The public war of words between the Mayor of London and the Department for Transport continues, with a claim this morning that reduced funding for London’s transport could put planning housing developments at risk.

It’s true that a lot of housing is tied with transport upgrades, but it’s often the housing developer being asked to fund the transport improvements to take into account the arrival of hundreds (or thousands) of people in an area that couldn’t otherwise cope with the extra demand.

Known as Section 106 payments and the Community Infrastructure Levy, these payments from the developer go to the council to spend on local area upgrades, with varying degrees of efficiency. Some councils are good at spending the money and others seem to horde it for years.

There is however another model, where larger transport upgrades are built on the assumption that doing so will unlock much larger housing developments across a wider area that otherwise could not go ahead.

If the transport links are not built, then housing cannot be built either.

An example would be the Barking Riverside development, which has a clause limiting the number of houses that could be built in the area until the new rail link is built. No railway means no houses.

The latest statement from the Mayor’s office ahead of this weekend’s deadline to secure a funding settlement for TfL is that curbing TfL’s funding would affect its ability to develop transport upgrades that would enable future housing developments to take place.

However, most of the examples given this morning are not dependent on transport upgrades — quite the opposite in fact.

A large upgrade of Colindale tube station is being planned, and the statement says some 6,000 homes might be at risk if the tube station upgrade doesn’t go ahead. However, that station upgrade is fully funded, as the bulk of the cost of the upgrade comes from the profits extracted from a housing development being planned by TfL to sit next to the station.

The statement also said that a second station entrance at Walthamstow Central could be at risk without transport funding. However, that entrance is being built by the housing developer, not TfL. It is possible that TfL could end up in a situation where the box is built but not fitted out, but arguably that’s a delay to completion, not a cancellation. A similar situation may happen at Elephant and Castle.

A concern that a new DLR station at Thames Wharf would not be built, and put a housing development at risk is overlooking the fact that TfL has already decided to delay the new DLR station, pending a decision about how to pay for it. The DLR station would have been largely funded by the housing development and central government through its Housing Infrastructure Fund, so TfL’s current funding situation would likely to have been a minor problem here.

However, on a much stronger footing is the concern that a planned extension of the DLR to Thamesmead wouldn’t go ahead if the funding isn’t available, and that would put a lot of housing at risk — between 25,000 to 30,000 additional homes in fact. This is one of those schemes where a transport link is provided to unlock housing that otherwise wouldn’t happen, and in this case, the Mayoral concerns are legitimate. When TfL was looking at cuts last year, they prioritised the DLR extension over the Bakerloo extension as the DLR would enable more housing than could be built along the Bakerloo line extension.

Also viable is the suggestion that an upgrade of Leyton station would not happen — as the £18 million cost is due to be half-funded by TfL, who naturally won’t be able to afford its half of the bill.

While most of the housing developments cited are in fact not dependent on transport funding, quite the opposite, cutting funding for TfL would reduce its own in-house funding package, the TfL Growth Fund, which helps fund modest localised transport upgrades where other funding sources from councils and developers leave a short-fall in covering the costs.

A recent example would be the recently completed additional entrance at Ilford Station which cost more than could be funded by the property developer and the local council, so TfL filled the gap.

TfL is also usually very good at extracting developer funding for transport upgrades, where often the developer pays the cost of building the main structure at the same time as they are building their own site, leaving TfL to cover the cost of fitting the box out afterwards. This combination enables TfL to deliver local upgrades at a very low cost compared to what it would otherwise cost, and here, the risk of a cut to TfL’s funding is more serious as it reduces the opportunity for TfL to take advantage of a nearby development to grab something for itself at the same time.

Cancelling the opportunistic grabbing of chances to deliver upgrades “on the cheap” simply means that TfL would have to pay far more for the same upgrade at a later date, and cause more disruption to commuters from more building works when the upgrade can finally be paid for.

That’s the real risk to commuters if TfL’s long-term funding is not secured.


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