A land value tax should pay for London's new Garden Bridge

The proposed garden bridge. Image: Heatherwick Studios.

By 2018, you should be able to leave London’s Garden Bridge to the north onto Arundel Street. As you leave behind the tourists having a nice day out, or turn away disappointed because the bridge is closed for a private corporate event, you should remember that the biggest winners from the £60m of public funding will be the developers and owners of places like the brand new Arundel Great Court.

This £351m development will feature a new five-star hotel and 151 luxury flats, and could be completed around the same time as the bridge. In their summary of the business case for the Garden Bridge, Transport for London (TfL) notes that projects of this kind usually make the local area more desirable, and so drive up land and property values. TfL estimates that the value of the Arundel Great Court development could rise by 5 per cent if it’s built.

Consider, too, all the people who already own land in property in the area. They should be able to charge even higher rents to tenants, and command a higher price if they choose to sell their office space or flat, all without lifting a finger.

TfL reckon the total one-off uplift in land and property values for businesses and residents brought about by the new bridge will be in the order of £84m. That’s more than the public money that TfL and the Treasury are contributing. Their £60m, drawn from transport budgets, will help a charitable trust build a bridge with little transport value and no public right of way, and which results in a £84m windfall to private interests.

(As an aside, in the midst of a desperate housing crisis, on page 97 of this document, TfL describes this windfall to wealthy land and property owners as a “large positive”. They add this windfall to the positives in their cost-benefit analysis. Given the mayor’s declared concern about high house prices, shouldn’t his transport agency be looking at rising land and property prices as a negative?)


Why can’t the Mayor capture this windfall gain to offset the public subsidy for the bridge? TfL hope to use planning obligations on new development to capture some of it – but that won’t go very far.

City Hall and TfL have been looking at Tax Increment Financing for regeneration in nearby Vauxhall and Nine Elms. This mechanism enables them to borrow money from the government to invest in regeneration: once the scheme is completed, it will result in greater tax revenues, which the government can use to paying off the borrowing. There’s no suggestion of that being used here.

But there is another option: land value tax. If the mayor would back those campaigners calling for such a tax, he could use it to capture much more of the gain, potentially even reclaiming the £60m in full.

One simple way to do this would be to tax all land owners based on the rental income from their land, as used to happen. If the land owner is occupying, not renting, the space (as with a home owner for example), you can instead tax the “imputed rent”: that is, the amount they could theoretically charge if they did let it out.

Because the bridge will increase its neighbours’ potential rents then, were such a scheme to be implemented, they would have to pay more in tax. In return for the taxpayer’s contribution to the construction of a fancy new bridge on their doorstep, they would have to chip a little more back into the public purse.

A land value tax wouldn’t only help TfL finance this scheme. It could also act as a disincentive to investors looking to speculate on land and property, and encourage investors hoarding development sites to get on and build something. This could all help stabilise or even reduce house prices in an area of London where they are beyond ridiculous.

City Hall could use the revenue to build more social housing along the South Bank, or to build a much more useful pedestrian and cycling bridge from Canary Wharf to Surrey Quays, where a new crossing is actually needed.

If the mayor’s principal aim is to build his legacy, TfL’s plans will probably do the trick. But if he wants to build a better transport network and a more affordable city, he should seriously consider backing the campaign for a land value tax.

 
 
 
 

Here are all the names of London tube stations that we’ve just stopped noticing are weird

What the hell. Swiss Cottage. Image: Oxyman/Wikipedia Commons.

Angel

 “The next station is Gnome. Change here for Elf, Cherubim and Gnome.”

Arsenal

Would be a lot less weird if it wasn’t a good eight miles away from where they actually built the arsenal.

Bank

It’s like something from a kid’s picture book where everything is labelled incredibly literally. Was even sillier when the next station along was still called Post Office. (It’s St Paul’s now.)

Barking

Disappointing lack of doggos.

Barkingside

Same, also a surprisingly long way from Barking.

Bromley-by-Bow

But not by Bromley which, once again, is eight bloody miles awy.

Canada Water

No.

Chalk Farm

Chalk isn’t a plant, lads.

Cockfosters

...

Elephant & Castle

What.

Grange Hill.

Hainault

Hang on, that’s in Belgium isn’t it?

Hornchurch

There are literally horns no the church, to be fair.

Kentish Town

Actually in Middlesex, nowhere near Kent.

Knightsbridge

Not only no knights, but no bridge either.


Oval

Might as well have a station called “oblong” or “dodecahedon”.

Oxford Circus

Plenty of clowns though, amirite?

Perivale

Does any other London suburb promise such a vertiginous drop between name and reality?

Plaistow

To be honest the name’s fine, I just wish people knew how to pronounce it.

Roding Valley

The river’s more than 30 miles long, guys, this doesn’t narrow it down.

Seven Sisters

None that I’ve noticed.

Shepherd’s Bush

“Now where are those sheep hiding now?”

Shepherd’s Bush Market

Because one bush is never enough.

Southwark

1. That’s not how that combination of letters should sound. 2. That’s not where Southwark is. Other than that you’re fine.

Swiss Cottage

Sure, let’s name a station after a novelty drinking establishment, why the hell not.

Waterloo

Okay, this one is definitely in Belgium.

Jonn Elledge is the editor of CityMetric. He is on Twitter as @jonnelledge and also has a Facebook page now for some reason. 

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