Andy Burnham's land taxes plan to pay for Northern Powerhouse Rail should be explored, says Patrick McLoughlin

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New Transport for the North chair Patrick McLoughlin says the idea of using Hong Kong-style land taxes to fund the expansion of the Northern Powerhouse Rail route merits serious consideration - but admits some business leaders are “very sceptical” about whether the idea will work in practice.

The proposal was put forward by Greater Manchester mayor Andy Burnham in November and subsequently backed by the cross-party Transport for the North board - leading to preliminary talks on the idea between TfN officials and the Department for Transport.

In the Integrated Rail Plan published in November, the Government set out plans for a £17.2bn investment in Northern Powerhouse Rail - involving a new high-speed line between Warrington and Marsden on the boundary of Yorkshire that would be part of improving the network between Liverpool and York.

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But the plan fell short of the full £42.1bn plan put forward by TfN which would have improved connections between Northern cities from Liverpool to Hull, up to Newcastle and down to Sheffield, with a full new high-speed line between Leeds and Manchester via Bradford at the heart of the proposals.

Patrick McLoughlin is the new chairman of Transport for the North. Picture: Tony JohnsonPatrick McLoughlin is the new chairman of Transport for the North. Picture: Tony Johnson
Patrick McLoughlin is the new chairman of Transport for the North. Picture: Tony Johnson

Mr Burnham suggested the idea of using a process called ‘land value capture’ which is used in other countries called Hong Kong. He said the system would work by taxes on land along the proposed route which should rise in value as a result of the construction process.

Land value capture has also been mooted as a way of helping fund London’s Crossrail 2 project, which is currently on hold. Crossrail 1 has been paid for in part from a supplement on business rates and the Community Infrastructure Levy charged to developers.

When asked about the idea of using land value capture for Northern Powerhouse Rail, Lord McLoughlin said the proposal merits consideration.

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“I think it is something we need to look at to see whether it is a feasible idea,” he said.

“If you see an area has vastly improved because of some investment that Government has put in, then why not say some of that money should also come back to the taxpayer?

“That is something that could be looked at. I think some people would say it is a pity that wasn’t argued earlier on and it is a bit after the event.

“I can’t change what’s happened and what’s gone on. I can say, let’s look at it and see if there is a realistic opportunity of doing it.”

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He said there were questions as to whether increases in land value would take effect at the construction stage.

“You talk to some business leaders and they are very sceptical about it. They say you get a feedback afterwards but it is difficult to get it in the process.

“It isn’t straightforward but certainly we should do some work on it and look at where it has worked elsewhere.”

Read more:

Chairman backs integrated ticketing plan

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Plans for London-style contactless ticketing across public transport in the North have the potential to be “transformational”, Patrick McLoughlin has said.

“We all struggle to find different tickets, different prices and different regimes at the moment,” he said.

“If we can get something like London, it would transformational..”

The Integrated Rail Plan has proposed the introduction of tap-in, tap-out ticketing at regional railway stations, with the intention of working with local councils of integrating the system so it also works on local buses and trams in a parallel to what is available in London.

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