The Subplot
The Subplot | Can Northern Powerhouse Rail be saved?
THIS WEEK
- Northern Powerhouse Rail’s future: a deep dive into how the North could resurrect the ambitious rail strategy
CAN NORTHERN POWERHOUSE RAIL SURVIVE?
If local taxes help pay, maybe it could
NPR has been hanging by a thread for ages, and yesterday the new Transport Secretary appeared to cut it.
Can it be saved? There’s a plan brewing.
“Mistakes were made,” said secretary of transport Mark Harper when reminded yesterday that Liz Truss promised to back Northern Powerhouse Rail (after the Johnson government fileted the project). That is hardly the language of a man with plans to spend £17bn-plus.
Plus ça change
Surprised? You shouldn’t be. Johnson’s ebullient promise to build NPR came out of thin air during his leadership campaign in 2019 and never had much foundation. Since then Whitehall has been rowing back. Remember too that transport spending has been heavily skewed to London and the South East for decades. Take a look at this nice map from 2014. Things have changed a little but not fundamentally and the last decade shows a reliably similar pattern (about £8,000 per person in London, about £2,000 per person in the North West). Meanwhile, the damage mounts. The North’s metro mayors made this point in technicolour late last week, addressing the particularly awful rail service currently on offer.
Doormat politics
The North has been asking nicely for transport funding for years – and surprise surprise, nothing happens. At what point does one give up asking? Could the North fund NPR itself, via a mixture of local authority loans, local taxation, uplifts in land values, commercial partnerships, with developers – who benefit from the uplift in land values – taking some of the load? An increasing number of NPR-watchers think something useful and workable could be done, if there is the political will. In other words, there is a cunning plan.
Politics meets property
The argument falls into two parts. The first property-slash-practical, the second political. Both turn on accepting the idea that the North can raise a fair chunk of the £20bn needed – say, £2bn-£3bn give or take – but couldn’t raise the whole sum.
Developers help pay
Practical / property issues first, and that means a glance south towards London and Nottingham. The property business made – and is still making – a fairly hefty contribution to London’s Crossrail. So far it’s come to £1.2bn via the Mayor’s Construction Infrastructure Levy – a tax on property developers – along with section 106 payments. Last year they chipped in £143m. Now obviously this is a long way short of the £17bn-£20bn that Northern Powerhouse Rail needs, and London’s tax base is much larger than any Northern city’s, but every billion pounds raised is a step in the right direction. Meanwhile, in Nottingham a workplace parking levy – introduced in the teeth of business opposition – has now settled in nicely. It helped pay for the city’s trams. Transport for the North has already talked about part-funding NPR through some kind of devolved or hypothecated tax (Subplot, 20 October)
It might just work
Could something like this work across the North? Stephen Miles is the Leeds-based head of land, development, and planning for Cushman & Wakefield and up to his eyeballs in proposals for Bradford, where a large chunk of the NPR budget would be spent building a new underground station. Arup data suggests the station would lead to a 10% uplift in residential land values.
Depends how much
“There’s definitely a value capture opportunity for NPR which should be explored,” Miles says. “It would make a contribution to the cost, allowing the North to ask the government to provide the balance. The question is, how much? That depends on locations of stations but it’s the aggregate uplift that matters.”
Be creative
Miles says local leaders would need to think out of the box. “They would need to be innovative, and couldn’t just rely on land value capture directly, so also look at tax incremental finance, business rates, stamp duty land tax retention, congestion charging – and there are other ways to ring-fence funding.” Miles concludes that if NPR was designed to maximise values, and the value-harvesting was done well, it could add up to significant sums. Not enough to build NPR but by no means trivial. Of course many of these require government approval, or at least tacit consent. Which is where politics comes in.
We both win
The politics is super simple and super complicated, explains Tom Forth, head of data at consultancy Open Innovations. For self-funding to work, two things need to happen. Firstly, central government needs to feel so sufficiently shamed (and / or in danger of losing marginal seats) that it contributes a hefty chunk. Secondly, local political leaders need to expend some political capital to generate the momentum such an approach would need. This means taking the political risk of raising local taxes.
It all adds up
“Raising £500m here and there via local taxes could make a difference. You could raise a fair whack in the North. Though the scale of money we’re talking about here is probably tram-system sized, enough to electrify a few rail lines, enough to really improve the North’s rail and trams, but not enough to dig a £5bn tunnel under the Pennines or build an underground station in Bradford,” says Forth, adding that the political gamesmanship is what could lever this into an NPR-sized pot.
How it works
“You can see a case in which Northern mayors say to government: ‘look, if we contributed 10% to the cost, would that tip the balance? If we took the flack for the tax rise, took the risk?’” says Forth. From the other side, ministers can say: ‘we agree NPR needs doing, but it’s a tough spending round, we need you to step up and carry some of the pain’. Their message would be: metro mayors, it is time to act like the devolved governments you say you want to be.
It was us that did it…
“That would surely appeal to a Conservative government who could then say, look at Labour mayor’s raising taxes,” says Forth. And of course if it works, and NPR gets built, who put up the lion’s share and can claim the credit? A Conservative government, of course. “If I were Mark Harper I’d push quite hard on this,” Forth adds.
…or it was us
For the Labour mayors, the game is the same in reverse. They get to shame (or frighten) a Conservative government into coughing up the balance of the NPR cost. The mayors then get to claim they got NPR built. “Politically, this feels quite lucrative,” says Forth. This could be hard to sell: who will vote to raise taxes in Merseyside to pay for a new station in Bradford? But if the mayors stuck together and played a canny game, and if NPR is as important as they say it is, it is not unfeasible.
…or it was both of us
So that’s the plan: accept some political pain, and a little risk, as the price for getting NPR built. It is a bargain at the heart of the partnership formula that Manchester City Council knows well: the Leese-Bernstein years were all about sharing with central government, and it generated enormous dividends. The Factory arts complex is the latest in a very long line of outputs.
Taking the plunge
Can Andy Burnham and the other metro mayors pull off the same trick on a much larger scale? Subplot asked the metro mayors of Greater Manchester, Liverpool City Region and West Yorkshire for a steer: so far, silence. In the background there are rumbles that national infrastructure should be paid-for nationally – which sounds ominous because the danger is that they take the safer, less politically-risky approach of continuing to blame a Tory government for being mean, and let NPR die. It all depends how serious they are about growing the North’s economy.
Get in touch with David Thame: david.thame@placenorthwest.co.uk
The Subplot is brought to you in association with Oppidan Life.
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It will be scrapped as part of the budget announcement along with the HS2 Manchester leg.
By Anonymous
In the past Andy Burnham has in effect said that he would sooner forego HS2 sections 2 and 2b and get NPR built in full, and I think that would work, as in that way most of the Northern cities would benefit and the chaotic mess we have now on Northern railways could be a thing of the past.
By Anonymous
It will not happen. Our Southern government will simply use the economic mess, they have created as an excuse to abandon it. HS2 will be watered down and HS2 will just become a fast commuter line for people on the North side of London to get to work in five minutes. In twenty years time, we will be still be taking an hour to get to Leeds, if we are lucky.
By Elephant
I agree that I’d rather see NPR in full than HS2 Phase 2. However the mistakes that Mark Harper references are of the conservatives’ own making and if they scrap their manifesto commitments as reported, then there should be a general election to determine if their policies have a mandate or not
By Levelling Up Manager
I’ve been saying all along. The priority should have always been a high speed route from Liverpool to Leeds via Manchester; this was most needed before HS2 or Crossrail2. It’s London-centricity in it’s purest form; NPR doesn’t directly benefit London so Westminster doesn’t care.
Whilst I believe HS2 should happen, a lot of the so called benefits aren’t why it’s got this far, the main reason HS2 has got this far is because it will allow the London elite to get up North and back in time for lunch and not have to mingle too long with the peasants.
By Mancunian
I have no doubt that there will be an attempt to tax Liverpool city region taxpayers and businesses, to fund transport improvements in Manchester.
The gifting of gold plated infrastructure to others while expecting our city to pay through the nose for the basics is par for the course.
The notion of an undemocratic colonial extraction tax is, however, unsupportable. It will be the career end of any politician that supports it here, and open a new era of grievance politics on a whole new level.
Give us what we have more than earned. Then we can talk.
By Jeff
Just a waste of money, hardly anybody will use it yet they expect everybody to pay.
By Cal
Cal getting in there with another insightful comment, bringing the whole of PNW’s reputation down
By Anonymous
An Interesting comment Jeff. Wholly unsupportable of course and largely nonsense. The ‘Manchester is the source of all our woes’ is a tired one by now. It ignores the complexity of decades of underinvestment in the North by consecutive national governments not to say decades of underachievement by consecutive local councils . As a regular contributor here I would have expected better.
By Anonymous
Great analysis, thank you
By Northern Powerhouse
Wigan to London – 2 hours. Wigan to Leeds – 2 hours. Liverpool to Leeds – 2.5 hours.
We don’t need HS2, we can already travel North-South pretty quickly, but across the North it’s appalling.
NPR is much more important…Liverpool to Leeds via Manchester (and other routes taking in Bradford etc)
If all the Mayors got together as a single voice, we might just be heard (though perhaps I’m being overly optimistic)
By The Wiganer
By all means, engage with the substance Mr Anonymous!!
Liverpool’s taxpayers are already indirectly subsidising HS2 into Manchester. One through general taxation, and two because the route of it is deliberately targeted at Manchester and away from Liverpool. This increases the cost of our spur (which you can be guaranteed we will have to pay for) to decrease the cost of yours (which you get for free with all the bells and whistles).
Believing this is settled because we have other more urgent things to deal with right now is naive.
Trying to tax us directly to fund other cities’ infrastructure may be just the ticket to show you that the issue of discriminatory spending is far from settled.
By Jeff
Manchester tax payers already subsidises Merseyrail’s operating costs and has done for decades.
Also, has Liverpool paid off the massive cost government paid for the loop and link line extensions to Merseyrail yet?
The invoice is in the post.
By Mancunian tax payer
Typical gaslighting when the first response doesn’t wash!! The old metrolink makes a profit (despite sinking costs of over £10bn) while merseyrail operates at a loss (despite Liverpool’s 105m annual city region fare contributions vs 65m for the whole of GM.
On the actual topic in question, we’ve had over a decade to get used to such gaslighting.
Such as being told that HS2 being withheld on the basis of faulty data didn’t matter to our prospects. Versus now apparently a show-stopping underground HS station is vital to yours.
Sorry “pal”, but it should be clear to you now that the divide is alive and well. Raise the topic, reap the political consequences.
Probably why the absurdly named NPR will never, ever happen. Just remember, we weren’t the ones that sold our souls.
By Jeff
Rolling Stones …..” but if you try sometimes , you get what you need”, and we need full NPR much more than HS2, most of the North can get to London in around 2 hours, but to cross the region currently can take twice that ,as long as your train turns up ,or more if it get delayed.
By Anonymous
London runs the north like it ran the empire and the northern M PS all in reality live in London and have zero interest in transport infrastructure that does not benefit them
By Anonymous
You will Jeff believe whatever you choose . That’s how bias works. I’m just surprised to see it play out on PNW. Your comments are better made on Facebook where the truth is less likely to be fact checked.
By Anonymous
Burnham saying HS2 is worth forfeiting for NPR is very noble but there is no shovel in the ground anywhere for NPR, so what will that actually do, only give the government a get out of gaol free card and allow them to kick their promises into the long grass. Both these projects need to go ahead. This treatment of Northern and Midlands commuters by their own elected representatives, is neglect. Why is someone in Huddersfield not entitled to the same level of transport commitment, as someone in Slough?
By Elephant
Jeff, what does relative fare receipts have to do with the fact that Merseyrail runs at a permanent loss? A subsidy is still a subsidy whichever way you look at it. And a subsidy must be plugged by the tax payer. I think it is you that is gaslighting the good readership of PNW by trying to make out that Liverpool is victim of some sort of bias or conspiracy.
As I say, the invoice is in the post.
By Anonymous
At least Manchester will still get the HS2 station. The east west link looks like it will be tenuous at best. Manchester may have to continue being the Northern powerhouse but at least it can provide a lot of jobs for the area. I didn’t realise it subsidised other areas though other than providing employment.
By Anonymous
@6.31pm Well the whole point in Liverpool wanting HS2/HS3 is to create them jobs isn’t it and to attract business it has to start somewhere and why should Manchester be in favour to other cities ?
By Anonymous
Shapps on TV this morning saying the Mcr/Leeds link will be sufficient, so does that mean the North can wait at least till 2040 before all of it is brought in line with the standard of rail service enjoyed by the South, NPR needs to be now.
Crossrail is gilt-edged ,while we always get edged out.
By Anonymous
StarTreck Newsflash: A communications revolution is underway. Tele-Transporters are obsolete. Video-Conferences are taking over.
By James Yates
Video conferencing has been around for 30 years and easily available on laptops for at least 15. People do like to travel though so the the idea of some kind of mass transportation device would be just peachy. If not an actual tele transporter then maybe something on rails,quick comfortable and reliable. What’s that you say ‘you’ve more chance of getting the tele transporter’ . Yes , that is now apparent.
By Anonymous
It’s good that Manchester still gets the HS2 station which is already well underway so I can live with this. Large infrastructure projects being cut in a recession…who’d have thought …
By Anonymous
HS2 and Northern Powerhouse Rail should be the same project! One integrated high speed rail line connecting all the UK’s Major cities. A lack of investment now will cost us so much more in the future.
By MC
Why should Bradford and Leeds get stations? If it is one metro area, one station is enough.
By Los Santos
Someone just asked why Bradford and Leeds shouldn’t both have a station? So you think that Stockport should share a station with Manchester? Or Watford with London? I despair at the ignorance on here about Northern towns. There are half a million people in Bradford. It is the same size as Edinburgh.
By Elephant
Agree with the recent article in the Spectator, shelve HS2 north of Birmingham and build NPR in full, in that way the North gets a railway it deserves, we can come back to HS2 phase 2 later.
By Anonymous
Somehow I think Los Santos based his comment around the fictional city of the same name in Grand theft Auto. There are clearly not many stations there because it’s based on Los Angeles and everyone drives!
By Los Didsbury
Bradford Station! If Little Britain, with its Marketist ideology, was like China, a new Bradford station linking both existing rail lines with thru trains to the Dales, North Lancs, Scotland as well as Leeds/Halifax/Manchester would be built next week. What a fantastic 21st C rail hub! Victorian railways would have been cancelled by this Treasury and the Tories. They confuse business accounting with national economics. Business Cases and Social Value are still only half the tale. Borrow money and invest for tomorrow. It’s called Capitalism!
By James Yates
Leeds and Bradford are both bigger than Manchester
By DH
Leeds and Bradford are both bigger then Liverpool and the city of London too.
By MH
Not really though but they are combined twice the size of Merseyside.
By Anonymous
I guess it really is only the big boys get an HS2 station. That doesn’t make Los Santos any more real though.
By Anonymous
Isn’t all heavy rail subsided, this includes Mersey Rail. Local trains into Manchester and elsewhere.
So all the taxpayers contribute to areas where they don’t benefit from?
By Oh Mr Porter!
Yes Bradford very much overlooked even though it has such a large population. Rather like Sheffield which is often missed out when the goverment is handing out goodies, it`s fairly central too but is very hard to reach by train from most northern cities and towns.
By Anonymous
I’d much rather see NPR than HS2. In the final analysis, we have pretty good connections between London and the Northern Cities, but lousy connections across The North. Given a choice (and acknowledging that a huge amount of HS2 has already been half-built) I’d stop HS2 at Crewe, upgrade and electrify the Midland Mainline, four-track the WCML between Crew and Runcorn, and then build NPR in full, complete with a station at Bradford. However, I’d definitely take another look at the proposed route, which is, quite frankly, a bit of a nonsense, and which mainly exists for the benefit of Manchester Airport (accounting for <5% of all NPR demand). The most sensible route would very obviously be the simple direct one: straight out of Lime Street, across Chat Moss to Manc Victoria, then on via Rochdale and a sub-Pennine base-tunnel to Bradford, then tunnelled again to Leeds, before heading east to join the ECML plus an upgraded branch to Hull; all fully electrified, and fully four tracked except where the line is exclusively for the use of non-stop express trains. Maximum train speed should be 140mph, because there is no conceivable advantage in going any faster over such short distances, and anyway, much of the route is through tunnels where line-speeds are inevitably limited. Add to that, full electrification of the CLC, Diggle, Calder Valley and Hope Valley routes, and we'd be fairly well sorted.
By matthew jones
Well said, Matthew
By WayFay
Manchester as HS hub needs to fast rail links to Glasgow / Derby / North Wales; Not just Liverpool / Leeds
By Anonymous