Amrin Golam
GCHU Intern and MSc Nature, Society and Environmental Governance student
Email: gchu@kellogg.ox.ac.uk
From urban planner Ebenezer Howard’s 19th century vision of Garden Cities to post-WWII construction of New Towns, the UK government’s aspiration of creating urban spaces which balance housing, employment and green space, has a long founded history. In theory, these settlements promise an idyllic solution to increasing housing shortages and urban congestion. In practice, however, funding has proved to be a consistent challenge. Reflecting on past obstacles and adopting emerging strategies, provides a pathway to fund the next generation of sustainable urban developments.
Learning from the Past
The development of Early Garden Cities such as Letchworth in 1903 and Welwyn in 1920, aimed to utilise a fully self-financing model which relied on private capital and land value capture mechanisms. However, over the years, stakeholder priorities shifted away from the initial philanthropic motivations behind Garden Cities; proving this self-sustaining model difficult to maintain. Ultimately, government intervention became necessary, as seen in Welwyn Garden City, where public funding was required to build working-class housing.
New Towns, developed in response to post-WWII housing shortages (for example Milton Keynes), utilised a different approach, depending mainly on centralised, government funding. However, large initial investments with slow early returns led to significant debt in their early years. Furthermore, reliance on government funding made these projects vulnerable to shifting political priorities. This has particularly been the case since 2010, with austerity measures constraining government support in financing large-scale developments.
The key takeaway? Funding Garden Cities and New Towns requires a multi-faceted financial strategy which addresses three core challenges: diversifying funding sources, acquiring initial capital investment, and ensuring long-term financial sustainability.
Financing Tomorrow’s Towns and Cities
1. Diversifying Funding Sources
Although, no single stream of funding can fully replace centralised government support; the inclusion of varied funding sources such as public, private, and community-driven investments can reduce risk, and ensure long-term growth. Key emerging approaches include:
- Public-Private Partnerships (PPPs): Merging private sector expertise with local government support distributes financial risks, and can therefore be instrumental in urban development, as seen in projects like St Katharine Docks.
- Parks Trusts & Community Funds: Trusts which are locally managed can help with the maintenance of green spaces, reducing the financial strain on local authorities. Successful examples include the Milton Keynes Park Trust, which manages 5,000 acres of the city’s green spaces.
- Business Improvement Districts (BIDs): Increasingly studies are showing that BIDs can provide a dedicated, localised stream of funding. This is independent from the government, and allows businesses to invest in local urban developments including green infrastructure. In London, BIDs have already successfully leveraged private investments for the benefit of their local community.
2. State Investment Banks
A key financial barrier in developing both Garden Cities and New Towns is securing the initial capital investment that is needed for land acquisition and infrastructure. The establishment of a state investment bank could address this challenge, since it overcomes this initial obstacle by deploying private finance, thereby funding essential early stages such as land assembly and infrastructure. For example, the BNG bank in the Netherlands, successfully financed the initial development of the city Vathorst. A similar UK institution could provide essential initial capital for new towns and garden cities, reducing reliance on short-term, high-risk investments.
3. Cooperative Land Banks
As traditional land value capture models struggled to prevent speculation and to maintain community benefit as its primary goal, the cooperative land bank model provides a modernised self-financing model which addresses these pitfalls for future Garden City developments.
This system includes:
- Dual Land Tenure System: Land is collectively owned by the community, while residents and businesses hold long-term leases of buildings. Community Land Trusts (CLTs) exemplify this system, with non-profit organisations owning and managing land for the community’s benefit. The Dudley Street Neighborhood CLT in Boston, for instance, owns 30 acres of land, which it leases to local businesses and affordable housing cooperatives, thereby protecting local residents from displacement.
- Reinvestment Model: Revenue generated from land leases is reinvested into infrastructure and public services. This approach is successfully implemented in the HafenCity project in Hamburg, where profits from land sales and leases are used to fund the city’s development, including public transport and flood protection, reducing reliance on external investors.
- Community-Driven Governance: Residents are stakeholders of the cooperative bank, rather than external investors. This ensures that governance remains community-driven, preventing speculative land grabs and promoting continued reinvestment into local infrastructure. Although there are few direct examples of this model, community-run banks like Banco Palmas in Fortaleza, Brazil, offer a similar framework. Banco Palmas reinvests its profits into local projects, keeping capital circulating within the community rather than being extracted by external stakeholders.
The integration of these three components, positions the cooperative land bank model as a promising approach for long-term affordability and community empowerment – both being essential for the next generation of sustainable urban settlements.
The Future: A Balancing Act
Creating sustainable Garden Cities and New Towns requires carefully balancing financial resilience with social and environmental goals. The development and consequent success of these settlements depend on their ability to blend diverse funding sources and innovative financial mechanisms. This approach paves the way for thriving sustainable urban developments in the UK.