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Crossrail funding moves a step closer

The Mayor of London, Boris Johnson, has published proposals for consultation that would, through the planning system, seek contributions from most new developments in the capital towards the costs of delivering Crossrail. These will form part of London’s share of the funding package for the project agreed between the Mayor and ministers.

Crossrail, will, it is claimed, bring significant benefits across the capital, improving the transport system and creating thousands of new jobs. It is estimated that every London borough, not just those on the Crossrail route, will see an annual boost to its economy ranging from £15 million to £115 million. It will support development in key parts of London, including the West End, the Isle of Dogs and the Thames Gateway.

New powers given to the Mayor under the 2008 Planning Act allow him to use the planning system to raise money for infrastructure improvements needed to develop an area through the setting of a ‘Community Infrastructure Levy’. It will be collected on new developments which are approved from the Spring of 2012 aiming to raise £300 million.

This is a rough-and-ready way of using land values to pay for infrastructure, but it is precisely the wrong way of going about the task.

It is not just new developments that will gain, and in any case, what exactly is a “new” development. And it is impossible to determine where the scheme gives the greatest benefits and what those benefits are worth. Were a system of land value taxation put in place as the Campaign advocates, some or all of the benefits of schemes such as Crossrail would automatically be captured.

A further point in relation to Crossrail should be a matter of concern. There are obvious gains across the section of route between Paddington and Stratford. But there must be doubts about the benefits of extending towards Shenfield in the east and Reading in the west. Indeed, the transfer of outer suburban routes to Crossrail will in many instances lead to a worsening of the service. Passengers will be forced to travel long journeys in trains designed for the crush-loading conditions of central London, which will need plenty of clear floor space and not many seats. And experience shows that when separate networks are joined, there is a decline in reliability as disruption in one network is transferred to the other. One of the best tests of the worth of an infrastructure project is how much land value it generates. However, until a system of land value taxation is put in place, the necessary data for assessing such matters will never be collected.