Sadiq Khan has the mother of all in-trays to contend with in his first months as London’s new mayor - everything from housing to Heathrow, Crossrail 2 to controversial planning decisions. The construction industry, and housebuilders in particular, will be praying he has it in him to get things done
Sadiq Khan probably has London’s busiest diary this week.
Following his barnstorming victory over Conservative candidate Zac Goldsmith, winning the biggest personal mandate ever secured by a politician in UK electoral history, the new mayor has been assembling his team.
Amid the scrum, the capital’s housebuilding sector will be jostling for attention. Khan made it clear during his campaign that housing would be his big priority if he won City Hall. However his signature policy, the pledge that 50% of all development will be affordable, has sparked deep concern among the capital’s private builders.
Sarah McMonagle, head of external affairs at the Federation of Master Builders, says her organisation will be seeking an urgent meeting with Khan to discuss the implementation of his policy, which she worries will cripple housing delivery.
Pointing to Khan’s pledge not to relax the green belt, she argues that the new mayor will rely on smaller developers bringing forward already developed land: “Brownfield development is the only option and these sites are the ones that are potentially suitable for smaller builders, which again is why it’s so important that we have realistic expectations about smaller sites. Fifty per cent of nothing is nothing.”
This is just one of the areas where Khan will have trouble squaring his campaign’s pro-business rhetoric with the more left-wing policies that appealed to his voter base.
As Europe’s most powerful Muslim politician and London’s most elevated Arsenal fan settles into City Hall, Building explores the built environment priorities in the new mayor’s in-tray.
For Alexander Jan, director of city economics at Arup, soothing business concerns should be at the top of Khan’s to-do list. “The first 100 days will be crucial in getting things up and running. To avoid a pause in housebuilding and investment in the commercial sector, the mayor should go on a charm offensive. A high-profile visit to the City and Canary Wharf will send some reassuring messages that there will no loss of momentum in delivering floor space and dwellings.”
The need for such confidence-boosting engagement with the business community is particularly marked in the context of the looming Brexit referendum in June. Jack Pringle, managing director EMEA at architect Perkins+Will, argues that the new mayor should lobby hard on London’s behalf for continued membership of the EU. “A lot of inward investment that would have gone here will go elsewhere. There’s no question that certain clients are saying we won’t do a project if we leave the EU: it’s pretty black and white. As far as business is concerned, it’s a complete no brainer, staying in the EU.”
The first 100 days will be crucial. to avoid a pause in housebuilding and commercial investment, the Mayor should go on a charm offensive
Alexander Jan, Arup
In addition, the new mayor should also be working up a strategy on how London can navigate the economic turbulence likely to follow a vote to leave the EU, according to Jan.
One way Khan can bolster confidence would be to avoid wholesale abandonment of his predecessor’s initiatives, such as the London Land Commission initiative to bring forward public land for housing. “I hope the new mayor will capitalise on some of the work by the previous mayor,” says Mike McNicholas, lead for London at Atkins.
Another key to maintaining confidence, especially at a time of wider construction market slowdown, will be to avoid a pause in decision-making. “We want continuity and don’t want dithering on decisions. The housing numbers as they stand are pretty ambitious. If there is any hiatus now, that could be potentially damaging for meeting overall targets,” says Arup’s Jan.
“That doesn’t mean signing off schemes which shouldn’t be, but it’s showing that somebody’s in control, they know what they are doing and are delivering decisions that will enable market momentum to be maintained.”
However, some of these decisions will involve some tough choices, particularly for a Labour mayor elected on such a strong pro-affordable housing platform.
Whether or not to grant approval for Hammerson’s Bishopsgate Goodyard development, called in by his predecessor Boris Johnson, will be a particularly thorny issue for the new mayor. Approve the scheme and Khan will encounter a hostile backlash from the local councils and campaign groups, who are furious that the developers have proposed that just 15.8 per cent of the up to 1356 homes planned for the site will be affordable.
Refuse consent for redeveloping such a long-standing brownfield eyesore, though, and Khan’s credentials as a pro-development mayor will immediately be questioned.
Housing and the London Plan
But the biggest single item in Khan’s in-tray is the London Plan. Last revised in 2011, it was ripe for an update, even if there hadn’t been a change in political control at City Hall. The key issue in shaping the plan will be, unsurprisingly, housing.
We are still failing to get to grips with housing. we still seem to be failing to deliver anywhere near the amount the city requires
Mark Prior, Arcadis
Mark Prior, London City executive at Arcadis, says: “We are still failing to get to grips with housing. Notwithstanding the work done by Boris, we still seem to be failing to deliver anywhere near the amount that the city requires.”
The English Housing Survey states that the average Londoner is spending 72% of earnings on rent. And the pressure on the capital’s housing stock is growing. Net inward migration to London was 107,000 two years ago, according to recently published Office for National Statistics figures. London’s population passed its previous record level of 8.6m in February last year and is widely expected to increase by another 1.5m within the next 20 years.
Despite the outgoing mayor’s efforts to promote housing delivery, housebuilding levels remain too low to cater for the capital’s booming population. National House Building Council figures, published earlier this year, show that 25,994 new homes were registered across the capital in 2015, barely half the 50,000 widely reckoned to reflect the true level of need.
Finding the space for these extra homes will inevitably involve difficult decisions. Khan pledged in his manifesto to introduce policies in the London Plan to ensure that new tall buildings must respect the character of their surrounding neighbourhoods. However the new mayor’s room for manoeuvre is limited by his manifesto pledge not to relax the green belt, which will make it harder to meet London’s needs by expanding the capital’s footprint.
Patrick Flaherty, Aecom chief executive for the UK and Ireland, believes that a “targeted review” of the Metropolitan Green Belt is necessary alongside a drive to boost suburban housing densities.
And with London’s first-time buyers increasingly flocking beyond the M25, he argues that Khan will need to forge a “coalition of the willing” with neighbouring councils to tackle the capital’s housing pressure. Given that Johnson struggled to secure much buy-in to his plans from his Conservative allies in the Home Counties, Khan faces an uphill struggle on this score.
It’s a different story in London, though, where the majority of boroughs are under Labour control and Khan is able to play with Transport for London’s budget.
Transport to drive growth
The proposed Crossrail 2 line, due to run from south-west to north-east London, is expected to deliver an additional 200,000 new homes. The details of these will be firmed up when Sir Merrick Cockell’s Crossrail 2 Growth Commission publishes its findings in the summer.
However, while the government has given its green light to Crossrail 2, earmarking £80m in the recent Budget to develop the project, there are still question marks over how it will be funded and even the final route, both of which Khan will play a key role in determining.
Ministers expect London to generate half of the bill for building Crossrail 2. An extension of the mayoral community infrastructure levy, which was created to help fund the first Crossrail line, is one of the options that Khan will be mulling.
However, ambitious as it is, Crossrail 2 will only generate a fraction of the homes that London needs to meet its booming housing demand, points out Ian Liddell, head of development at WSP Parsons Brinckerhoff. “It’s a fantastic objective, but only accounts for four years of housing demand. We need to think ahead to projects like the Bakerloo line extension. But we also need to look at other schemes that will deliver housing without having to rely on major infrastructure projects which carry a lot of political risk,” he says, pointing to Capco’s Earl’s Court scheme as an example of a project that is capitalising on existing rail links.
Khan will also have to strike up a rapport with the Treasury, which may be harder in the wake of his criticism last weekend of the way the prime minister backed Goldsmith’s controversial campaign. However, George Osborne’s door is not shut to Labour local government leaders, as Manchester’s Sir Richard Leese can testify in the wake of the Chancellor of the Exchequer’s decision to award substantial freedoms to his council as part of the Northern Powerhouse initiative.w “He should go and see the chancellor and keep up the pressure on demanding more powers over taxes and borrowing,” says Jan.
And even if the government isn’t that keen to listen to London’s new Labour mayor, it may heed broader business concerns about the impact that the capital’s creaking transport infrastructure will have on its economy. Arcadis’ Prior says: “There is always a chance that companies will find getting people to work just too difficult in London. It’s not happening yet but it’s certainly on the horizon.”
And while he’s at the Treasury, the capital’s construction industry would love Khan to have a word about whether the South-east’s new runway will be built at Heathrow or not. Aecom’s Flaherty says: “A decision on the new runway in the South-east is vital. The influence of the new mayor could help end decades of prevarication around aviation capacity in the South-east.
Jan agrees: “This needs resolution, whatever the answer is going to be.”