Wandsworth Council is set to agree a financing package for the extension of the Northern Line to Battersea with the Greater London Assembly and HM Treasury.
The proposal would use Enterprise Zone legislation to capture local business rates revenue and channel it into the delivery of this major infrastructure project.
This is the first time such a scheme has been brought forward in England and could, say the council, set a new blueprint for financing growth and job creating transport schemes.
The proposal involves the GLA borrowing up to £1bn to pay for the Tube extension, with a repayment guarantee provided by the UK Government to minimise borrowing costs.
Loan repayments would be made from two revenue streams, contributions from developers collected through section 106 or Community Infrastructure Levy, and the growth in business rates revenue within a new ‘Nine Elms Enterprise Zone’ which would include the regeneration area’s key development sites.
The new zone – (see the council’s website for a map) – would stay in operation for at least 25 years.
Over time these funding sources are expected to cover the complete repayment of the loan.
Enterprise Zones usually offer incoming businesses a discount on their rates bills to stimulate growth and investment. In this proposal, it would be used purely as a mechanism to fund the Northern Line Extension.
TfL plans to submit their application under the Transport Works Act by the end of April.
Leader of Wandsworth Council Ravi Govindia said: “We plan to use an enterprise zone as a funding tool for a major transport upgrade, which in turn, will create new growth, new jobs, and even greater tax receipts in the future.
“Over the long term the scheme would pay for itself while delivering a major economic and inward investment stimulus for London. It would give Battersea its first underground station and help bring an underused part of the Thames riverside back to life.”
The new Tube tunnel and two new stations are needed to support 25,000 new jobs and 16,000 new homes across the Nine Elms on the South Bank regeneration area.
The proposal is to extend the Charing Cross branch of the Northern Line between the Kennington Loop and Battersea Power Station. It includes two stations, one at Wandsworth Road and another at Battersea Power Station.