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.

 
 
 
 

More than 830 cities have brought essential services back under public control. Others should follow

A power station near Nottingham: not one owned by Robin Hood Energy, alas, but we couldn't find anything better. Image: Getty.

The wave of cities worldwide rejecting privatization is far bigger and more successful than anyone thought, according to a new report from the Transnational Institute, Reclaiming Public Services: How cities and citizens are turning back privatisation. Some 835 cities in 45 countries have brought essential services like water, energy and health care back under public control.

The persistent myth that public services are by nature more expensive and less efficient is losing its momentum. Citizens and users do not necessarily have to resign to paying increasingly higher tariffs for lower standard services. The decline of working conditions in public services is not an inevitability.

And the ever larger role private companies have played in public service delivery may at last be waning. The remunicipalisation movement – cities or local authorities reclaiming privatised services or developing new options – demonstrates that cities and citizens are working to protect and reinvent essential services.

The failure of austerity and privatisation to deliver promised improvements and investments is part of the reason this movement has advanced. But the real driver has been a desire to meet goals such as addressing climate change or increasing democratic participation in service provision. Lower costs and tariffs, improved conditions for workers and better service quality are frequently reported following remunicipalisation.  Meanwhile transparency and accountability have also improved.

Where remunicipalisation succeeds, it also tends to inspire other local authorities to make similar moves. Examples are plentiful. Municipalities have joined forces to push for renewable, climate-friendly energy initiatives in countries like Germany. Public water operators in France and Catalonia are sharing resources and expertise, and working together to overcome the challenges they meet.

Outside Europe, experiments in public services are gaining ground too. Delhi set up 1,000 Mohalla (community) clinics across the city in 2015 as a first step to delivering affordable primary health care. Some 110 clinics were working in some of the poorest areas of Delhi as of February 2017. The Delhi government claims that more than 2.6m of its poorest residents have received free quality health care since the clinics were set up.


Local authorities and the public are benefiting from savings too. When the Nottingham City Council found out that many low-income families in the city were struggling to pay their energy bills, they set up a new supply company. The company, Robin Hood Energy, which offers the lowest prices in the UK, has the motto: “No private shareholders. No director bonuses. Just clear transparent pricing.”

Robin Hood Energy has also formed partnerships with other major cities. In 2016, the city of Leeds set up the White Rose Energy municipal company to promote simple no-profit tariffs throughout the Yorkshire and Humberside regions. In 2017, the cities of Bradford and Doncaster agreed to join the White Rose/Robin Hood partnership.

Meanwhile, campaigners with Switched on London are pushing their city to set up a not-for-profit energy company with genuine citizen participation. The motivations in these diverse cities are similar: young municipal companies can simultaneously beat energy poverty and play a key role in achieving a just and renewable energy transition.

Remunicipalised public services often involve new forms of participation for workers and citizens. Remunicipalisation is often a first step towards creating the public services of the future: sustainable and grounded in the local economy. Inspiration can be found in the European towns and villages aiming for 'zero waste' with their remunicipalised waste service, or providing 100 per cent locally-sourced organic food in their remunicipalised school restaurants.

Public services are not good simply because they are not private. Public services must also continuously renew themselves, grow, innovate and recommit to the public they serve.

The push for remunicipalisation in Catalonia, for example, has come from a movement of citizen platforms. For them, a return to public management is not just an end in itself, but a first step towards the democratic management of public services based on ongoing civil participation.

Evidence is building that people are able to reclaim public services and usher in a new generation of public ownership. The momentum is building, as diverse movements and actors join forces to bring positive change in communities around the world.

You can read the Transnational Institute report, “Reclaiming Public Services: How cities and citizens are turning back privatisation”, on its website.