London Unchained
Plans to extend the Bakerloo line have floated around for over a century. The business case for integrating the South East corner of one of the world’s richest cities into its metro system is as compelling today as it was when the Underground Electric Railways Company first costed it in 1921. It is unfortunate that the Treasury has never funded the line. It’s worse that London has been stopped from just building it.
A big reason for this state of affairs is that the UK funds much of its infrastructure from a central pot of money in Whitehall. That means we waste time arguing about whether it’s better to invest in richer places like London so they can compete with New York, or to invest in poorer places like Birmingham to drag up their productivity to the national average.
We need to do both.
To pay for all that, richer areas like London should have the powers and incentives to fund their own infrastructure, freeing up central government funding for the parts of the country that can’t yet stand on their own two feet. That means beefing up their tools to get more money out of landowners who make windfall gains in land values as a result of development, and from businesses who will see bumper footfall and profits.
The Bakerloo line extension is a case study for how that might look. London should have the toolkit that a city like Paris has to tax the businesses and households that will benefit from new infrastructure. And it should be able to deploy powerful development corporations that have the borrowing capacity to buy green belt land at cheap prices to build on it.
But with more power comes more responsibility. In return for those tools, London must use them to pay for its own infrastructure. It can’t be made to bring its begging bowl to Whitehall. London could fund the Bakerloo line extension, for example, if the Mayor fought the boroughs along the line to build much more housing.
Rebalancing Britain should be core to Labour’s political project. But that can’t come at the expense of places like London. By giving richer places the tools to pay for their own infrastructure - and occasionally a push to use them - Labour can focus Treasury resources on rebuilding the rest of the country. This holds for a wide range of projects in the South East, including turning the Ox-Cam corridor into another Silicon Valley, a fleet of new towns to massively expand housing supply and transport projects like Crossrail 2. These projects should be non-negotiables. This paper is about who will pay for them.