Chancellor must find ‘creative’ approach to finance London transport schemes, say developers

A group of London real estate developers and investors have called on the chancellor to look at new funding models to support the capital’s transport infrastructure.

Ahead of this week’s spring statement, the London Property Alliance (LPA) highlighted improvements could be a catalyst for investment and job creation.

It claimed that the opening of the Elizabeth line had led to 171 hotel openings, 2,666 new food and beverage outlets and 12 museums, and said other schemes which could drive similar growth.

Projects such as the Bakerloo line extension, Euston terminus and Crossrail 2 could help drive growth in the capital’s ‘Central Activities Zone’, which contributes 11% of all UK economic output, according to the LPA.

Despite tube ridership having reached 87% of pre-pandemic levels, Transport for London’s capital programme has not increased at the same rate.

The £1.86bn per year committed for 2022/23 – 2026/27 is equivalent to just 11% of the resources slated for New York state’s Metropolitan Transportation Authority and 44% of that of Paris region’s île de France Mobilités. 

The LPA has called on Rachel Reeves to explore the introduction of additional development taxes, similar to the Mayoral Community Infrastructure Levy which contributed to the funding of the Elizabeth Line.

It also suggested considering business rates supplements within central London, using farebox income to secure debt funding for major projects and introducing mechanisms to accelerate the release of unspent Community Infrastructure Levy.

Alexander Jan, chief economic advisor London Property Alliance, said: “Central London is the most economically productive area in the UK and therefore absolutely critical to the Chancellor’s growth mission.

“The opening of the Elizabeth line brought a huge economic boost but, with London’s population set to reach 10 million in the coming years and amid fierce competition for businesses and talent from Paris and New York, we cannot afford to stand still.

“Government must be bold in providing a clear timetable for the delivery of projects such as the Bakerloo line extension, the new terminus at Euston and Crossrail 2.

“Now more than ever, we need a creative and collaborative approach between public and private sectors.”