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Reinventing London

Nigel Roberts
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Even with a wall of money being invested in London developments,too much centralised planningmay not help as much as a mixed public-private approach.

Baroness Jo Valentine is CEO of London First, an organisation founded “to make London the best city in the world in which to do business.” She believes that, despite the global recession, there’s a wall of cash trying to get into the United Kingdom and into London. The problem is that neither is very good at getting Britain’s infrastructure ready to be invested in. The timing looks right to change that.

There has been a burst of ad-hoc speculative private development in the past few years which is changing the traditional low-rise skyline of the City of London, the square mile which constitutes the city’s financial district. Competing Middle Eastern investors have been vying with each other to build the tallest skyscraper, using idiosyncratic names like ‘The Shard’ and ‘The Gherkin.’ Mayor Boris Johnson recently announced that a 35-acre site in the old Royal Docks will be transformed into a “Gateway for Asian businesses seeking to establish headquarters in London.” The over £ 1 billion project is backed by ABP China in its first major development outside China.

“Creating a third financial district in the capital,” Johnson told reporters at the launch, “this development will act as a beacon for Eastern investors looking west, bringing with it tens of thousands of jobs and billions of pounds of investment for the U.K. economy.”

They are impressive developments providing office space for the financial industry, but elsewhere, until recently, there was little sign that recent development projects in the capital, such as Olympic Park in a deprived area of East London, were benefiting the wider community or driving economic growth.

The Kings Cross development, on the other hand, could generate a trickle-down economic benefit. Unlike Canary Wharf and Silicon Roundabout at Old Street, Kings Cross is more than merely a shiny series of office blocks with chic coffee shops and restaurants on the ground floors. The respected University of the Arts London and Central Saint Martins School of Art and Design will be sharing the space with Camden Council, the Guardian newspaper and corporate giants such as Google. There also will be a significant amount of mixed housing.

David Partridge, managing partner of Argent, the Kings Cross developer, believes that this mixed approach is necessary if the plan’s ambitions to create a fully formed urban environment, with a mix of businesses and customers, are to be realised.

“You have to do all that kind of stuff,” he says. “You can’t do one without the other. The richness of the place is all about layering. It’s incredibly hard work. You have to just keep layering it on and layering it on until it builds up into a very rich picture.”

The history of Canary Wharf illustrates the problem of a lack of infrastructure planning. While today it is a sort of Wall Street on the Thames, its growth was arduous. Erected more than 20 years ago on the Isle of Dogs amid great fanfare, the development was virtually cut off from the rest of London because, for the first few years of its existence, there were no decent public-transport connections.

The original developer, Olympia and York, went bankrupt and many of the office skyscrapers in this former area of East End docks stood empty for several years. “Canary Wharf only really began to be successful when the Jubilee Underground line was finally extended to the Isle of Dogs,” Valentine says, “more than a decade after it was first developed.”

She also cites three major infrastructure improvements that helped drive more recent development: the introduction of the congestion charge, the East/West Crossrail link and the Olympics. “Arguably none of those would have happened without the role of the mayor providing direction,” Valentine says.

The first mayor of London was Ken Livingstone, who also presided over the Greater London Council before Prime Minister Margaret Thatcher abolished it for political reasons in 1986. This created an urban-planning void for nearly two decades.

“It meant that London in the 1980s and ’90s was a bit downbeat and down at heel,” Valentine says.

That changed with the creation of the Greater London Authority and the new post of London mayor in 2000. With the city’s population heading for 10 million by 2030, an increase of around 2,000 a week, the case for change in how the city secures its future infrastructure-investment needs is more compelling than ever.

The London Finance Commission recently published a report into the way that infrastructure and public services are financed in the capital, and it calls for fiscal devolution from central government so that more of the taxes raised from Londoners can be spent on the capital.

“Only a fraction of the taxes raised in London, just seven per cent, is determined by the representatives elected to spend them,” the report says. “At over 50 per cent, New York’s figure is more than seven times higher.”

Even with a wall of money being invested in London developments, however, more needs to be done to free public-sector investment. Valentine cautions against too much centralised planning, instead advocating more of a mixed public-private approach.

“It is dangerous to have too rigid a plan for city development,” she says.

Nigel Roberts is the United Kingdom correspondent for Insead Knowledge.

© 2013 Insead.

“Canary Wharf only really began to be successful when the Jubilee Underground line was extended to the Isle of Dogs.”

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