When tube lines go to war, one is all that you can score

The role of Parliamentary Assistant for the London Underground (Green Park) Bill sounded pretty exciting when the temping agency suggested it to me. Newly arrived in London at the height of the 1990s recession, I needed work and entertained daydreams of passing notes to MPs, briefing journalists and crafting ingenious arguments about, er, something to do with extending the Jubilee Line?

The Sisyphean reality – photocopying and bundling documents, then unbundling and shredding them a few days later – was a bit less glamorous. It was autumn 1993 and the Bill – the last piece of enabling legislation for the Jubilee Line extension (JLE) – was already in its last stages. Construction contracts had been let, and the parliamentary team started to disperse. 

Many of them moved round the corner to Dacre Street to work on Crossrail, which was the next big transport project. Or at least it was until May the following year, when a House of Commons committee stopped the bill process dead in its tracks. What I didn’t realise at the time was how intense competition had been between the JLE and Crossrail, and how significant this competition and its outcome would be for London’s evolution in the decades that followed. 

Both Crossrail and the JLE can trace their lineage back to the 1970s or beyond, but gathered momentum in the late 1980s, those strange years when London lost its metropolitan government yet saw resurgent economic growth and the first signs of population recovery after 50 years of decline. Secretary of State Paul Channon’s foreword to the Central London Rail Study, published in January 1989, referred to the capital’s economic growth “putting severe strains on London’s transport system”. The study proposed an east-west ‘Crossrail’ (as well as alternative Chelsea-Hackney and Victoria-Euston-Kings Cross options), and detailed project planning was given the go-ahead the following year. 

But something was stirring in the east. In 1981 Michael Heseltine, Secretary of State for the Environment (which then included local government and urban policy), had established the London Docklands Development Corporation to find new uses for the swathes of land left derelict by the closure of east London’s docks. Rail and road infrastructure – including the Docklands Light Railway (DLR) – had been an early priority, based on the loose expectation that the docks would be redeveloped for a mixture of housing and light industry.

All that changed in 1984 when American banker Michael von Clemm visited Canary Wharf. Von Clemm was looking for food preparation units for Roux Brothers Restaurants, in which he was an investor, but returned to his offices at Credit Suisse First Boston to propose that the bank could build offices there rather than continuing to haggle over floor space with the deeply conservative City of London Corporation. Michael Cassidy, the City’s then chair of policy and resources, recalls von Clemm taking him to the site and saying, “I’m going to build my office here, and I’m going to blame you – the City – for making me do it.”

A succession of plans, changes of ownership and bankruptcies followed, but in 1987 Olympia and York (O&Y), the Canadian developers of Battery Park City in New York, signed a development deal to build 12 million square feet of offices at Canary Wharf. This would mean 50,000 daily commuters, way beyond the DLR’s capacity, so O&Y promised to build a new railway line – unofficially and unfortunately known as the Canaryloo Line – to run from Waterloo through Canary Wharf to Greenwich. 

Margaret Thatcher’s government liked the entrepreneurial spirit of the proposal, but Department for Transport officials were nervous of freelancing rail schemes, so a separate East London Rail Study was commissioned to review options for improving access to Canary Wharf. It reported in July 1989 and recommended that the Jubilee Line be extended via Canary Wharf and North Greenwich to Stratford. The total cost would be around £1 billion, of which O&Y would pay the £400 million they had earmarked for their own project.

By summer 1989, therefore, two rail mega-projects were eyeing each other uneasily on the starting blocks. The government was committed to maximising private sector contributions to both, which gave the JLE an advantage, as private finance was already committed to it. So the JLE overtook its venerable competitor in securing parliamentary approval: the main bill was introduced into Parliament in late 1989 and received royal assent in March 1992, while the Crossrail Bill did not have its first reading until November 1991.

Just as many in the City saw Canary Wharf as a threat to their pre-eminence as a financial centre, the JLE’s rapid parliamentary process alarmed many of Crossrail’s supporters – particularly central London property companies such as Hammerson, Land Securities and Grosvenor – which feared that the usurper railway would boost Canary Wharf at the expense of the City. As the 1992 general election approached and the UK slipped into recession, a new coalition began to assemble, galvanised by the need to prevent Crossrail being sidelined.

This coalition, led by Sir Allen Sheppard of leisure conglomerate Grand Metropolitan, was formally launched after the election as London First. Robert Gordon Clark, who became London First’s head of communications the following year, says their primary focus on lobbying for Crossrail to be built either ahead of or alongside the JLE led one property journalist to rename them “London First, Docklands Second”. 

But by then, the JLE had problems of its own. The global recession had hit O&Y’s north American holdings hard, and in May 1992 its creditor banks pushed the company into administration. The JLE  had received royal assent but its funding package had collapsed. “I had to work very, very hard to get the Jubilee Line extension underway, because at the time the Treasury just didn’t want it. We were in recession and they were fighting very hard to avoid any capital expenditure,” recalls Steve Norris, who, after the election, was appointed minister for transport in London. 

The Treasury insisted that the banks who now owned Canary Wharf maintained O&Y’s £400 million commitment, perhaps hoping this would kill the scheme off but, as Norris observes, funding the JLE was the only way for the banks to recover their losses: “Their property in Canary Wharf had virtually negative value at that time. With the kind of rents you could get without decent connectivity, the whole thing was a liability not an asset. So all the banks signed up, which made it very difficult for [the Treasury] to refuse. But they were dragged kicking and screaming.”

Lagging two years behind the JLE in Parliament and lacking committed private sector finance in the wake of a recession, Crossrail was more vulnerable. In May 1994, the four-person committee reviewing the Crossrail Bill threw it out. The committee’s issues with the scheme included its lack of connectivity to the Channel Tunnel Rail Link, falling Tube usage (which was 20 per cent down on its 1980s peak by 1994), and above all the lack of committed funding from either the Treasury or private finance. 

Transport schemes never quite die, of course, so Crossrail was sent into a limbo of new designs, parliamentary procedures, cost-benefit analyses, studies, spending reviews, business cases and consultations. London First kept the flame alive, particularly when Labour came to national power in 1997 followed by London’s newly-elected Mayor Ken Livingstone worked closely with both the City and Canary Wharf to make the case for the scheme, which broke ground in May 2009.

As the Elizabeth Line finally opens, it feels like closure for this chapter of London’s history, even if Crossrail 2 (the old Chelsea-Hackney line) is receding into the future. The JLE stole a march on Crossrail by having a single private sector stakeholder with deep pockets, and by being first out of the parliamentary stocks (though the delivery of the scheme was beset by overruns and delays). It shouldn’t be this way, but sometimes being first is as important as being best. 

But it is hard to argue that the Jubilee Line extension should have been ditched. Without it, Canary Wharf’s development would have been blighted and London’s development would have been dramatically altered: no second financial centre, no Millennium Dome on the heavily polluted Greenwich Peninsula and maybe no Queen Elizabeth Olympic Park in Stratford. By accident and design, the JLE was transformational. Perhaps Crossrail would have gone ahead more quickly without it, and perhaps it would have been completed in time for the 2012 Olympic and Paralympic Games. But, given the constraints on public spending in the 1990s, perhaps not.

The most enduring legacy of the rivalry between these rail schemes was the galvanising effect they had on London’s businesses and local authorities, impressing on them the urgency of coming together to lobby for the capital’s needs – including for the introduction of a directly elected Mayor, later championed by London First. It is a coalition that still needs to speak for London today.

First published by OnLondon.

Crossed wires on paying for infrastructure

In giving the green light to the next stage of planning for Crossrail 2 in the 2016 Spring budget, the Chancellor has taken the right decision for London and the UK. Transport for a WorldCity, the National Infrastructure Commission (NIC) report published a few days before the budget, powerfully made the case that Crossrail 2 is vital for sustaining economic vitality. The NIC estimates that the capital could pay for more than half of the £33 billion cost. But the detail of how London pays its share goes to the heart of our antiquated and hopelessly dysfunctional local government finance regime.
Ever since the Jubilee Line extension was built in the late 1990s, boosting land values so much that these could have paid for the project three times over, governments have wrestled with dilemma of big infrastructure: the costs fall on the public purse, but many of the benefits (and in particular property value uplifts) accrue to the people and businesses who are most directly affected.  Property owners who pick the right numbers in the infrastructure lottery get a windfall at others’ expense.
As public spending has tightened in recent years, the search for clever ways of funding big projects has become more and more intense.  Money borrowed for the Northern Line extension to Battersea will be repaid through developer contributions and ringfenced business rates, and commentators have suggested that Crossrail 1 was only spared the axe in 2010 because 60 per cent of its costs were met by Londoners and London businesses.
The Crossrail 2 package proposed by Transport for London follows the Crossrail 1 pattern by loading most costs onto London’s businesses and property developers. 18 per cent of the costs would be met from future fares and property deals; 20 per cent would come from a supplement on business rates (about a five per cent increase in the tax bill for most larger businesses); and 17 per cent would come from a Mayoral community infrastructure levy on new development. 
But householders get off very lightly.  Only 1.4 per cent of the cost of the project would come from council tax, specifically from rolling forward the Olympic precept that Ken Livingstone introduced in 2006 (memorably comparing it to the cost of a Walnut Whip for the average household every week).  The precept currently adds £20 per year to the average ‘Band D’ household, around 1.5 per cent of the annual bill.
So where’s the problem?  London’s booming businesses and rapacious developers get hit with the tax bills, lightening the load on ordinary citizens.  This may look like good news, but given the state of London’s property market, this funding package would do almost all the wrong things.  Charging an additional community infrastructure levy will threaten developers’ bottom line, which could just as easily result in delayed development, raised sale prices, or reductions in other social benefits like affordable housing, rather than in reduced profits.  And higher business rates may be reflected in higher prices or slower wage growth, or may even push businesses away from London.
Modest London-wide council tax increases, on the other hand, will do nothing to capture the increased desirability and value accruing to homeowners, particularly those nearest the new rail lines, who will get the mother of all free rides (one possible exception being Chelsea, where affluent residents are protesting against a new station).  In fact, Crossrail 2 may make matters worse for Londoners struggling to get on the housing ladder, pushing prices even higher in the districts that it opens up.
So the Crossrail funding package proposed for London could increase the costs of doing business in London, and hike the value of property, creating an unearned and largely untaxed bonanza for those living nearest stations, and pushing prices further our of reach for everyone else.
As the NIC report points out, the package proposed is constrained by the scope and structure of taxes raised locally.  TfL are working with what they’ve got. As the London Finance Commission pointed out in 2013, London’s council tax bands have not been revalued since 1993, when £320,000 defined the top tier of property values, rather than representing a bargain, £200,000 below the average house price. 
Regular (perhaps annual) revaluation would be fairer, allowing tax rates to be better tailored to the real values of homes and to capture some of the benefits that new infrastructure brings to home-owners in the shape of rising house prices.  If new infrastructure dramatically increased values, council tax would reflect this, and a proportion of the new tax revenues could be top-sliced to repay money borrowed to pay for the investment in the first place.
The obstacles to council tax revaluation have been seen as practical as well as political.  Practically, the exercise would be complex and call for careful callibration, but we shouldn’t make too much of this.  The technology we use to track property values has changed out of all recognition since 1993.  When anyone can check the value of their property against the local market with a few clicks of a mouse, a revaluation would not require a new Domesday Book.
There would be winners and losers, and political controversy, but these problems aren’t insuperable.  Transitional reliefs would be needed, as might measures to allow tax to be deferred so that cash-poor owner-occupiers were not forced to move by sudden tax hikes.  And Labour’s proposed ‘mansion tax’, a far blunter instrument than recalibrated council tax, did not do the party too much damage last year in London, the city that would have been hardest hit.
Other taxes could help to fund infrastructure too.  Stamp duty and capital gains tax do actually reflect rising property values, though they only kick in when property changes hands, and in the case of capital gains tax they do not apply to people’s main residence.  Nor are these currently available to the Mayor or the London boroughs, though the Government could at the very least extend the principle it applied to the Northern Line extension by allowing the Mayor to repay borrowing using tax revenues that would normally go directly to Whitehall.
In times of continuing austerity, booming London will have the devil of a job convincing the rest of the UK, let alone the Treasury, that it deserves massive public subsidy for infrastructure, however much other regions actually benefit from its growth.  London is booming, and should pay its fair share.  But without more comprehensive devolution and more control over its taxes, the capital will struggle to secure its future prosperity.

It\’s been a long time

I\’ve been distracted, having holidays, not smoking, all sorts. I\’ve also been reading Robert Caro\’s biography of Robert Moses, The Power Broker.

The book is a monster of nearly 1,200 pages, and its subject comes over as pretty monstrous too. From the mid 1920s to the 1960s, Robert Moses dominated public projects in New York, covering the five boroughs and Long Island with new toll roads, beaches, parks and bridges, creating the type of alienating, car-dominated urban landscape that Jane Jacobs has taught all good urbanists to despise. He achieved these feats through a combination of thuggish arrogance and low cunning, with unattractive top-notes of racism and class prejudice.

And yet, governor after governor, and mayor after mayor, found him indispensable, unsackable. Whatever his methods, Moses got things done, and he got them done within electoral timescales. When he was building his first parks on Long Island in the mid-1920s, he had $1 million out of a total of $15 million. Instead of completing a few projects within budget, he assembled land for a much larger number, thereby forcing NY State Congress to vote him the remainder. Caro reports him as saying: \”once you sink that first stake, they\’ll never make you pull it up.\”

What would Moses have made of Crossrail\’s latest faltering step forwards? When I worked on the Jubilee Line extension project in the mid 1990s, Crossrail was the next big project. Offices were being set up, and engineers recruited. And then, nothing. And now, maybe something? But breakthroughs are reported so frequently, and to so little effect, that it\’s hard to feel too excited by the news.

We seem to be very good at stopping big projects happening in the UK. The Treasury feels that it has been burned by so many wannabe-Moses characters, that it publishes volume upon volume of guidance on stopping big projects. The safest answer is always \’no\’. Soon after London won the 2012 Games, I had a meeting with a senior civil servant. \”You\’ve got the Treasury in an awful spin,\” he said. \”You\’ve robbed them of their three standard strategies: delay, descope and say \’no\’.\” At the IOC meeting in July 2005, London (Jowell, Livingstone, Coe) put some stakes in the ground. They won\’t be quickly forgiven.