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.

 
 
 
 

Do South Hampshire deserve its own metro mayors?

Portsmouth. Image: Getty.

The idea of metro mayors is a good idea. So good, in fact, I think is should be brought to other conurbations, such as the south coast cities of Southampton, Portsmouth and Brighton.

Greater Brighton has already got the idea in motion – although it needs more momentum to make it happen and democratise it. The question is what changes in Hampshire are needed for a Greater Southampton or a Greater Portsmouth to exist?

A small bit of backstory. The government had an idea a few years ago to create a Solent City deal, which included South Hampshire and Isle of Wight. The plan fell flat because Hampshire County Council blocked it.

Hampshire today. Image: Wikimedia Commons.

This was the right thing to do in my opinion. The government’s ambition was to rope together a very diverse area with no clear economic heart – it was always going to be a bad idea. Giving the region an extra few million pound a year may have sounded good for strapped for cash councils in the area, but would have met with a lot of opposition and resentment from locals.

Redrawing the county map

I don't ask for much, just to drastically re-shape Hampshire. Image: author provided.

In order to make this happen, Hampshire's county council should be dismantled and all the councils in the county turned into unitary authorities. Various Hampshire councils have applied to create a Southampton City Region, to qualify for transport funding – but the current proposal doesn't include Romsey and Winchester.

This to me is short sighted and arrogant on Hampshire's part. It’s come about in part because Hampshire doesn't want to lose its "capital", but also because these are wealthy areas and they'd rather they weren’t mixed up with the sorts that live in Soton. We should bin that sort of attitude.

The proposed Southampton City Region. Image: author provided.

Much like Southampton, there is a desire for more cross-border partnership in the Portsmouth City Region (PCR), too. Most of the boroughs are established, though I’d favour a tiny bit of adjustment to create a Waterlooville borough and enlarge Fareham slightly. All that’s necessary requires is the breaking up of Winchester council (again) to be reused.

The current proposal includes the Isle of Wight, which I don’t think is a good idea. The city region proposal focuses purely on Ryde, a single town on a sparse island. The resources required to improve connectivity between the island and the Portsmouth region should be a lower priority when there are more pressing issues in the city-region, such as addressing housing and transport between Gosport and Portsmouth.

The proposed Portsmouth City Region. Image: author provided.

I realise that many in Hampshire do not like change: it’s difficult for a traditionally rural county to embrace its metropolitan potential. However, city mayors lead to greater productivity by improving the distribution of resources. The establishment of metro mayors for these cities will tackle issues that have been affecting Hampshire for quite some time: the poor transport and the inequality between different communities.