Crossrail funding moves a step closer - Greater London Authority Release

By Jonathan Baggs

Crossrail funding moves a step closer - Greater London Authority Release

Mayor of London Boris Johnson today published proposals for consultation that would, through the planning system, seek contributions from most new developments in the capital towards the costs of delivering Crossrail. These will form part of London’s share of the funding package for the project agreed between the Mayor and ministers.

Crossrail, long supported by London’s businesses, will bring significant benefits across the capital, improving the transport system and creating thousands of new jobs. It is estimated that every London borough, not just those on the Crossrail route, will see an annual boost to its economy ranging from £15 million to £115 million. It will support development in key parts of London, including the West End, the Isle of Dogs and the Thames Gateway.

New powers given to the Mayor under the 2008 Planning Act allow him to use the planning system to raise money for infrastructure improvements needed to develop an area through the setting of a ‘Community Infrastructure Levy’. It will be collected on new developments which are approved from the Spring of 2012 aiming to raise £300 million.

The Mayor of London Boris Johnson said:

“There is no underestimating how important Crossrail is to the future of this great city. Every corner of London will benefit once construction is complete and despite the current financial pressures, I am committed to ensuring London meets its fair share of the cost. It is right that the sector that will benefit so much should make its contribution and I am confident that this will not hinder development in the capital. However, through this important consultation I want to ensure we have heard and considered every point of view.”

NOTES TO EDITORS

1. It is proposed to seek contributions on new developments in London at the following rates. Zone London Borough Rate (£ per square metre) -

i) Camden, City of London, City of Westminster, Hammersmith and Fulham, Islington, Kensington and Chelsea, Richmond-upon-Thames and Wandsworth - £50;

ii) Barnet, Brent, Bromley, Ealing, Greenwich, Hackney, Haringey, Harrow, Hillingdon, Hounslow, Kingston upon Thames, Lambeth, Lewisham, Merton, Redbridge, Southwark, Tower Hamlets £35 3 Barking and Dagenham, Bexley, Croydon, Enfield, Havering, Newham, Sutton and Waltham Forest - £20;

2. Contributions will be collected by the boroughs once development commences. The Community Infrastructure Levy (CIL) will be paid by most new development in Greater London which: consists of buildings that are usually used by people (this excludes buildings to which people do not usually go to, or go to occasionally to inspect machinery and structures like electricity pylons which are not buildings) has 100 square meters or more of gross internal floorspace or involves creating one dwelling even where this is below 100 sq m

3. The Mayor proposes that developments used wholly or mainly for the provision of any medical or health services (except the use of premises attached to the residence of the consultant or practitioner) AND development used wholly or mainly for the provision of education as a school or college under the Education Acts or as an institution of higher education will not pay the levy. Developments by charities for their own purposes, and affordable housing are excluded by law.

4. Under the 2008 Planning Act and supporting regulations, the amount of CIL to be paid has to be set out in a formal document called a Charging Schedule. The Mayor has to carry out two rounds of public consultation on his proposed Charging Schedule, starting with consultation on a preliminary draft (the stage launched today). He then has to consult on a final draft schedule (this stage is currently planed for May 2011.

5. After public consultation, the Mayor has to appoint an independent “examiner” to conduct a public Charging Schedule Examination (currently expected in the autumn). The examiner will then report to the Mayor, who will take his final decision on the rate to be charged in the light of any recommendations the examiner may make.

6. The CIL will be payable for developments that receive planning permission after the date the Charging Schedule comes into force formally. Payments are made by developers when they commence their developments.

7. In 2010 alterations to the London Plan introduced new policies to use planning obligations (Section 106 agreements) to secure financial contributions towards Crossrail to raise a further £300 million towards London’s share of the funding package. Office, shop and hotel developments in central London, the north of the Isle of Dogs and areas near new Crossrail stations outside central London pay these contributions. Section 106 contributions will continue to be sought once the CIL is set, but the Mayor will not double charge - CIL payments will be deducted from the amount to be paid under s106

8. Crossrail, the capital’s most important new infrastructure project in a generation, will employ some 14,000 people at its peak and carry an anticipated 200 million users during its first year of operation. It is the largest addition to the transport network in London and the South East for 50 years. The new line will run 118km from Maidenhead and Heathrow in the west through new tunnels under central London to Shenfield and Abbey Wood in the east. New stations will be created at Paddington, Bond Street, Tottenham Court Road, Farringdon, Liverpool Street, Whitechapel and the Isle of Dogs (Canary Wharf). Early construction works for Crossrail started in 2009. It is scheduled to open for service in 2018.

9. When the funding arrangements for Crossrail were announced in October 2007 it was agreed that the Government, the former Mayor and London businesses would each contribute approximately one third of the expected cost. Businesses have been among the most prominent supporters of Crossrail given the long-term benefits to the economy that it will bring, and the business contribution has been a long-established component of the funding package. In the spending review in October 2010, the Mayor agreed with the Government to adjust some of the funding reflecting savings in the project, but left the expected contributions from CIL (£300 million) and Section 106 (£300 million) unchanged.

10. Other funding includes Department for Transport grant, Transport for London borrowing against income from future Crossrail fare payers, and the business rate supplement introduced in April 2010.

11. The CIL will be collected by the boroughs on the Mayor’s behalf. It was introduced in the Planning Act 2008. The consultation will run for six weeks, with comments to be received by 1 March 2010. To view the report, visit http://www.london.gov.uk/publication/mayoral-community-infrastructure-levy. The Mayor is keen to hear from all concerned parties and will carefully consider all the points made.

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