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More land value the community won’t get

Construction of Crossrail has now started. This new deep level underground railway will run beneath central London between Paddington and Stratford, with links to Heathrow Airport and Maidenhead in the west, Shenfield in the east and Abbey Wood in the south-east. The cost will be £15.9 billion and the line is due to open in 2017. It will create all sorts of new commuting opportunities, as a recent article in the London edition of Metro explained.

“Needless to say, properties near the new rail link will be highly sought after and priced accordingly. However, there are many affordable housing opportunities along the route but to see the most benefit you need to buy now and plan to live in them for some time.”

All sorts of run-down areas will become attractive once the new services start. The Metro article refers to West Drayton, Stratford and Romford, Canning Town and Slough, where developments are already popping up, ready for purchasers to sit on and wait for the value to go up.

Naturally, the article does not invite the reader to think about how all this added property value has suddenly appeared. This is yet another example of public investment putting money into private landowners’ pockets, with a meagre return to the taxpayers who pay for the project in the first place. With no prospect of clawing back the value created, it is not surprising that the Treasury is reluctant to invest in infrastructure of this kind, with the result that systems suffer from chronic congestion.

Whether Crossrail is good value for money is another matter. The Campaign does not take a view on matters of transport policy, but £16 billion would pay for a lot of light rail or tramway mileage on the ground rather than under it. Would that be a better investment? It is difficult to judge, given the inadequacy of cost/benefit analysis. In our view, a better measure of external benefit is the amount of added land value generated by a scheme, relative to the initial investment.

Beyond that, there is the question of whether “predict and provide” is a sound basis for transport policy. Congestion in the South-East of England is to some extent a natural consequence of its geographical advantages, but some of it is due to the tax system which bears disproportionately on marginal locations and can make it difficult or even impossible to run viable businesses there.