A new report has recommended an “innovative” funding model which could unlock £4.5 billion for new transport projects.

An adaptation of the financing mechanism which helped deliver the Battersea branch of the Northern Line in 2021 could unlock billions in new transport infrastructure investment.
According to a new report by business campaign group BusinessLDN and multi-disciplinary professional services consulting firm WSP, the model would help drive additional development to boost UK-wide growth.
The report titled, ‘Generating Land Value to Grow London: A New Residential Funding Approach’, recommends building on the tax increment financing (TIF) model.
The model allows borrowing against future increases in tax revenue resulting from infrastructure projects in order to finance those transport schemes.
Through the The Northern Line extension, the Greater London Authority (GLA) was able to borrow against future increases in business rates amongst firms benefitting from the extension to support its delivery.
The report recommends evolving the framework to create a residential TIF model, calling on the Government to empower the GLA to borrow against, and retain, a proportion of future increases in stamp duty and council tax.
This would go to finance transport projects which directly drive those specific, additional increases.
According to the report, this would reduce the call on public investment for transport infrastructure in London, in turn freeing up extra spending for other parts of the UK.
The residential TIF model could raise as much as £4.5 billion over 25 years to support delivery of:
- The proposed extensions to the Docklands Light Railway to Thamesmead
- The Bakerloo Line to Lewisham
- The West London Orbital extension to the Overground
The report argues it will unlock sites for more than 100,000 new homes and create over 10,000 new jobs.
TfL’s investment in its national supply chain is estimated to have been £5.9 billion in the 2022/23 financial year alone.
John Dickie, chief executive at BusinessLDN, said: “Against a backdrop of stretched public finances, the Government needs to consider innovative approaches to get shovels in the ground.
“Letting local government borrow against the future tax revenues that investment will generate, to fund that investment in the first place, is a common-sense way of supporting growth.
The report also recommends that the Mayor be granted powers to utilise the new residential TIF model, alongside the existing commercial TIF framework, with the freedom to bring the two mechanisms together according to the requirements of different locations.
With local authorities facing significant pressure on their budgets, the report highlights the model would only draw a proportion of the additional future council tax on new development resulting from transport infrastructure rather than using existing income.
It also highlights other sources of funding that would be needed to share the risk for projects, including Section 106 agreements and the community infrastructure levy.
Chris Whitehouse, Technical Director at WSP, said: “Unlocking the value of land and property created by better transport connectivity is key to delivering the homes and infrastructure the UK needs.”
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