Diving into the Fleet Part 5: The Canary Wharf Years

Competition between the City and Canary Wharf, Conservative party politics and the rise and fall of one of the world’s largest property developers all helped define the Jubilee line as we know it today. Jonathan Roberts and Long Branch Mike explore the relationship between the Jubilee line Extension and the Docklands and the near-forgotten plans to build the ‘Waterloo & Greenwich’ – London’s first privately-funded Tube since WW2.

In the 1970s and early 1980s no-one could come up with a justification for high density new development in the Docklands that would support extending the Jubilee Line there, as we have seen in Part 3 of this series – neither successive governments of different levels, nor property developers.

With the benefit of hindsight, it seems that planners and politicians failed to see the potential for major commercial office development only 2½ miles from the highest valued square footage sites in Britain, the City of London. That is, approximately the same distance from the Bank of England to Hyde Park. In a way the perceived distance of the Docklands was much greater due to the east of the City traditionally being physically and socially undesirable, although everyone was probably guilty of this thinking at the time.

In addition to the six major influences on transport planning in the London region in the 1980s that we looked at in Part 4, an additional one came out of left field. Oddly enough it was the largest catalyst for Docklands regeneration and it required much more density than any extant plan had projected.

Banking deregulation

To understand why Canary Wharf was first proposed, why such density and size of development was suddenly and unforeseeably required, and why the Isle of Dogs was the ideal location, it is necessary to understand why and how the financial industry drastically changed in the years immediately preceding.

The Canary Wharf development was predicated on two assumptions: that financial deregulation would lead to a large increase in financial services’ employment in the City of London; and that the ‘Square Mile’ would be unable to provide sufficient office space with adequate trading floor sizes to accommodate this growth.

In the 1960s the Square Mile was the world’s preeminent international financial centre, as London continued to have a major presence in global shipping and insurance, and the City’s financial institutions maintained its core role as financial intermediary between savings and government borrowing. In addition the City continued to capitalise on its reputation of trust, its concentration of expertise and its political stability, to become a European currency and capital trading centre. It also developed into an offshore banking centre for many countries and currencies, most notably for oil producing nations. Moreover the City was also relatively independent from the declining British domestic economy.

Indeed London’s financial services exploded as an offshore banking centre with foreign banks and securities firms, going from 135 in 1968 to 491 in 1986, more than tripling in less than 20 years. This had been aided by more restrictive US banking laws, which were less attractive to the international syndicated loan market, and especially to European banks.

But the largest increase was the Big Bang of British banking – the Office of Fair Trade’s banking reform of 1986. A ‘merger mania’ of City financial firms resulted from Big Bang of financial services deregulation, which in turn drove the need for larger, flexible, and IT-serviced office space.

In physics, the microscopic properties determine the macroscopic behaviours. Similarly, what were thought to be isolated changes to banking reform, lending requirements, and financial services’ information technology spawned the need for vastly more financial office space. Developments in information technology had accelerated throughout the 1970s and early 1980s to such an extent that most existing City buildings were becoming inadequate to accommodate IT in the ways in which modern office users, particularly bankers, demanded. Bankers were starting to need the most up-to-date, automated quotation systems and a whole range of peripheral electronic services.

This drove the need for buildings with high ceilings to accommodate raised floors, or false ceilings to house an effective cable management system. There was also a need for large, deep and open floor plans to accommodate dealing floors and to allow the maximum flexibility in layout as organisational and technological needs evolved.

By 1985 this building type became known as ‘large open area floors’, or LOAFS, that would allow a large number of market traders to work together in a single space within line-of-sight, with the electronics and air-conditioning that a modern trading floor required.

To get that extra space, banks began looking to the City’s fringes where some brokerage houses had already located, such as the ultra-modern Broadgate development. Larger US banks were far less location-sensitive than British and other foreign banks, having relocated to Aldwych, west of the City.

Canary Wharf was proposed on the assumption that the City would require an additional 12 million square feet of financial services office space to accommodate anticipated expansion in sector employment, which could not be accommodated in or near the Square Mile. Deregulated bank lending requirements also freed developers from the conservatism of traditional Square Mile lending institutions who considered non-City locations such as the Docklands too risky for long-term investment.

LDDC planning was piecemeal and incremental. The construction of ‘red brick roads’ in the new ‘Enterprise Zone’ (EZ) began in 1981. These were locally known as ‘Yuppie roads’, as they were all very expensive and single lane. Much of this road network had to be dug up and widened only 5 years later to accommodate the far greater volume of traffic of the Canary Wharf development, which lead to congestion in the area.

A new development arises

It was the EZ and the Docklands Light Railway (DLR), combined with a rate paying holiday, which convinced Credit Suisse First Boston and Morgan Stanley International (both US based merchant banks) to bring in Texas developer G. Ware Travelstead (his real name) and his colleagues in 1985. They were tasked with creating a plan for the initial Canary Wharf business development which would provide additional office space and trading floors hosting 50,000 workers for financial companies close by in the City, but at much cheaper rents. Travelstead quickly earned the nickname ‘G Whizz’.

The Travelstead consortium started off by funding the DLR City Extension to Bank, as it was quickly recognised that without decent rapid transit access, the 2½ miles would become a millstone rather than an opportunity. In true Texan (and Thatcher) style he also planned a series of multi-level car parks that would have loomed over the DLR.

Travelstead, however, had not planned for other aspects of infrastructure, whether that be housing and related population facilities, or sufficient road capacity for the multiple thousands of cars envisaged. He had also not worked out how to transport the 50,000 construction workers necessary to build the 10 million-plus square feet of office, financial trading floors, shops, pubs and restaurants he had planned. Roads were left to be planned, designed and paid for by the Government.

Travelstead’s first phase of Canary Wharf was to cost £1.5bn, but he had trouble raising the financing – especially once the City realised the scope of the Docklands threat and relaxed its own restrictions on new development.

The Canadians to the rescue

Taking advantage of Travelstead’s financing troubles, the Reichmann brothers and their Canadian development company Olympia & York (O&Y) swooped in and took over the Canary Wharf development in July 1987. They were aided by a sterling reputation as a developer that had built large, high quality office tower projects in Toronto, New York and Tokyo both on budget and schedule, which was almost unheard of at the time. O&Y were also the largest developer in the world, worth $20bn at their peak in the 1980s.

O&Y presented a bigger vision. They increased the scale of Canary Wharf to 65,000 office workers and other financial services companies started to become interested in a serious way. Their expanded Canary Wharf development was uniquely positioned to take advantage both of Travelstead’s predicament and the City’s need ‎for vastly more space, having large LOAFs. Contemporaneous City rents were approximately £70 sq ft, whereas O&Y was proposing larger, brand new office spaces at half that, £30-40 sq ft. A powerful incentive indeed to bankers. Paul Reichmann envisioned the development as London’s ‘Wall Street on water’.

In 1983, O&Y and investment bankers Salomon Brothers had pioneered the use of mortgage-backed securities for commercial properties to obtain better rates than available through the banks and to limit potential liabilities, wherein only the mortgaged building could be taken over in case of default. A representative of Lloyds Bank, one of O&Y’s lenders, stated:

We weren’t investing in Canary Wharf, we were lending to O&Y, the biggest property company in the world.

This demonstrated how little the banks evaluated the risk of what O&Y were doing with the money. Financing was further complicated due to the high interest rates during the mid 1980s, averaging 10% or more, set by the Government to stem inflation.

O&Y even contributed £148m to the DLR, £68m of which substituted for the G Ware Travelstead Group’s development and transport obligations in 1987. So the Government had great confidence in O&Y’s commitment, financing and foresight. What helped them just as much though was Paul Reichmann’s personal affinity and relationship with then-Prime Minister Margaret Thatcher. They shared the faith that private industry could do things much faster and better than government. She lit the fire under various Departments to make things happen. Canary Wharf, she believed would be the shining star of private enterprise triumphing over government bureaucracy.

Lack of centralised Government planning

With the GLC’s abolition in 1986 (which we described in Part 2) political transport planning (such as the railway to busway schemes and the rail privatisation bubbling below the surface), meant holistic transport planning was dismantled in favour of planning individual lines under political direction.

It was clear to most people that even the DLR City extension to Bank, and a fourfold expansion in DLR capacity, would never be able to handle all the passengers betwixt the London catchments and the new financial area once it was fully built out. Nor was the DLR extension to Bank sufficient to market Canary Wharf as an accessible location, although it might work as a link to back offices distant from the City. O&Y wanted the head offices themselves to move to their development.

Indeed upon taking over the Canary Wharf development, O&Y had quickly realised that a better public transport connection than the DLR would be needed between central London and the massive new development. At the 1987 opening of the railway, locals called the articulated twin-car operated line the Dear Little Railway, so underwhelming did it appear. This impression was not helped by the fact that the DLR initially only went to Tower Gateway at the very edge of the City.

The City fights back

The City viewed Canary Wharf as a competing location for global financial services. The new development was perceived as an economic threat, as noted above, as well as a political threat to the City Corporation’s raison d’etre as a Corporation rather than a standard local authority, which was its benevolent oversight of London’s financial hub.

The Corporation of London’s John Watson stated the City’s initial position:

The City exists because it is functional to have organisations clustering together. We saw Canary Wharf as dysfunctional because it was so far away. You couldn’t just hop in a cab and be there in few minutes, or walk there in ten minutes.

To counter this, Canary Wharf’s original developers had insisted that the destination of the Docklands Light Railway City extension be Bank station, next to the Bank of England, and invested another £80m to extend the DLR to Bank later in 1987. The perception that G Ware Travelstead had wanted to project was that Canary Wharf was an extension of the City, ’10 minutes from the Bank of England’.

The City Corporation unsuccessfully opposed the 1987 DLR City Extension Bill, arguing that the Bank station destination made no sense in strategic transport terms. But there was no strong strategic plan then in force to back this up.

From the beginning, the LDDC’s primary goal had been to attract quick (mostly likely low-density) development and to use roads to allow “flexible planning”. However that rapidly went out the window once high density office towers were being planned.

Unfortunately, the most recent plan for heavy rail service in the area had been the Jubilee Line extension, whose Parliamentary powers the GLC and Government had allowed to lapse in 1982, five years earlier. There was no planned heavy rail route still on the books, as the government had been happy to let the private sector set the agenda for development and supporting transport needs.

The 1988 Bakerloo Extension Proposal

To support their expanded development, the Reichmanns were very clear what they wanted – a new direct tube from London Bridge and Waterloo, to ferry high value senior and middle banking executives directly to Canary Wharf from their Hampshire, Surrey, Sussex and Kent homes, via new interchanges at the southern railway terminals. Better access to Essex commuters was also desired, via interchanges in East London.

The Reichmanns’ first proposition to achieve this, in early 1988, was to extend the Bakerloo Line from Waterloo to Canary Wharf, via either London Bridge or Bricklayers Arms. This was to have then continued on two branches: one to Stratford and possibly Tottenham Hale, and the second via East India/Brunswick to the Royal Docks. Alternative alignments included an extension of the Bakerloo from Elephant & Castle.

It was soon realised that considerable political and practical difficulties would ensue from the diversion of the Bakerloo away from its present terminus at Elephant and Castle, if London Bridge were to be served, so this idea was quickly dropped.

The first private Tube line in 60 years?

The Underground Group’s Piccadilly Line extensions in the late 1920s and early 1930s had been the last true private Tube schemes (benefitting from some Government capital subsidies).

As we shall see below, it was the absence of a top priority railway scheme in the Central London Rail Study (CLRS), then underway, to serve Canary Wharf adequately from main line interchanges, that led the Reichmann brothers to get actively involved in transport planning. In addition they were not willing to wait for any government-led scheme, which might not deliver what they needed within the developer’s own tight timescales.

As a result O&Y created their own transport department (involving Jim Berry, Michael Schabas and other advisors) to start planning a private sector Tube line to connect Canary Wharf with central London. They proposed their own £400m Waterloo & Greenwich Railway along a south bank corridor, with 4-5 car trains and a limited number of stops:

• Waterloo
• Southwark
• London Bridge
• Surrey Quays
• Isle of Dogs (just north of the current Canary Wharf station)
• Blackwall Point (now North Greenwich station)
• Greenwich Parkway
• Westcombe Park (terminus and depot)

There were also two possible branches:

• North from Blackwall Point to Stratford
• East from Greenwich Parkway to Woolwich Arsenal and Thamesmead

This was incidentally similar to a proposal in the 1943 County of London Plan for an Underground line between Waterloo, London Bridge, and Surrey Docks.

In effect, the W&GR would be a longer, higher capacity equivalent to BR’s Waterloo & City line, to shuttle workers instead between Waterloo and Canary Wharf. As many financial workers already used the Waterloo mainline commuter routes then the Waterloo & City into the City, the W&GR was seen as vital to transport many of these same workers just as easily and quickly to Canary Wharf, and this in turn would be crucial to attracting financial companies to the Docklands.

This was a highly planned scheme, not a ‘seat of pants’ project. It had full project justification and validity in achieving the extra employee connectivity required commercially by Canary Wharf, within defined cost limits. One of O&Y’s goals was that 80% of work trips to the development were to be made by public transport. It is interesting that one of the bastions of capitalism trumpeted by the Government realised the cost effectiveness advantage of the Tube over road transport for its chosen form of high density development.

However London Regional Transport (LRT) quickly realised that an isolated Waterloo & Greenwich Railway line would connect with few other lines and would do little to improve the Tube network for the rest of London. Even though O&Y stated that the W&GR could be extended west to the West End as far as Paddington, this appeared to be unlikely, given the tunnelling costs in central London, if it had to be funded wholly by the private sector. The effective capacity of a 4-5 car tube service might also be too limited to be much practical use on a longer corridor, compared to conventional full-length trains. With hindsight, the W&GR would absolutely have required major reconstruction to accommodate the scale of Tube travel demand now seen to and from Canary Wharf.

As the W&GR was to be the first major Tube proposal since the King’s Cross fire of 1987, new tunnels and stations had to now meet more demanding safety criteria, including larger diameter tunnels with a walkway for emergency evacuation, and larger stations with secondary means of escape from different parts of each station.

The Central London Rail Study

At the same time as, and independent of, the W&GR scheme being worked up, LRT, BR’s Network SouthEast (NSE) and the Department of Transport (by now, DoT) jointly commissioned the Central London Rail Study (CLRS), in 1988.

For the first time the detailed, network-based 4-stage London Transportation Study (LTS) model was used, recently developed by the Greater London Council (before its demise) and the Department of Transport. It was based on household & public transport passenger survey data, detailed network information and transport user cost estimates. The model was then validated by passenger and road traffic counts.

An additional model, RAILPLAN, was also developed to better model passenger choice between alternate rail routes. Unfortunately, like most models of its time, the LTS could not derive the potential development benefits of any scheme. Either you modelled a fixed network and varied the demand, or varied the network against a fixed demand! (It took until Crossrail, to move those modelling goalposts in Britain and allow live assessment of development and network variables, to judge relative costs and benefits. Once more it was the re-incarnated Canary Wharf Group who stimulated that, for self-evident reasons.)

Even in 1988, it was clear that a gap was emerging between the increasingly sophisticated and rigorous transport appraisal, demographics and modelling methods used by transport planners, and the absence of London region planning priorities, since such ‘overview’ institutions had been abolished. In the late 1980s, with the prevailing political rules and desire for third party funding support, this meant that it was still a line versus line situation to gain project authority, and that you needed a good development case to underpin the preferred railway and for a developer to commit to a significant degree of project funding.

The CLRS however ignored this pragmatic inter-relationship, and focused primarily on the abstract meritoriousness of various railway projects designed to improve travelling conditions and capacity to, from and within Central London. Ultimately this proved to be the main reason for the undoing of the CLRS recommendations, because its prioritisation ignored the relative ability to fund each scheme (including private sector contributions), and the different political impetus associated with each project.

CLRS released – Mark 1, January 1989

The initial CLRS investigated a number of other new Tube lines and extensions, including a number of Jubilee Line extension options:

• To Liverpool Street and Whitechapel “to relieve overcrowding on the Central Line, is an obvious possibility… via Aldwych, Ludgate/Blackfriars to St Paul’s, Liverpool Street and Whitechapel. Feasibility of the scheme has been broadly established though the pace of development of buildings with deep foundations in the City is such that unless a route is safeguarded soon [which it wasn’t]… [but] The traffic levels forecast for the scheme were relatively low, although significant relief of the Central Line was predicted..”
• To Stratford and Ilford “since the Central Line is overloaded for much of its length in East London”.
• To turn south after Ludgate to terminate at London Bridge.
• To take over the Leytonstone to Hainault section of the Central Line.

In this CLRS, new lines and extensions evaluated were essentially driven by operational considerations and LT’s own maps of overcrowding on the Underground. However BR didn’t possess any equivalent – it had only its cordon counts.

This initial version of the Central London Rail Study released in January 1989 recommended building:

1. Crossrail (now called Crossrail 1) as the top priority to relieve the Central Line
2. Chelsea-Hackney northeast-southwest line (aka Chelney but now called Crossrail 2, and now foreseen as a regional railway not a Tube)
3. Jubilee Line extension via the City towards East London and Ilford

This study also determined that the Thameslink Metro scheme (soon to be renamed Thameslink 2000), to increase capacity on that recently opened route, had the highest benefit-cost ratio (BCR) of all studied schemes.

The Study was ambitious in advocating a sequence of new large-scale railway projects against an historic backcloth of peak-time rail commuting demand having not yet exceeded the volumes last seen in the 1960s and early 1970s (see the commuting demand table in Part 4). It was bold forecasting to argue that Central London needed another four rail projects, though justifications were set out for each. Hindsight again shows the study was correct in adopting a high growth trajectory for travel demand (ignoring some routeing details), though even so it under-estimated some matters – for example it didn’t allow for the pace of change and growth in some localities, including Docklands.

The Free Market

The reason why this initial Study slid so rapidly below the horizon lies in the wording, which said that nothing would be done unless it was financially viable. The main constraint identified in the CLRS was funding, to which the government of the day’s remedy was their policy whereby the users of public transport schemes were to pay for the benefits they received from the improvements.

Specifically, the CLRS proposed that developers who benefit from public transport schemes should voluntarily contribute toward them, as negotiated with the transport operators. Should the revenue increase from passengers and developer contributions fail to cover a scheme’s costs, the government would then consider providing a grant not to exceed the value of the external benefits. (Meanwhile it was understood that roads would not be subject to the same funding restriction…).

This institutionalised the pragmatism noted above. That was soon to be put into practice, but not quite in the way the government liked.

The CLRS echoes the earlier government response to the 1987 House of Commons Transport Committee report on rail subsidies, which proposed injecting private capital into the national railway system. The government was a few years later to propose a single agency to own the track and infrastructure (eventually becoming Railtrack) whilst franchising train operations to various private companies.

Parliamentary Manoeuvres in the Dark

In parallel to the CLRS, the enabling Parliamentary legislation for the W&GR was drawn up in an acceptable way for that day and age, via a Private Bill, not as a government-backed Hybrid Bill. Although it was prepared by London Transport, who were the Private Bill experts for new Tubes in London, O&Y underwrote the bill’s £2.5m preparation and submission costs. Prime Minister Thatcher supported the new development quarter for world finance, in principle, provided O&Y built the transport link.

O&Y deposited the W&GR plans in Parliament in November 1989, using the normal Parliamentary rules, and were then only a week (under the same rules) from depositing the Private Bill which would formally seek the powers to construct, when the Government panicked about a private Tube outside of their control. This was paradoxical, since it was a pro-private sector Conservative government that had encouraged developer initiatives and funding.

There was one major problem for the government. London Transport had just evaluated extending the Jubilee Line in the Central London Rail Study Mark 1 using the latest modelling tools, and had determined it was a low priority, to follow after Crossrail (Crossrail 1) and the Chelsea-Hackney Line (Crossrail 2). However the W&GR scheme and the Reichmanns’ No. 10 connection meant that they could effectively rewrite the priority outputs of the Central London Rail Study that had just been released. Which they achieved.

London Transport’s Perspective

David Bayliss, Director of Planning at London Transport, was interviewed for the book Too Big to Fail: Olympia & York: The Story Behind the Headlines by Walter Stewart, 1993, McClelland & Stewart, and recalled the events, like a Greek chorus commenting on the folly from the sidelines:

Our [LT’s] priority was to get on with relieving the hard-pressed general rail network through two projects [Crossrail 1 and Chelsea-Hackney] which would have brought considerable relief to the historic west end of the city and the commercial centres.
While [the Jubilee Line Extension] was important, we thought that underpinning the existing commercial centres was probably more important than providing a new railway out to Docklands to assist a third commercial centre. We determined our priorities accordingly.
It was supposed to be a bold signal of the way in which government wanted planning to go in the UK, with the private sector leading the way and providing some of the funding…
The weakness was that there was no systematic way of securing the private contribution, and it was done on a haphazard and uncertain basis.”
They [the Reichmanns] had an entry to No 10 Downing Street that overruled everything else.

And everyone else.

Malcolm MacDonald, head of the London Division of the Department of Transport at the time, further explained:

O&Y were driving the whole thing. They got a bill deposited in Parliament before any of the other studies got to the serious phase. The case for other developments was stronger elsewhere, but if they were prepared to fund a study and draft a bill, the government thought they’d make more contributions to the construction of the thing.

Had it not been for the Department of the Environment-led, O&Y-led, pressure, the Department of Transport would have pushed the other proposals. We would have built the Crossrail and the Chelsea-Hackney line, and the Jubilee Line behind those two.

None of this official exculpation from the DTp avoids the reality that O&Y weren’t interested in waiting in a 10 or 20 year queue (nor could they commercially), and that they wanted their railway at the front of the queue, to support their development which had a time-limited ‘build and sell space’ date. It is evident that only through the DoE perspective on priorities, LDDC’s vision and above all O&Y’s own political leverage did a critical game-changer for the whole London economy and for Britain’s ‘World City’ status come to exist – a key part of which was to be a tube extension only rejected in principle within No.10 less than a decade before. (The routeing details – previously via Millwall – didn’t feature in that earlier discussion.)

East London Rail Study 1989

The Jubilee Line Extension (JLE) scheme was conjured up in a great rush via the launch of the East London Rail Study (ELRS) in January 1989, this study being announced only weeks after the O&Y Waterloo & Greenwich Railway Parliamentary plans.

Detailed and rapid optioneering was undertaken to define the practical ways in which a line similar to the W&GR but at a full tube scale of capacity could be interwoven with the rest of the Underground. The W&GR was to terminate at Waterloo from an eastwards direction. The Jubilee Line terminated at Charing Cross from a north-westwards direction. Could they be joined somehow? There was also the Bakerloo at Elephant, which merited another review for an eastward extension.

Some severe Tube contortions were considered to try to marry the Jubilee already heading east under The Strand with the need to serve Waterloo terminus. Avoiding Waterloo would have been much easier, with a cross-river route somehow to London Bridge (possibly interchanging along the way with the Thameslink line via Elephant & Castle), but that did not match O&Y’s requirements for its defined passenger catchments, where Waterloo commuters were a critical ingredient.

Eventually, axing the Tube service to Charing Cross and re-routeing the Jubilee via Westminster to Waterloo was judged the most realistic option. A replacement direct interchange with South Eastern trains, instead of at Charing Cross, was also desired, that avoided overloading London Bridge station. This emerged in the form of a Southwark interchange station. The Thameslink Elephant route didn’t get connected to the Jubilee extension, losing out to the higher priority South Eastern interchange, although the main Thameslink route (Thameslink 2000 was foreseen in the CLRS) could be accessed at London Bridge.

In this way, the Government avoided the embarrassment of a private sector Tube scheme being seen overtaking London’s transport priorities. The Government urgently directed the Department of Transport (DTp) to commission this study, but the work to create it was not performed by London Transport or DTp, but the private consulting firm Halcrow Fox and Associates, supported by Maunsells and Mott MacDonald who prepared the Book of Reference (the mapping and listing of property interests potentially affected by a railway alignment).

Pay to Play Government Transport Policy

Lord Wakeham, the Cabinet member assigned to handle all dealings regarding Canary Wharf, explained the Government’s planning process to Walter Stewart in Too Big to Fail:

The original proposals for the Jubilee Line came out at a total cost which was in excess of the value laid down by the Department of the Environment when they did a cost-benefit analysis. On its own, it would never have been approved. The money would have gone to other projects which were better value for money. However, O&Y undertook to produce in round figures £400 million over a longish period, and we said, ‘Right. Subject to the private sector contribution, the public sector contribution will be forthcoming.’

As part of the East London Rail Study process, the government had initially approached British Gas for a contribution for the JLE to go via their 263 acre site at North Greenwich, as part of the government’s policy to get the private sector to pay for the transport benefits they would receive. The utility said no.

So the Jubilee Line Extension route was initially drawn well north of Greenwich in the planning documents. This quickly got the attention of British Gas. As Bayliss stated in Too Big to Fail: “The route of the line was in effect a bargaining ploy.”

This was really an auction to see which private sector party would offer the greater cash input into a revised public sector Jubilee Line extension. Would the Jubilee go via Poplar or the North Greenwich Peninsula?

The other bidder was effectively a Swedish company who had a major office development northeast of Canary Wharf. British Gas won the auction though by agreeing to pay £25m, but contributed most of this amount in the form of the land required for the North Greenwich station. What the Swedes had offered was never revealed.

Bayliss remarked, “You should not build a system on mere whim and opportunity.”

Whilst having the private sector contribute to transport infrastructure that they will directly and in perpetuity benefit from is a laudable goal, it needs to be a transparent process. Transport agencies also desire to retain control of the goals and route planning, underpinned by solid transport modelling and data.

In this case, O&Y were now going to get the powers for the Tube access and main line connectivity they wanted, so the niceties of where the line ran elsewhere were a secondary matter. However O&Y also had their eyes set on the Greenwich Peninsula for longer term development (as shown by the W&GR routeing), so were probably not unhappy to see the North Greenwich option adopted.

CLRS Mark 1 Out-Flanked – Mark 2, July 1989

The CLRS Mk 2 report was published 6 months later, with the JLE to Canary Wharf jumping to top priority, coinciding with the O&Y push for a Tube there. The Government couldn’t allow itself to be backing the third priority JLE project from its own Mk 1 CLRS.

Events and ‘planning’ had moved quickly. To summarise:

• The Central London Rail Study Mk.1 was released in January 1989, and listed the Jubilee Line Extension as its third priority.
• On 23 January 1989, the Secretary of State for Transport Paul Channon wrote urgently to Parliament to declare that the East London Rail Study had been established: “The study will include Olympia & York’s proposal for a new underground railway between Waterloo and Greenwich peninsula via the Isle of Dogs.”
• On 26 July 1989, the East London Rail Study was published and recommended the Jubilee Line Extension via Canary Wharf.
• Also issued on 26 July 1989 was the revised, second version of the Central London Rail Study, now concluding that, having taken into account the ‘regeneration benefits’ to the Docklands, the Jubilee Line Extension (JLE) via Canary Wharf was indeed the top priority for London.
• On November 16, 1989, Secretary of State for Transport Cecil Parkinson deposited the Jubilee Line Extension private bill to Parliament, and publicly announced that it would proceed at a cost of £1 billion, with O&Y contributing 40 per cent.

Date	Sponsor or Plan	Line Extension	Main Routing	Cost
Mid-1988	O&Y	Bakerloo	Waterloo – (London Bridge or Bricklayers Arms) – Isle of Dogs – (Stratford and possibly Tottenham Hale or the Royal docks)	Unknown
Nov 1988	O&Y	W&GR	Waterloo – (London Bridge or Bricklayers Arms) – Isle of Dogs – (Beckton or Stratford) – Tottenham Hale	£400m
Jan 1989	CLRS Mk 1	Bakerloo	Waterloo – London Bridge – Surrey Quays – Canary Wharf – Westcombe Park [Many routes presented, detailed study deferred to ELRS]	Unknown
Jan 1989	CLRS Mk 1	Jubilee	Aldwych – Ludgate Circus – (London Bridge or Stratford) – (Ilford or Hainault) [Detailed route study deferred to ELRS]	£560m
Spring 1989	O&Y/LT/LUL	Jubilee	Joint team set up to further Jubilee Line Extension design work	–
Jul 1989	ELRS	Jubilee	(Aldwych or Waterloo) – London Bridge – Canary Wharf – North Greenwich – Stratford	£1bn
Jul 1989	CLRS Mk 2	Jubilee	Waterloo – London Bridge – Canary Wharf – North Greenwich – Stratford	£1bn
Nov 1989	Government	Jubilee	LU (Jubilee) Bill 1989 deposited to Parliament	-/td>
Feb 1990	LUL	Jubilee	Project Team established	–
Nov 1990			2nd Parliamentary Bill deposited proposing changes to 1989 Bill
Feb – Dec 1991	Govern-ment	Jubilee		–
1992	Govern-ment	Jubilee	Waterloo – London Bridge – Canary Wharf – North Greenwich – Stratford	£1.8bn
16 Mar 1992	Govern-ment	Jubilee	London Underground Act 1992 receives Royal Assent	–
29 Oct 1993	DTp	Jubilee	Secretary of State for Transport gives go-ahead once private sector funding was secured

Table 1:Heavy Rail Proposals for the Docklands and JLE Parliamentary Timeline 1987-1993

O&Y’s Tube contribution and the real world

O&Y had agreed to contribute the £400m they were to spend on their own Waterloo & Greenwich Railway to the Jubilee extension, provided the JLE was delivered on time and to budget. (Which it wasn’t, by a long way.) The Letter of Understanding stated that O&Y was to contribute £98m up front, then to pay the remaining £302m spread over 25 years.

But because of inflation, according to LT’s Bayliss, the £400m in 1992 prices by the end of the 25 year payment schedule would be worth only £180m. Given that the projected cost of the JLE in 1992 was £1.8bn, this then meant that O&Y were effectively only to be contributing 10% of the total JLE costs, not the 40% that appeared on paper.

Whilst the JLE bill quickly received Royal Assent – the Parliamentary process took only from November 1990 to March 1992 – O&Y was in the midst of increasingly dire financial problems. The property world had suffered internationally with Black Friday October 19, 1987 and its aftermath. The funding leverage that had built the Reichmanns’ empire had relied on stable tenants and rents, and the bankability of O&Y started to fall. Olympia & York survived the initial 1987 hit, but its cash flow started to regress, and was to worsen as they pushed the Canary Wharf development ahead at full pace. This was normal market economics, of course.

It was also clear to all that the entire Canary Wharf development could become a very expensive flop if the JLE were not built.

Thatcher Resigns – O&Y loses its patron

A year after having successfully ambushed the government’s transport planning process to move their development access railway to the front of the queue, a bombshell then dropped on O&Y. Their political patron Prime Minister Thatcher, resigned suddenly on November 22, 1990, the victim of a party rebellion. Her nemesis was Michael Heseltine, erstwhile champion of the Docklands regeneration, and other senior Conservative politicians. However by this time he was interested in foreign affairs, and his rebellion had nothing directly to do with the Docklands, nor did he have any further input on the area or the JLE.

New Government, new rules

The new 1990 Conservative government of John Major was not beholden to O&Y at all, although it was still wedded to the idea that the market should pay for infrastructure. It furthermore knew the extent to which the predecessor administration had massively underwrote Docklands regeneration. The Government was also hearing about O&Y’s increasingly precarious financial state, therefore they would not proceed on the Jubilee Line Extension until O&Y made its initial payment of £98m.

Olympia & York overextends

With Thatcher’s resignation the political strings had weakened. How O&Y could finance its £98m contribution for the extension wasn’t obvious. Having alienated Departments and Ministers by going over their heads to the previous PM, they had few other friends in national government (though there were some), while localities such as Tower Hamlets Council (where Canary Wharf was to be based) were also using their own contacts to keep the scheme alive.

Furthermore, the 1980s’ property boom which the financial services sector helped transform came to an abrupt end in London two years after the October 1987 stock market crash. The rapid fall in commercial property values in London in 1989/90 was mirrored around the world, so O&Y’s global financial morass continued with no relief in sight.

In August 1991, the first tenants began moving into Canary Wharf, many having been bought out of their existing leases by O&Y to help create a critical mass of well-known companies at the development. Moreover, most of these tenants were also provided with less than market rents, some reputedly of ‘sweetened’ deals with four-year rent-free periods. With an oversupply of office space in London as a whole, rents fell to below £10 per sq ft on the Isle of Dogs by this time.

The simple fact is that the real financial world imploded to an extent in the years following 1987. For better or worse it was up to the UK Government to decide whether Canary Wharf should be enabled to proceed towards its target volume of development (in contrast to a small office enclave in the Isle of Dogs, as the first phase of development was already under way). Development go-ahead would need the JLE to be built in order to stand a chance of becoming successful. Alternatively, by not proceeding with the JLE, the Government would pull the plug on what had been Docklands’ rising star – and with it the knock-on risk of pulling the perceptual plug on wider Docklands regeneration.

The end of government support for Canary Wharf

The Conservative government remained true to its free market principles. Despite all that the Thatcher government did do to assist the Canary Wharf development, it did not, post 1987, restrict further City office development, due to its ideological ‘free market’ beliefs and the spectre of strong opposition from its own supporters.

Such a restriction could have made a key difference in keeping office rents higher, sufficient to allow Canary Wharf to continue without financial hardship, and to pay its full £400m obligation to the Jubilee Line. An alternative supportive option would have been to move various government offices to Canary Wharf, and this was explored. However the government made it clear that it would do so only if the price and other merits were competitive with alternative locations. Given the lack of any such offices moving, it is clear that support for such an initiative did not trickle down sufficiently to any Departments.

Even when rents bottomed out at £10 per sq ft, Ministries and Departments did not take the bait to move to Canary Wharf.

On 29 March 1992 O&Y failed to make the initial £98m installment on its £400m contribution toward the Jubilee line extension, and over the following few weeks missed a series of bond and mortgage payments on its New York and Toronto developments, signaling to all the seriousness of their financial problems. On 28 May 1992, laden with ‎£550m of debt to the banks and needing another £600m to complete its first phase of development, as well as fulfill its JLE commitment, property giant O&Y fell into administration.

Former O&Y executives and a few historians blamed the government for letting the entire development down, which might have tided the development over until it became more financially sustainable. Had Thatcher hung on at No 10, she might have followed through on her intent to move the offices of the Departments of Transport and of the Environment to Canary Wharf, whose long-term leases could have made some difference to O&Y finances and stability. However this sounds unlikely at the going rate of £10 per sq ft.

The fundamental point to note is that the structure of UK government is itself a multi-celled ‘free market’, and that leadership at the centre does not guarantee conformity throughout the ‘body politic’. This is something that, today, Brexit is also illustrating only too well.

JLE construction is finally authorised

Transport Minister for London, Steve Norris was involved in trying to define JLE funding in the 1992-93 period when the scheme nearly didn’t survive. Norris had also stated that there were still layers of Government working to keep alive schemes such as Crossrail (after it was nearly killed-off by a 1994 Select Committee decision) against Treasury resistance, who sought to kill it off completely.

The government was also feeling the pressing need for more rail transport to the first stages of the newly opened Canary Wharf development, due to the lack of road and bridge capacity to Isle of Dogs to move sufficient numbers of workers.

However the government only proceeded with the Jubilee Line Extension to Canary Wharf once funding (£175m) flowed from Canary Wharf Group, which acquired the assets of Olympia and York from its Administrator. Two years later after O&Y’s demise some of this funding also later went towards the first round JLE capacity upgrade. So, to the end, it was the money which talked.

The Jubilee Line extension had been authorised by the 1992 London Underground Act. It was the not-very-visible 19 month hiatus between Royal Assent and construction go-ahead when the key ‘go-ahead or cancel’ debates arose and decisions were eventually taken.

JLE built

Construction started in 1993, but was only completed in 1999, over a decade after first promised. As built, the JLE is the culmination of Heseltine’s Docklands initiative, so it is entirely apposite that the emergence of the Tube line was as much a creature of political preferences and priorities as the whole of Docklands redevelopment.

The JLE was essentially a politically-pressurised route, not one that LRT really liked, though hindsight demonstrates it is a very busy line throughout to Stratford, and has comprehensively extended the Docklands regeneration effect into East London ‘proper’. As late as 1992, it seemed to NSE and LUL that there was likely to be sufficient capacity to extend the Jubilee over one of the Dartford loops instead of to Stratford. The BR interest was in reducing train throughput at London Bridge station.

However LRT was able to use part of the routeing of the Waterloo & Greenwich Railway for the JLE, to take advantage of the preliminary design work already done. And much of the JLE route would be on (and under) British Railways Board (BRB) owned land, minimising costly land take from third parties.

The originally planned terminus at Westcombe Park lacked business and a sizeable passenger node, so London Transport was able to have the east terminus moved to the growing transport hub of Stratford – also useful in providing a train depot the other side of Canary Wharf.

As the JLE’s actual construction and innovations have been extremely well documented elsewhere, we shall not do so here.

Enabling the JLE in turn fostered renewed confidence in Canary Wharf as a development. That has led to where we are now in the 2010s, with Canary Wharf and surrounding areas now aiming for a 250,000 working population in a few years’ time, which is a quarter of what used to be the commuter numbers travelling to the whole of central London. Land value rose five-fold in only five ‎years in the epicentre of the Isle of Dogs.

Previously on Diving Into the Fleet

Part 1 – Diving into the Fleet: A look at London’s lost Tube

Part 2 – Jubilee line derailed: 1974-1979

Part 3 – Jubilee line: Getting Conservative 1980-85

Part 4 – The rest of the Eighties