Creative new ways to extract funding contributions from landowners for new transport projects must be explored as a matter of urgency, former Transport Minister Steve Norris has said.

 

He told a rail conference on Monday that securing a proportion of stamp duty on the sale of new developments is not enough to raise the necessary funding for major schemes such as Crossrail 2. 

 

“Is stamp duty the answer? I don’t think so,” he said. “What is missing from the funding of Crossrail 1 is there are a huge number of property owners who will not be selling or developing so will not be paying the Community Infrastructure Levy or Section 106.

 

“All they have done is sit with a building that used to let for £50 a square foot and now thanks to Crossrail it is let for £70 a square foot. This is a massive increase in the value of that asset and the taxpayer gets nothing.”

 

The benefits for landowners around Tottenham Court Road (pictured), where Crossrail is being built, are “enormous” but they will only pay a contribution towards the project if they develop those buildings, Mr Norris added. “So the challenge for Crossrail 2 is to say to land and building owners along the line of route: ‘Look what happened to values when we put Crossrail 1 in’.

 

“We need to develop a formula to charge the existing estate that actually reflects the massive increase in value, whether you develop or not. That is, I suspect, how you might get closer to Crossrail 2 paying for itself.”

 

His comments followed an assertion by London’s Deputy Mayor for Transport Isabel Dedring that Crossrail 2 will look to pay for itself. “It is a fallacy to think that we will be asking the Treasury for billions of pounds. Our starting position is Crossrail 2 won’t be asking for any money,” she said.

 

“When you have a fare box, an existing investment that Network Rail needs to make and on top of that you capture land value properly and business rates from CIL you can make the thing broadly pay for itself. 

 

“We all have to move on from the idea that the Treasury will give us that money,” she added. “We have to start to think about how we can raise money locally. It is do-able.”

 

Mr Norris and Ms Dedring were addressing an event organised to promote a report by the think tank Centre for London that the London Overground branded rail service should be extended further south of the Thames to make better use of existing, but under used, railway networks.

 

♦ Transportation Professional’s February issue will feature a Technical Paper about the Community Infrastructure Levy

 

(Photo: Transport for London)