Hindhead tunnel – profit at both ends
If ever there was a perfect example of how improved infrastructure increases land value in the surrounding area it must be the Hindhead road tunnel on the A3 trunk road in Surrey.
Transport Secretary Philip Hammond officially opened the tunnel yesterday. It will be the longest non-estuarial twin-bore tunnel in the UK, and has been built to tackle congestion and improve safety on this busy route which carries an average of 28,400 vehicles per day between London and Portsmouth on England’s south coast. It cost the taxpayer £371m.
It was reported that Jeremy Hunt, the government’s Culture, Media and Sport Secretary, said, “Hopefully this tunnel will help to bring new business opportunities and jobs to Portsmouth. With easier transport through this area more and more people are going to want to invest in the city.”
We hope so, too.
But we also learn that for homeowners it’s jackpot time with house prices south of Hindhead likely to rise by at least 5%. A Grade II listed house bought for £650,000 in 2003 is on the market for £895,000 – a 37% price rise. One estate agent expects the average uplift in property values in surrounding towns and villages south of the tunnel to be 15% to 30%.
Yet again we see taxpayers money used to improve infrastructure that has the immediate effect of increasing land values and providing an unearned increment for a fortunate few. So along with the community benefits land and house prices will be more expensive, it will make it even more difficult for people, especially first time buyers, to establish a home and pay the mortgage. An improvement?
Rail improvements
It is not just new roads that enhance the attractiveness of towns and villages, and push up property values. The £41.7m rail improvement between Kemble and Swindon will cut journey times between London and Cheltenham by 20 minutes. And the £75m East London Line extension (total cost of the complete extension £33bn) linking Highbury & Islington with Crystal Palace has pushed up property prices over a swathe of southeast London.
All this is good and necessary. We want more infrastructure improvements. We want more opportunities to encourage employment, wealth production and prosperity. But where should the funds for this national investment come from?
We make no apologies for continually pointing to the benefits that could be achieved if, instead of taxing wages, production, savings and profits the state collected the annual rental value of land – a reform that would return to the community the value created by the community. Until the nation understands this simple expedient we shall continue to pay high taxes to fund state services and infrastructure, thus perpetuating the uneven distribution of wealth and widening the gap between the rich and the poor.