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

Summary

In this chapter we analyse new forms of funding and financing of the London model and what they mean for governing the city. As noted in Chapter 1, the model itself emerged partly in response to the presence of global and national finance seeking out new opportunities in urban property markets. But as Özogul and Tasan- Kok (2020) argue, when seeking to understand investors and developers it is necessary to unpack the diversity of practices and approaches they employ and the ways in which they navigate the complexity of places and planning systems. Specifically, we look at the rise of patient capital by examining four types of investor: pension funds, sovereign wealth funds (SWFs), property- specific real estate investment trusts (REITs) and then address more predatory forms of finance. We highlight how these newly significant investors have transformed the relationships between the public and private sectors.

The growth of new forms of funding and finance has come hand in hand with the rise of development by project mentalities. Boroughs and the mayors’ executive bodies increasingly view the pursuit of projects as a means of generating financial autonomy in a context of budget cuts from national government and the constant shrinkage of locally determined regulatory powers and responsibilities. In this way, the ideological work of the London model manifests in how the visible presence of projects is presented as a win- win form of planning through which the city's residents and businesses benefit from new growth, in terms of jobs and economic opportunities, while at the same time meeting social and environmental objectives. Growth also creates the funds to introduce better designed and more sustainable urban built environments, often delivered by private sector consultants and experts.

However, we show that far from generating financial autonomy for government bodies or signalling a wider renaissance in localism within London, the shift towards project- led planning has taken the mechanisms of competition and insecurity that exist within financial markets and internalized them directly into the functioning of the public sector. The analysis of these new investment landscapes and actors, and in particular the types of assets they are looking for, demonstrates the limitations of planning and the need for a more holistic approach to urban management that is capable of attending to a diversity of opinions and approaches and therefore is able to regulate this heterogeneity.