysts saw the economic future of cities as belonging to small and medium-sized places, in the same way that command-and-control Fordist economies had given way to post-Fordist forms of flexible specialization (Porter & Sölvell 1998). Megacities had had their day.

This simple story then goes on to describe an era of turnaround and triumph. In the mid-1980s following the abolition of the left-of-centre Greater London Council (GLC), a new set of entrepreneurial thinking began to emerge. There was a reformed and updated global outlook on the part of policymakers, who were increasingly prepared to reach out to elite actors and business organizations to help transform the city’s fortunes. Population levels first stabilized and then began to grow again; the economy saw rapid expansion, especially in the service and financial sectors following the big bang of financial deregulation and technological transformation in the mid-1980s; investment into the built environment increased relentlessly in both commercial and residential property sectors; old-fashioned sunset industries, mainly in the manufacturing sector, disappeared as the economy modernized and transformed into a service sector-based powerhouse of globally oriented growth; and restrictions on London’s expansion were removed by the dismantling of national spatial policies and a neoliberal focus on supporting global winners. A new era of development thinking emerged underpinned by theories of competitive advantage and the purposeful selection and boosting of successful locations, from which development gains would trickle down to all people and places within a given territory (Porter 1990).

The rise of third-way politics at the national level in the 1990s opened the door to a new role for London as the centre of a Cool Britannia politics, with an intensified growth strategy built on the city’s perceived strengths in financial and business services. A growing economic orthodoxy was used to give credence to such approaches culminating in the work of writers such as Glaeser (2011) who celebrated the triumph of global cities and their emergence as the drivers of twentieth-century economic and population growth. Cities, it was argued, were benefiting from opportunities created by enhanced globalization and would act as spearheads for innovative capitalism. The introduction of elected mayors from 2000 gave London a further boost, acting as focus for public and private coordination and the development of shared projects. London’s built environments boomed, fuelled by national and international investment and a supportive planning system. Even in the wake of the global financial crisis of 2007–08, the city thrived, protected by national government bailouts on an unprecedented scale. By 2020 it had become the archetypal triumphant city.

Within this wider narrative a London model of governing was hailed as a template for others to follow (Moore, Raco & Clifford 2018). Rather than a concrete programme, the model consisted of a loose set of ideas and assumptions about priorities for development planning and who should govern and deliver it. It both described and prescribed how modern metropolises should be planned and by whom, and propagated recipes of good governing for national and city authorities. This model has become increasingly concerned with managing growth rather than arresting decline and dealing with the associated economic, social and environmental costs of expansion, especially in relation to housing and rising inequalities (Florida 2017). During this era London took on an iconic role, surging to the top of global rankings such as the influential Global Power City Index (Mori Memorial Foundation 2019), driven by the presence of some of the world’s highest-ranked universities, a dynamic and highly skilled labour force, agglomerations of successful industries (especially finance, insurance and real estate) and a vibrant and dynamic cultural sector. Its economy grew by 3.5 per cent in 2018–19, much higher than comparable European cities such as Paris (0.5 per cent) or Madrid (1 per cent), and corporate executives scored London as the number-one location for professional and legal services and availability of talented labour. For Atkinson, Parker and Burrows (2017) it became an alpha centre for global elites and associated forms of urban development and investment. Its economy is now a mass generator of employment and the city has become a magnet for in-migration.

The transformation of the city’s built environments is at the heart of this turnaround. Landmark flagship urban projects have been powerful in delivering and sustaining the triumphant city narrative, in particular:

• the regeneration of the iconic Olympic 2012 location around Stratford to showcase how major sporting events can act as a springboard for urban investment;

• the evolution of mixed-use projects in areas with long and complex development histories such as those of King’s Cross or London’s South Bank (Brill & Robin 2019 ); and

• the identification and development of major regeneration programmes, most notably the long-running redevelopment of the London Docklands, Europe’s largest project of its type.

At the same time, the planning system has been able to deliver some of the most complex infrastructure projects in western Europe, including public transport-led developments around rail stations, the building of new metro lines and the construction of utility infrastructure. All these projects are seen as templates for policymakers and built environment professionals elsewhere, and are promoted by UK and London policymakers to showcase the city’s governance structures and planning system (UK Government & Mayor of London 2013).

The simple story and new urban realities

During this period of much-trumpeted success, the seeds of new crises have been sown and the simple story is being challenged, even on its own terms. Relentless economic and demographic expansion generated structural tensions that are common to megacities across the world, most notably:

• a failure to provide enough accessible and available housing and employment for a growing population;

• a market-driven modernization of planning systems, making them reliant on private investment and expertise, therefore vulnerable to downturns and the changing needs of private firms;

• a hollowing-out of local government and state powers and resources, leaving welfare systems unable to address mounting and unprecedented inequalities between groups;

• the broader mass-privatization of welfare provision and social infrastructure; and

• shifts in government finance that undermine the capacity of state agencies to establish coordinated forms of intervention.

All of these challenges are emerging as public authorities face unprecedented funding cuts in the wake of the 2008 global financial crisis, geopolitical uncertainties in the shadow of Brexit, growing global protectionism and a creeping awareness of the environmental limits of current policies as the climate emergency gathers pace (Wallace-Wells 2020).

These threats and insecurities were emerging before the Covid-19 pandemic sent a further shockwave through the city’s economy, infrastructure, financial models and communities in 2020. From a narrative of triumph, London is suddenly being spoken of as a megacity facing a future of uncertainty and instability. Some commentators talk in an excited way of the possibility of an era of peak-urbanism, or a pivotal moment in which there is a discernible shift of people and investment away from central urban areas to the suburbs or rural locations (Florida 2020). The very factors that have driven the city’s development are seen as potential risks that could make it unattractive to future investors and/or the groups of migrant workers who sustain it (Žižek 2020). In 2021 London residents spent a staggering £55 billion on property outside the city, in a rush for more living space and healthier living environments (Hammond 2021). These trends are in direct contrast to those predicted by the triumphalist narratives of the 2000s and 2010s, and while they should not be exaggerated or taken as certainties, the impacts of the pandemic have, at the very least, highlighted the hubristic character of simple stories and expectations of perpetual growth.

It is in these contexts that this book is situated. It challenges the notion that megacities such as London are somehow ungovernable, or too large and complex to manage through traditional territorial policy and planning instruments. Instead, it argues that despite an internationalization of economic systems, public policy still matters and makes a significant difference to material outcomes and development trajectories (Le Galès 1998). It will show how policy interventions and agendas, allied to broader changes in the form and character of investment, have played a direct part in London’s recent economic and social growth. The findings reflect Le Galès and Vitale’s (2013: 1) claim that modes of governance have long-term consequences for their inhabitants and governing failures may have severe negative effects (e.g. housing shortages, low levels of educational attainment, crime, low productivity, health). Urban societies and economies are more or less governed, and that may change from one city to the next or from one period to the next. Research on contemporary megacities should articulate the question of what is governed? within a broader set of questions over who is governed? and who is governing? As we show in later chapters, in the case of London, purposeful approaches to governing have been introduced that seek to create new forms of control and coordination beyond the state and in the hands of elites, albeit subject to challenges. In turn, this highlights wider questions over what is not governed and who governs beyond the gaze of governing agencies and systems.

We use this approach and the questions it raises to set up the core structure and argument of the book. We examine how and why London’s governance structures and development planning systems have undergone a profound transformation since the 1980s, who is governing these processes, and with what effects. Fainstein (2001) famously talked about London’s city builders in the 1980s and 1990s: the networks of property developers, policymakers and planners responsible for reshaping urban development. Here, we develop the argument that a new generation of city builders has emerged representing a much more complex, relational and multi-scalar assemblage of regulators, policymakers, private financiers, consultants, lawyers and built environment specialists. Projects are implemented in a highly fragmented and inefficient manner. Fainstein and others concentrated on the power of development elites but also drew on a longer tradition of Anglo-American scholarship in which the state is represented as a relatively coherent set of institutions, operating with a degree of political legitimacy and authority when negotiating with private sector actors. Even US-based writers who talked of dependent cities in the 1980s and 1990s (Savitch, Kantor & Vicari 2002) maintained a liberal separation between public and private sectors and highlighted the ways in which the former were increasingly dependent on decisions made by the latter (Kantor 1987). In contemporary London there has been a shift away from hierarchical, imperative-driven modes of government-led planning to one where state agencies seek to coordinate different agents and actors, each seeking to steer development priorities and opportunities in their own direction.

The book sets out some of the costs of this success both for London and places and regions beyond. It argues that megacities have become test beds for new forms of planning and selective state (in)action, with political and economic consequences that go beyond their borders. There has been a shift in the definition and purpose of planning interventions. Rather than acting as a mechanism for resolving tensions between development and social and environmental needs, it has been retooled to become a driver of development in which the state has been restructured and repurposed to meet these ends.

Changing economies, financialization and the emergence of the London model

What has happened in the twenty-first century is the result of multiple interconnected processes. First, urban built environments have attracted finance on a scale that dwarfs those of property investments in the 1990s, in both relative and absolute terms. What Rolnik (2019) terms a wall of money has been invested into residential and commercial property and land, with The Economist (2020a) estimating that globally these were worth in excess of $200 trillion in 2020 (see Ward & Aalbers 2016; Ward & Swyngedouw 2018). For investors, growing megacities like London are central locations for this mass investment. Moreover, the types of real estate investor have diversified in ways that were difficult to foresee in earlier periods to include:

• state-led firms and wealth funds now exist on an unprecedented scale;

• a new global elite of oligarchs and super-wealthy individuals see London’s high-end property markets as a must-have acquisition;

• as populations in the global North age, their pension funds have been active agents, looking for high and stable returns from the most successful property markets; and

• mass home-ownership has created a growing class of property-owning citizens for whom investment in the housing assets is seen as the key to longer-term financial stability ( The Economist 2022 ).

Alongside the growth of new investment groups that we will chart through the book, the welfare state itself has become a lucrative market for private profiteering. The default option in the London model, enshrined in planning and policy regulations, is to turn to the private sector for expertise, finance, resources and project delivery skills. There is an inbuilt tendency to return to trusted experts used before, many of whom are powerful and vertically integrated multinational firms. This is reflective of broader trends in many western countries in which welfare states have become vehicles for investment profits and/or direct private sector control (Braithwaite 2008).

The new city builders therefore partly consist of a range of private sector regulators and what we term parastate actors, who govern and regulate with or even on behalf of the state. The planning of urban development and infrastructure is no longer a matter of established public/private partnerships or regimes. Private expertise is now working alongside or in place of the state, with their own private codes of conduct. As we show, regulatory capture and delivery has become a lucrative market for parastate firms. This generates governance paradoxes. In contrast to neoliberal-focused accounts that highlight trends towards liberalization and deregulation (see Pinson & Morel Journel 2016; Sager 2015), a new breed of corporations exists that benefit from the presence of greater complexity in planning processes and the presence of more regulations that they help establish, govern and deliver. We return to this paradox in different fields of public policy throughout the book.

A consequence of these shifts is the growing dependence on private sector resources and expertise by state authorities. Agencies become subject to an expanded managerialism reliant on private sector-type targets, quantitative calculations, established professional codes, private laws and (international) accounting standards. These forms of parastate governance have emerged alongside, and at times in place of, formal state structures, and yet within existing literatures on urban development and planning in London (and elsewhere) there is little direct reference to the more liquid and relational acceptance of private norms, regulations and standards in shaping the building of cities (Black 2017; Krisch 2017). While some have focused on what Pistor (2019) calls the codes of capital written by lawyers and accountants that facilitate private sector practices and global privatization programmes, these are rarely applied directly to urban development planning and practice.

At the same time, the presence of a clear model does ideological work in that it seeks to overcome the antagonisms associated with a greater reliance on market actors and market knowledge. There is an attempt to showcase the benefits of private sector inclusion while minimizing any downsides. The most significant manifestation of this is through a retooling of the planning system with a new role for value-capture mechanisms – interventions that seek to capture financial surpluses for public gain. The two most significant policies, Section 106 agreements and Community Infrastructure Levies, are outlined in Table 1.1. Reliance on these mechanisms generates a deep dependency on development activity. And as Pike et al. (2019) note, added to this policy mix is the trend for state agencies and local authorities to become financial actors themselves, adopting (risky) future-oriented policies that are contingent on financial gains delivered through infrastructural projects and consequential land value uplift (Penny 2021; Weber 2016).

Table 1.1 Value-capture mechanisms in the London planning system