Land value cap 'could fund £1.4bn city metro scheme'
Cambridgeshire and Peterborough mayor James Palmer has welcomed a report that backs his plan for a land value cap to help fund a future Cambridge metro system.
In a report jointly commissioned by the Greater Cambridge Partnership and the Combined Authority, it was recommended that an autonomous metro system could be the solution to the city’s traffic woes.
The scheme, which is expected to cost between £1.2bn and £1.4bn, could be partly funded through a land value cap – a plan Mr Palmer first announced in July.
Mr Palmer says this “is a mechanism that has the potential, if designed in the right way, to unlock major infrastructure schemes that otherwise would have a prohibitively high price tag”.
The report, produced by Steer Davies Gleave, agreed.
Speaking to the Cambridge Independent, Mr Palmer added: “Since my election in May, I have made clear my view that land value capture should be looked at as a way of making a significant contribution towards the cost of the project.
“The report sees the potential for land value capture to play a role. In addition to the amount raised via land value capture, I would imagine that there would be a contribution from central government and the Combined Authority.
“However, it is early days, the Combined Authority board in consultation with other partners will have to agree upon an option to pursue. At this point discussions will then begin relating to the package of funding required.”
A land value cap would put an upper limit on the price landowners could charge for sites adjacent to infrastructure projects, such as the mayor’s proposed M11 extension.
Mr Palmer said previously: “For example, the increase could be limited to 10 times the original value.
“The landowner would still benefit financially from the effect of a major development that would not have taken place without the introduction of a land value cap.
“The purchaser of the land in question, probably a housebuilder, would be able to secure the land at a far lower price than would have been the case without the cap.
“On purchasing the land, the housebuilder would sign an agreement, agreeing to pay a charge to the organisation funding the road construction project, which made the housing development possible. This would have the potential of making the project a viable proposition.”
The report also suggested that pooling of section 106 money regionally and the ability to forward-fund infrastructure by borrowing against future receipts could also help to fund the scheme.