Author: Emma Gascoigne

We’re delighted to see passenger services have returned after 60 years on the Northumberland Line.

This is a very special project for many reasons. One of those is because it’s the first time our unique, groundbreaking land value capture (LVC) model has been used to help fund part of the re-opening of a UK rail line.

We’re very proud of this and we would like to congratulate everyone involved in this transformational project. We look forward to continuing to help more projects like this in the future.

The government is currently consulting on proposed planning and housing policy reforms aimed at accelerating housebuilding. Among the proposed changes is an expansion of compulsory purchase order (CPO) powers, which would allow local authorities to force landowners to sell green belt land if it could support new housing developments. While this approach aims to address the housing shortage, E-Rail’s George Hazel, explains how this may overlook a more sustainable alternative.

How CPO works at present

Compulsory purchase orders are a tool that government entities use as a last resort to acquire land for public benefit. The process is complex, requiring a clear purpose and strong political backing, often resulting in legal challenges, significant costs, and the risk of failure. Additionally, the use of CPOs can alienate local communities, who may feel their rights are being overridden by centralised decisions. In a country like the UK, where land is limited and public sentiment is strong, relying on CPOs to meet housing needs is likely to provoke significant resistance and delay.

Potential impact of new CPO proposals

The government’s new proposals will involve councils needing to confer with their planning colleagues to select the most appropriate sites. This in itself may be controversial. How will they decide which sites work best? There is irrefutable evidence that the most sustainable sites will be those with fixed transport links, be they existing or new. If existing, they should be a shoe in! If the sites are within a 1 km radius of a potential new station site, then it is possible to use land value capture as a financing ingredient, by harnessing a share of the uplift created by the planning approval process. This is entirely equitable and would mean that a CPO can be avoided.

“How will they decide which sites work best? There is irrefutable evidence that the most sustainable sites will be those with fixed transport links, be they existing or new. If existing, they should be a shoe in!”

All local authorities whether they are up to date with their planning strategies or not, will have pre-conceived ideas of what is expected of them to satisfy the housing shortage without the new intervention from Westminster. So, will this strategy make them react positively or simply comply with less enthusiasm and encourage delay?

The new government proposal suggests that landowners will get existing use value, and the local authority will secure the benefit of any uplift as a result of a beneficial planning consent. This is controversial as the body applying a CPO is also the giver of valuable planning consents. This is in effect a development land tax by the back door and may be open to both abuse and manipulation, on all sides.

Uncontrolled consents will do two things, lower the value of land and undermine the banking system of lending against value. If the housing is to be local authority controlled, then the financing of the project will need to come from central government.

A more sustainable and equitable alternative

We believe there is no need for development in any areas where it cannot be served by public transport, especially heavy, light rail or trackless tram. New roads will only add to congestion, pollution, accidents and social inequity. There are a huge number of development opportunities throughout England and Wales which could justify development, be they brown or green fields, with the justification for planning changes driven by new public transport provision.

“Our experience at E-Rail, built over 12 years and involving 56 projects in collaboration with Network Rail and local authorities, demonstrates that housing needs can be met through strategic development around existing or planned rail and tram stations.”

Rather than expanding CPO powers, the government should focus on integrating transport infrastructure with housing development. Our experience at E-Rail, built over 12 years and involving 56 projects in collaboration with Network Rail and local authorities, demonstrates that housing needs can be met through strategic development around existing or planned rail and tram stations. This approach not only aligns with sustainability goals but also provides significant funding opportunities through land value capture.

Developing housing in areas served by public transport reduces the need for new roads, which can lead to congestion, pollution, and social inequity. Instead, focusing on transport-connected land enables faster project delivery, meets sustainability objectives, and minimises public opposition. In addition, this approach supports broader economic goals by improving access to jobs and enhancing social mobility.

George Hazel, Director of E-Rail, examines how E-Rail can help the new government deliver its transport aims and ambitions.

Last month a new Government was elected in the United Kingdom. In her first speech, the new Labour Secretary of State for Transport listed five key aims:

·         Improving performance on the railways and driving forward rail reform

·         Improving bus services and growing usage across the country

·         Transforming infrastructure to work for the whole country, promoting social mobility and tackling regional inequality

·         Delivering greener transport

·         Better integrating transport networks

In setting out the Government’s aims the minister noted that “growth, net zero, opportunity, women and girl’s safety and health” can only be realised with transport as a key enabler.

These are all good policy objectives, but given subsequent announcements outlining constraints on funding, the difficulty of delivering greener transport and the lack of joined up integration of transport networks, the question remains: how can these can be delivered in a way that increases access across all communities and promotes social equity?

The team at E-Rail has developed a method that will help deliver better public transport through innovative funding and support creating sustainable communities around public transport. Our work also helps integrate various transport modes.

“On average, house prices rise between 15% to 20% within 1.5km from a railway station access point.”

It is well documented that improved accessibility leads to increases in land value around stations, whether that be for heavy or light rail, trams or bus-rapid-transit (BRT) / trackless trams. On average, house prices rise between 15% to 20% within 1.5km from a railway station access point. Our method harnesses this increase in value by securing it through a unique and innovative method that can demonstrably fund around 25% of the capital cost of the new transit facility.

This is new wealth created from the increased land values that only exist because of an investment in infrastructure. We secure the funding from landowners through contribution agreements built into the title of land plots. Working on behalf of Northumberland County Council, we secured a substantial LVC contribution for the Northumberland Line project, and our method was reviewed and validated by the Department for Transport.

However, the benefits do not end at raising the LVC funds. The amount of funding raised depends on the development allowed around stations; the more development the greater the funds. This also means that because the developments are within walking and cycling distance of the station, more people will use public transport, and there will be additional demand for new services, helping the business case. LVC can therefore provide a significant and direct contribution to capital costs and, by virtue of the development arising, more users of the facilities provided and thus more income.

“If the planning regime incentivised landowners and developers to build around stations car parking could be reduced, cutting emissions, accidents and congestion.”

Coordinating and connecting development with public transport creates sustainable communities that support local businesses and services and are less reliant on the car. If the planning regime incentivised landowners and developers to build around stations car parking could be reduced, cutting emissions, accidents and congestion. Montreal did this successfully with developers having to firstly justify why they were not developing around stations.

This really is a multiple-win scenario, increasing accessibility for communities, helping to foster social equity, growing the local economy, and creating a cleaner environment and a higher quality of life. New facilities can act as transit hubs integrating with other modes such as cycling, bus and taxi thereby creating a multi-modal environment for travel. Indeed, in many places around the world these are also community hubs, building in social as well as communal facilities alongside business interests.

Successful and fair towns and cities need effective and efficient public transport systems. In terms of planning and transport successful towns and cities maximise exchange space and minimise movement space. It is exchange space that creates a healthy economy, clean environment and higher quality of life. Movement space gets people to their places of exchange. However, to do this the productivity of the movement space needs to be maximised. The only way to do this is through good public transport systems. Towns and cities do not have the movement space to do this through private cars – it’s simple arithmetic! Transport is about getting people and goods to where they want to be, not moving vehicles.

“Transport is about getting people and goods to where they want to be, not moving vehicles.”

The new government is seeking to introduce new ways of capturing land value, including CPO powers and expanded levies. This is ultimately a form of development/community land tax, something that has been tried, discussed, altered, abandoned, reintroduced by successive governments, for a very long time. It can and will likely take a long time to develop into a formal policy, and whilst this form of value capture has seen modest success, in most cases it has been withdrawn because of the unforeseen consequences of a tax on land and development.

Most analysts will admit that while the theory is sound, the practical implementation of such proposals is flawed, as they act against wider policy objectives. A tax on development or land discourages development. This is not the intended result. Most landowners and developers will simply wait for a change in government and the withdrawal of the tax. In the meantime, both commercial and residential projects don’t happen.

The methodology used by E-Rail goes with the grain of both developer/landowner and government. We secure on behalf of Government the cash generated from value increases as a result of activity in infrastructure, and landowners see their sites prioritised with a degree of certainty which would otherwise not be achievable. Furthermore, the payment of the landowner’s contribution takes place when the value has been actually realised, thereby ensuring the maximum is raised and there is no penalty to pay up front, such as with S106 or prolonged legal processes to secure land ownership through a purchase process.

Public spending is currently under massive pressure and is likely to be curbed, or as a minimum dramatically reduced (for example, ceasing of the Restoring You Railways programme recently announced by the Chancellor) and reprioritised. This is when E-Rail does truly come into focus.

There are rail projects we have previously assessed which could be fully funded using our methodology, and others that could achieve a substantial contribution, lifting up the pecking order in any value for money assessment. Importantly, this should mean that railway line and station reopening investment, or introduction, can continue; supporting economic growth of our country despite the availability of government contributions being much reduced.

E-Rail remains busy supporting transport authorities across the UK to secure landowner contributions, through Land Value Capture (LVC), towards funding important new railway stations and schemes.

We were pleased for the rail industry endorsement, and recognition of the positive impact our LVC methodology has had to help fund the Northumberland Line, as highlighted by Rail Minister, Huw Merriman at the Transport Select Committee on the 6th March.

Our method is adaptable and can be used for individual stations, or large new rail corridors such as East West Rail, where LVC could potentially support funding the future project stages between Oxford, Bedford and Cambridge.

With E-Rail, control remains with the public sector proponent and the independence of planning and transport processes are protected. Our method works across all levels of government in the UK including unitary, non-unitary, and regional authorities.

We’re delighted to be a finalist at the 2023 Spotlight Rail Awards.

E-Rail is a finalist in the ‘Service of the Year’ category along with other shortlisted entries from GoMedia and Greater Anglia.

George Hazel, Director of E-Rail said:  “Our unique way of funding rail projects is a game-changer for public transport investment and can help plug the UK’s funding gap that stops so many important projects.”

The winners will be announced at the Royal Lancaster Hotel in London on 30 March 2023.

Are you missing out on valuable funds to make your infrastructure project happen?    

It is normal for local authorities to use mechanisms within the planning process such as Section 106, or in the case of Scotland Section 72 contributions, or wider instruments such as Community Infrastructure Levy (CIL) to raise money to make sure that infrastructure in the region can keep up with new homes and businesses. This includes roads and schools. However, these charges miss most of the uplift in value created because they come at the end of the development process, by which time, value has been allowed to leak from the development process. In addition, CIL charges apply to all residents and businesses across a region, not just those that will specifically benefit from new local infrastructure that creates value uplift.

Capturing uplift at the beginning

Both existing methods can be effective to an extent, but there is a third method – pioneered by E-Rail – which is quietly appearing on the agenda where contributions are sought from landowners that obtain beneficial planning consent as a result of new infrastructure. This is particularly impactful where the council, as the planning authority, is required to raise money towards the cost of the project, (for example where a 25% local contribution is required towards infrastructure to be funded from central government grants).

Re-opening the Northumberland Line

The E-Rail methodology, which has been developed over the last 10 years has played its part in the re-opening of the Northumberland Line between Newcastle and Ashington, where it is estimated the E-Rail transport fund will generate around 25% of the capital cost.

This is substantially more than any S106, S75 or CIL; and achieves greater social equity, as those who benefit most make the contribution.

Harnessing funds for your project

If you are considering a heavy rail, light rail or bus rapid transit project in the foreseeable future then this method and the potential it could deliver should be included in your business case thinking. The E-Rail team can explain how it works, if it will succeed on your project and how much you might expect to collect.

Please contact George Hazel at  George.Hazel@E-rail.co.uk or https://www.e-rail.co.uk/contact-us/

 

 

Britain’s railways are enjoying a renaissance and new stations are opening across the UK as we wake up to the social, economic and environmental benefits of rail says John McGregor, Director of E-Rail, a company that is leading an innovative approach to funding transport initiatives that could see more projects take off in the North East of England.

But there’s a catch: despite the benefits, if you want a new station, the government will only provide 75% of funding. The other 25% is down to you. That’s where E-Rail can help with its innovative approach to Land Value Capture (LVC).

New stations create a hub commercial and housing development, which means substantial increases in the value of existing agricultural, brown or amenity land – and premiums on completed buildings of up to 20%.

Our experience has taught us that this is a tempting prospect for landowners and developers, whilst helping local authorities and transport bodies fulfil their own obligations and targets.

E-Rail is the UK’s expert in Land Value Capture for new rail stations projects – its recent success helping to fund the Northumberland Line speaks for itself.

Looking specifically at benefits there are those that relate to local authorities and transport bodies and those that relate to landowners and developers.

Experience shows that developments start sooner, sales are completed faster and price levels are higher, as building work on the new station is accelerated by the guaranteed funding.  LVC can secure the 25% funding requirement for new stations, which ensures projects can go ahead faster – or at all.

For the former they include:

• Undeveloped land near to proposed stations becomes more attractive.
• Greener, safer travel objectives met through reduced car use.
• Commercial and housing developments create vibrant communities and help achieve increased housing targets.
• The potential funds created through LVC can far exceed s106 and Community Infrastructure levies, whilst ensuring non-transport s106 funding remains intact.
• The process encourages long term partnership and collaboration with developers and landowners.

For the latter they include:

• LVC agreements can bring a degree of certainty to planning applications and be more valuable than the landowner might expect.
• Experience shows that developments start sooner, sales are completed faster and price levels are higher, as building work on the new station is accelerated by the guaranteed funding.
• LVC can secure the 25% funding requirement for new stations, which ensures projects can go ahead faster – or at all.

This article was featured in CompProp NEE April 2022.

E-Rail has been commissioned by the Witney Oxford Transport Group to bring its ground-breaking Land Value Capture (LVC) methodology to a new transport scheme in Oxfordshire.

This adds to a growing portfolio of studies on the applicability of LVC throughout the UK, and after E-Rail successfully worked with Northumberland County Council to secure the first true LVC in the UK, generating up to 25% of the cost of reopening the Northumberland Line.

George Hazel, Director of E-Rail, said: ““We look forward to supporting Witney Oxford Transport Group develop its funding strategy for the project to incorporate Land Value Capture.

“Witney Oxford Transport Group has a strategic vision to provide a new, high-capacity and sustainable rail connection between the west of the county and Oxford, and is currently campaigning for the development of the project with an outstanding bid to the DfT’s Restoring Your Railways Ideas Fund.”

Charlie Maynard, Chair, Witney Oxford Transport Group, said: “We’re delighted to be working – supported by Railfuture – with the E-Rail team.

“There is a great opportunity here to obtain a share in the uplift in value of new housing along the A40 corridor required to meet local growth targets over the next ten years to help fund the construction of the railway project.”

E-Rail has been commissioned by Glasgow City Council to bring its ground-breaking Land Value Capture (LVC) methodology to a new transport scheme in Scotland.

This adds to a growing portfolio of studies on the applicability of LVC throughout the UK, and after E-Rail successfully worked with Northumberland County Council to secure the first true LVC in the UK, generating up to 25% of the cost of reopening the Northumberland Line.

George Hazel, Director of E-Rail said: “Glasgow City Council has a vision of increased connectivity into and out of the city, as is considering investing in a number of projects to achieve this.

“We need to assess schemes in their infancy to make sure the opportunity for LVC is considered as part of the initial business case process, and that is what we are doing here. It’s good to now be working in Scotland, building on the work we have already delivered on transport schemes in the North East of England.”

E-Rail featured on Times Radio’s early morning breakfast show on Friday 23 April.

George Hazel was interviewed to explain how E-Rail can be used to help get more projects off the ground, the benefits for taxpayers and if E-Rail’s pioneering funding model could be applied to other projects outside of the railway.

E-Rail – working with Northumberland County Council – recently secured the first true land value capture in the UK, generating up to 30% of the cost of reopening the Northumberland Line.

Listen to the interview at around 49 minutes in: https://www.thetimes.co.uk/radio/show/20210423-3974/2021-04-23