HS2: land value around north's train stations could fund rail projects
Andy Burnham would look to resurrect the Manchester leg of HS2 using land value capture to pay for it.
The increase in land value around northern train stations is expected to outstrip new calculations if HS2 was restarted by Andy Burnham, experts have said.
The former Greater Manchester Mayor will become the new prime minister next week, and looks set to try and resurrect HS2’s leg to Manchester that was scrapped by Rishi Sunak.
It is understood Mr Burnham would look to pay for it using land value capture, which is when money is raised by borrowing against the projected increase in value that comes from land next to a major transport hub.
This was used to fund the Northern line expansion to Battersea Power Station in London, which he describes as a “cleverer way of funding this”.
New research from Ranking Atlas has found that land registry data showed that five of seven cancelled station areas - including in Sheffield and Leeds - grew faster than the England average between their HS2 route announcement and the cancellation.
In the case of Sheffield, it was 20 percentage points higher than the national average, and Leeds was eight percentage points higher.
However, Henri Murison, chief executive of the Northern Powerhouse Partnership, believes this underestimated the scale of land value increasing.
“The data on planning applications, as highlighted in research by Arcadis, demonstrates the upsurge in development activity associated with new HS2 stations, including Old Oak Common and Curzon Street,” he said.
“Residential property transaction data over comparatively short time periods is inherently volatile, and the methodology behind this analysis raises more questions than it answers.
“House prices in places such as Harehills and Middleton are influenced by many factors, not simply whether HS2 is being built.
“What really matters is the investability of prime commercial and residential real estate, such as Leeds South Bank, where the arrival of Northern Powerhouse Rail is still expected and is already reflected in investment decisions.
“To help fund Northern Powerhouse Rail - including new stations in Bradford and Rotherham and an underground station at Manchester Piccadilly - the current Chancellor, Rachel Reeves, has argued that new forms of fiscal devolution, including the retention of income tax uplift, will be necessary.
“To argue that major transport schemes do not deliver land value uplift is not justified by this evidence.
“However, the comparatively lower land values in Manchester and Yorkshire than in other markets, particularly London, mean that value uplift can only ever form part of the overall funding solution.”