SE1 office developments could be hit by Crossrail levy says Southwark

Last year the Mayor of London announced his intention to vary the London Plan to enable him to insist that developers building office blocks in the so-called Central Activities Zone (CAZ) pay a contribution towards the cost of east-west rail link Crossrail via the section 106 (planning gain) agreement.

Mr Johnson hopes to raise £300 million for Crossrail via a levy on additional office space above a 5,000 square foot threshold in the Central Activities Zone and the northern Isle of Dogs.

The CAZ incorporates much of north Southwark and north Lambeth (including Elephant & Castle) although neither borough will be served directly by Crossrail.

The City Hall view

"It's wrong to say that boroughs that don't have a [Crossrail] station won't benefit," deputy mayor Sir Simon Milton told the London Assembly's planning committee last week.

"Southwark will particularly be a beneficiary because of the impact of congestion – for example – on the Jubilee line.

"Anyone who's tried to get on the Jubilee line in the morning peak to get to Canary Wharf will know that you sometimes have to wait for five or six trains before you can get on.

"London Bridge Station will benefit from the reduced congestion that Crossrail will help deliver.

"The benefits are not necessarily from the physical assets; they are from the relief of congestion in that morning peak on certain key lines."

The Southwark view

"Our main concern is that the central activities zone boundary has been drawn to include areas that are indisputably fully functioning, high land value areas with a great deal of economic activity and areas that aspire to attract that economic activity," argued Simon Bevan, Southwark Council's interim head of planning and transport.

"Southwark entered in to the Cross River Partnership and has welcomed the London Plan designations of opportunity areas at London Bridge and Elephant & Castle in order to fulfil those aims of regenerating London South Central.

"The main concern that we want to get across is particularly to do with Elephant & Castle, which is ... 2.83km away from any [Crossrail] station, does not have a direct connection with any of the new stations being built and ... has lower land values than those areas in central London."

The Mayor's planning officers insisted that each planning application would be examined on its own merits and that they would be open to persuasion if a developer could demonstrate why it would be inappropriate for their scheme to contribute towards Crossrail.

But Mr Bevan told the committee that developers would be deterred from coming to Southwark at all so the opportunity for those discussions would not arise.

"At the Elephant & Castle we're talking about an area where we're trying to promote regeneration with 75,000 square metres of commercial space with a tube station that doesn't have an escalator and is extremely poorly served as an interchange.

"Developers may look at potential to develop in that area and say well, there will be section 106 used to increase connectivity to the regional infrastructure, but you can't even get in to the tube station in the first place."

Sir Simon Milton offered some reassurance: "We would clearly be prepared – in exceptional cases – for applicants to put forward evidence that there are other transport improvements of equal or greater need."

"Perverse" proposal could mean more hotels for SE1

Lib Dem Assembly member Mike Tuffrey told the committee that he didn't consider the Mayor's proposals to be logical or fair.

"It seems perverse to say that Elephant & Castle should pay to bring the rate down in the areas where it seems to me that there is a real benefit," he said.

The committee also heard concerns that the levy could distort market decisions and land use, meaning that developers might be more likely to bring forward proposals in SE1 for hotels and student accommodation which would not be liable for the Crossrail levy.

Dan Taylor, Southwark Council's London Bridge and Bankside development team manager, told the committee that his department had modelled a scenario to demonstrate the impact of the proposed levy.

"We've taken an example of Blackfriars Road – say a scheme of 5,000 square metres. Under our current policy climate we would charge around about £500,000 section 106 for all the different headings. Under Crossrail that would be £1.6 million ... it's a huge impact that could potentially deter development."