The COVID-19 pandemic has resulted in many challenges for businesses – and the rail industry is no different. Although passenger numbers have only slightly recovered from the 85% decline seen during the height of lockdown, this is no time to take our foot off the gas when it comes to investing in infrastructure. That’s why it’s essential to find a way to plug the funding gap.
For the last ten years, my Edinburgh-based company E-Rail, has been working on something to do just that, developing a means of capitalising on the uplift in land value around infrastructure projects and using it as a funding source. In the north east we have proved it can be done, working with Northumberland County Council (NCC) to secure between 25% and 30% of the capital funding required for a new passenger rail line from Land Value Capture (LVC). The line – which Beeching closed for passengers in the 1960s – was allocated £34m to commence early works by the Department for Transport (DfT) on 23 January 2021 and will see 18 miles of track upgraded and six new stations. This will be the first time our methodology has been used globally in this way.
Whilst initial funding for the line will come from the public sector, the contribution from landowners – which will be a share of the uplift in land values along the route created by the new line reopening – will come back to the council, lowering the long-term burden on the taxpayer.