Londoners will not bear the cost of the proposed £150m pedestrianisation of Oxford Street, Mayor Sir Sadiq Khan has pledged. Speaking to the London Assembly, he expressed confidence in securing private sector funding to transform the western half of the UK’s most iconic shopping street into a vehicle-free zone.
Private sector backing
Sir Sadiq assured Assembly members that investment from businesses would fund the ambitious project. He stated, “The conversations we have had, without breaching confidences, with a number of people in the private sector show there is a big appetite for this initiative. What you will not see is large sums from my budget being allocated to this, as I am confident we will get third-party funding.”
Budget concerns and council tax
The mayor’s draft budget for 2025/26 is due on January 15. It is expected to propose raising his share of average council tax bills from £471 to almost £500 per household. However, he emphasised that the Oxford Street pedestrianisation would not come from this budget but from external sources.
The revival of the Oxford Street project, with Government support, was announced last September. Despite this, written questions from Lib-Dem Assembly Member Hina Bokhari regarding the expected cost and timeline remain unanswered.
Mayoral development corporation
The mayor plans to take control of Oxford Street from Westminster City Council and establish a mayoral development corporation (MDC) to oversee its transformation. A map outlining the MDC’s jurisdiction is expected next month, focusing narrowly on Oxford Street rather than the broader West End.
Sir Sadiq explained, “The first step is to redesignate the road from council ownership to TfL ownership. This involves consultation, and we’ve allocated funds for this in the 2025/26 budget, along with setting up the development corporation.”
Challenges and timelines
Experts believe establishing a mayoral development corporation could be a lengthy process, particularly if it involves tax-raising powers similar to those used to fund the Northern line extension to Battersea Power Station.
Professor Tony Travers of the London School of Economics noted that compulsory purchase powers might be necessary for land assembly, which could lead to conflicts with Westminster City Council and local residents. “Without land assembly powers, development risks stalling, as everyone waits for someone else to act,” he said, citing the 40-year delay at King’s Cross as an example.
Professor Travers added that a tax increment finance (TIF) arrangement, which relies on future increases in property tax revenues, might be needed to secure private investment. Effective leadership and ministerial support would also be crucial to ensure the success of the MDC.
Precedents and future development
London already has two mayoral development corporations: one at Old Oak Common and another at the Queen Elizabeth Olympic Park. However, the planning powers of the Olympic park MDC have been returned to its constituent boroughs.
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Another MDC is expected to be established at Euston to oversee the HS2 station’s construction and the area’s broader redevelopment. The Government has indicated that it will retain control over the Euston MDC’s constitution and membership, prioritising ministerial oversight over City Hall or local council leadership.
A path forward
Despite the challenges, Sir Sadiq remains optimistic about the Oxford Street pedestrianisation. The project aims to revitalise the street, improve air quality, and enhance the shopping experience for millions of visitors.
He highlighted the necessity of collaboration: “This project represents an opportunity to bring together public and private sectors to create a world-class pedestrianised area. It will take careful planning, but I am confident we can deliver this transformative vision for London.”
As the city awaits the mayor’s budget next week, Londoners can expect further details about the funding and timeline for this landmark initiative. For now, Sir Sadiq’s pledge ensures that the financial burden will not fall on residents, setting the stage for a significant step forward in urban development.
