Charles Wright: Government knows value of transport infrastructure investment in London, but withholds it anyway

Charles Wright: Government knows value of transport infrastructure investment in London, but withholds it anyway

Two weeks ago Transport for London unveiled its latest ambitious contribution to the capital’s infrastructure – a two-station addition to the Docklands Light Railway (DLR) from Gallions Reach via Beckton Riverside to Thamesmead, supporting up to 30,000 new homes and up to 10,000 jobs.

“Extending the DLR would unlock huge opportunities for London,” said Sadiq Khan. “The breadth of opportunity and economic potential that this scheme offers is enormous,” added Bek Seeley of developers Lendlease, speaking on behalf of the Thamesmead Waterfront Partnership.

Working with Greenwich and Newham councils and major developers both sides of the river, TfL envisages sign-off on the scheme next year, construction starting in 2028 and the first passengers on their way in the early 2030s.

There’s a sting in the tail of TfL’s enthusiastic press release, though, in a plaintiff “note to editors”: “Construction for the DLR extension to Thamesmead is currently unfunded”. In simple terms, it won’t be happening any time soon.

It’s not the only major infrastructure project in the capital sitting on the shelf as a result of funding uncertainty. TfL last month confirmed that Crossrail 2 had been shunted even further into the future, alongside the Bakerloo line extension, also on hold after a decade or more of detailed discussion. And the HS2 Euston terminus has been “paused” by the government until at least 2025.

None of these are vanity projects, any more than the Elizabeth line was. Indeed they are all included in a new shopping list of 67 key projects in the capital needed to secure a “more prosperous, inclusive and sustainable” future for the city, put together by London Councils, the umbrella group for the capital’s 33 local authorities.

In a sign of the private and public sectors speaking increasingly with one voice on the city’s needs, an analysis from the private sector group Business LDN’s Place Commission, also published last month, covers similar ground. Its blueprint for the capital covers transport, housing, sustainability and digitalisation, with calls to boost affordable housing budgets and ramp  up action to meet the city’s 2030 “net zero” carbon-cutting target.

Work is needed too on full-fibre broadband connectivity and upgrading electricity infrastructure, while threatened hikes in water charges have underlined the requirement for significant extra investment in sewage and supply arrangements in the city.

These calls aren’t new. Back in 2019, a detailed analysis for City Hall catalogued London’s “huge” investment needs: “The city’s transport system is the most congested in the UK and struggles to meet increasing demand. Severe housing shortages affect living standards and constrain the economy. Digital infrastructure networks fail to meet the needs of many businesses. And a transformation in the capital’s energy networks is needed to reduce carbon emissions and combat climate change.”

There was a price tag too – public and private investment of some £968 billion of capital and operating expenditure costs up to 2041. As we all know though, there’s no real sign of that level of necessary investment being provided, particularly from Whitehall, despite the widespread acceptance that, for large transport schemes like the DLR extension especially, it’s the government that needs to put its hand in its pocket.

Transport Secretary Mark Harper actually did recognise the value of public investment when he heralded the success of the Elizabeth line after six months of operation indriving growth not only within London but across the wider region” and forecast to “generate £42 billion for the entire UK economy”. It was “a shining example of what we can do when working together,” he added.

But just six months later his junior minister Huw Merriman was deferring the Euston HS2 terminus scheme, announcing the Treasury’s conclusion that the government did not have the “financial headroom to proceed” and leaving a hole in the ground in Camden until 2025.

It’s all getting urgent. The capital’s productivity growth is stalling, according to a stark Centre for Cities analysis, unemployment remains higher than in other English regions, and there’s an escalating housing crisis. If tech entrepreneurs are leaving for Lisbon, the poorest Londoners may be being forced out by high rents, according to some analysts.

Warnings are coming apace. BusinessLDN commission chair Francis Salway has warned thatLondon’s place in the hierarchy of world cities cannot be taken for granted” and deputy mayor Jules Pipe has said that ​“investment in transport, affordable housing and decarbonisation are key to London delivering economic growth and remaining a global leader for business and talent”.

Meanwhile, TfL is still awaiting a Whitehall decision on the £475 million capital funding it needs next year simply to honour existing contracts. And it has even less long-term funding certainty and income-raising flexibility than Manchester and the West Midlands, thanks to their recently-agreed five-year devolved funding deals.

It’s those sorts of deals, particularly when they are not just about cash but about more power to raise and allocate revenue, which all concerned see as the way forward. London Councils is now plotting out a “gainshare” proposal, keeping more of the proceeds of locally-driven growth in return for London generating higher growth nationally.

That would be a “win-win”, according to the group’s vice-chair Elizabeth Campbell, Tory leader of Kensington & Chelsea Council, bringing benefits “not only to Londoners but the UK economy as a whole”. Will ministers listen, hunkered down in the tail end of their administration and subject to Treasury restraint and the last flickerings of the anti-London “levelling-up” agenda?

For Pipe, the London Councils’ report is “a really useful document for slamming down on the table in front of ministers in the future and saying, ‘you have got to support this’” – the emphasis being very much on “in the future”, I suspect. Perhaps that future is Londoners’ best hope.

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