Rail users could face levy to help fund high-speed network

The Department for Transport (DfT) is considering seven different methods to raise extra cash to boost the contribution from Whitehall and are also looking at supplementary business rates and regional development agency funding.

Transport Secretary Lord Adonis has announced plans for a 30bn network that would be built over the next 25 years, travelling from London to Birmingham, and then splitting to serve both Yorkshire and the West Coast.

Business leaders have said rail fare increases or extra business taxes should be a last resort and recommended the formation of a new National Infrastructure Bank, leveraging public funds with private capital.

Nick Pontone, director of policy at the Yorkshire and Humber Chambers of Commerce, said: "This is a major national infrastructure project and most of the funding should come from the Government.

"A levy on existing rail users is unattractive given the high cost of existing fares and a new business tax should be a last resort.

"There is a strong case to find funding from the additional economic activity and property uplift in areas benefiting from high speed rail and the option of a new National Infrastructure Bank should also be considered."

High Speed 2 (HS2), the company which put together the report on various high speed rail options, outlines seven potential methods of funding.

Fares on existing train routes could be increased, through a "high speed rail" levy. It is estimated that a one per cent levy might raise up to 75m per year.

The report also suggests a potential levy on air passenger duty but warns this would only make sense if combined with a rail levy and if a national network was built, not just a route from London to Birmingham.

A charge could be applied to council tax across regions served by high-speed rail, similar to that for the London 2012 Olympics, and the Government could raise funds through supplementary business rates.

Non-user charges could be introduced, for example, retailing and advertising at stations, utilities along the line of route, and the sale of corporate sponsorship and naming rights of the line and stations.

Land redevelopment could raise funds if property owners, the local authority and other stakeholders contribute directly by pooling or leasing land at high speed stations.

The report suggests contributing to stations directly, for example by improving accessibility, and this could be done either through the private sector or other public sector funding such as local authorities and regional development agencies.

A spokesman for the DfT said: "Money has to be raised and this

outlines some of the options for how to do that. No decision has been made yet as to which options the Government may pursue."