My On London 2025…

Plus, a first look at the prospects for the capital in 2026

2025 was the first full year of a Labour government alongside a Labour mayor since 2007. Sir Sadiq Khan had made much of the conjuncture; in his 2024 election manifesto, forecasting the general election victory to come, he proclaimed: “I’m excited about what we can achieve together”.

Looking back at my stories in 2025, there was a clear focus on housing, planning and transport, key concerns for the city, and at first glance a sense that Sir Sadiq’s optimism was misplaced. Many observers suggested the capital had been “short-changed” in the June spending review, while the Budget’s limited support for transport in London, merely allowing TfL and City Hall to borrow the £1.7 billion required for the Docklands light railway extension to Thamesmead, meant larger and equally important schemes left on the shelf.

Housebuilding was grinding to a halt, with the capital’s government target of 88,000 new homes a year looking increasingly out of reach. Without “significant amounts of investment…whether that is affordable housing or transport”, Khan’s planning deputy Jules Pipe warned, the target would be merely “an intellectual exercise”. The mayor made the same point after land at Crews Hill in Enfield was identified by the government for a potential 21,000-home ‘new town’. To get to that number, he said, “transport investment and [rail] devolution…will be critical”.

Meanwhile, homelessness continued to rise. One in 50 Londoners, including more than 100,000 children, are now in temporary accommodation provided by the boroughs, at a budget-threatening cost of £5.5 million a day. One borough housing director memorably suggested another ‘Cathy Come Home’ moment was needed, recalling the 1966 TV play which prompted the founding of the charity Crisis and the passing of landmark homelessness legislation.

Some good news too though

Whitehall funding for City Hall’s affordable housing programmes was boosted to almost £12 billion over 10 years, and as well as the DLR green light, which will ‘unlock’ some 25,000 new homes, a record four-year £2.2 billion capital allocation was confirmed for TfL.

More affordable housing would be on the way in 2026, Sir Sadiq’s housing deputy Tom Copley asserted. TfL chiefs were also positive, forecasting another break-even, and welcoming the funding required to get vital renewals programmes back on schedule, including replacements and upgrades for veteran stock on the DLR, Piccadilly Bakerloo and Central line. The government pledged too to work with the mayor on “options for innovative financing to support the delivery of infrastructure projects in the capital” in the future.

There were other optimistic signs too; overall demand for visitor accommodation back above pre-pandemic levels, driven by growth in domestic demand - Brits clearly not convinced by all that “crime-ridden hellhole” rhetoric, and research showing the capital’s 545 retail centres bucking the high street misery trend, to mention just two.

But “radical” action needed on housing

Private housebuilding remained in the doldrums, with serious consequences for the numbers of affordable homes required from developers alongside their market schemes, notably via Sir Sadiq’s flagship policy offering a “fast track” through the planning process in return for 35 per cent affordable housing.

With some 300,000 homes on schemes with planning permission but increasingly deemed “unviable”, City Hall planning deputy Jules Pipe conceded in September that things had to change. The mayor was working with government on “immediate measures” to kick-start development, he said. Those emerged in November, with a temporary reduction in affordable housing quotas for private development to 20 per cent as their controversial centrepiece.

Time will tell whether they will be successful, with some in the boroughs concerned they amount to a short-term shoring up of private developers’ margins at the expense of longer-term social housing provision, particularly on those stalled predominantly ‘brownfield’ sites. New powers granted to the mayor to decide applications over the heads of council planning committees were perhaps a pre-emptive strike in what could well be a period of heightened tension between City Hall and the town halls.

But the biggest change was undoubtedly the government’s relaxation of Green Belt rules, which in London were rendering almost a quarter of the city’s total land area effectively immune from development. It was a decisive intervention in the long-running debate as to whether London’s increasing housing need could realistically be met within its existing ‘brownfield’ built-up area, and looks to change the planning landscape of the city, and then its actual landscape, significantly.

Sir Sadiq, previously a stalwart Green Belt defender, was on message, arguing that the status quo was now “out-of-date and unsustainable”, with the “extraordinary challenge” presented by the capital’s escalating housing shortages requiring a “radical step-change in our approach”. In May his initial scoping document for his new London Plan, the blueprint for development across the city, pledged to “actively explore” the release of Green Belt land. Deputy mayor Copley put it bluntly: “We can’t meet our targets without Green Belt development.”

Could this herald a new free-for-all in the suburbs, with the new government policy offering a “once in a generation” opportunity to get building”, as leading planning barrister Zack Simons told a conference I covered in September, urging developers to “strike while the iron is hot”? Or a situation in a few years, as London Assembly housing committee chair Zoe Garbett warned the same month, “where we will still have brownfield sites that are empty and the Green Belt being built on”?

It’s still ‘brownfield first’ for Sir Sadiq, but the progress he is able to make through 2026 on his review of potential Green Belt development, now underway, and then on his new London Plan, will be critical in ensuring that brownfield sites continue to come forward and averting what he himself has said could be a “wild west” of speculative development. Government cash promised for a new “City Hall developer investment fund” to help unlock those currently stalled sites will be significant too.

So, looking back, and forward…

Was Sir Sadiq over-optimistic back in 2024? Overall I’d argue that 2025 has been more positive for the capital than some have suggested. Smaller steps than many would like, with more to be done, on fiscal devolution particularly – the ship of state takes time to turn around - but the groundwork at least laid for progress in 2026, on housing, and on transport too. The big lesson of the past year, perhaps, is the importance of London continuing to make its case with one voice, City Hall, the town halls, business and civil society too. There’s a lot at stake, for the capital, and for the country too.

Happy New Year!

The aim of this substack is to highlight my recent work for Dave Hill’s website On London, with a comment or two on London news more generally. If this is of interest, you can subscribe here, and do please consider supporting On London too here, or via Dave’s substack.