Nine Elms enterprise zone to be set up to finance Northern Line extension

The enterprise zone would be introduced to boost regeneration in the opportunity area and would help finance large-scale regeneration projects through the use of tax increment financing. It is envisaged that the Northern Line Extension would be one such project. 

"We are getting all our ducks in a row in order to have everything in place by the Budget," said Sir Edward Lister, the Mayor of London's chief of staff, according to an EGi report. "The EZ will have one purpose - to allow TIF to finance the £850m Northern Line extension from Kennington to Battersea Power Station."

Tax incremental financing (TIF) is a proposed new power that would allow councils to borrow against their predicted future increase in business rates over a 25 year period. The borrowing could then be used to fund development projects.

The proposed £950m extension to the London Underground's Northern Line, highlighted in Chancellor George Osborne's Autumn Statement, would create new tube stations at Battersea and Wandsworth Road.

“Commentators have for some time been emphasising the imperative need for financial solutions to facilitate delivery and reduce risk in the VNEB OA," said Marcus Bate, a planning expert at Pinsent Masons, the law firm behind Out-Law.com. "In the absence of new money by way of Government grant or public sector pump priming, TIF and other means of capitalising future income streams such as retained business rates and CIL will be crucial to stimulate regeneration.”

“Political and legal structuring is another important piece in the regeneration jigsaw," said Bate. "The use of an enterprise zone, and the potential establishment of a mayoral development corporation, would be a sensible intervention. It is the natural next step, in planning terms, following of the Government’s commitment to the regeneration of Battersea Power Station in its Autumn Statement.” 

Under legislation, councils can raise further money through the use of the new Community Infrastructure Levy (CIL), which can be charged on all new developments, subject to specific exemptions and reliefs. The proceeds raised by CIL must be used to fund local infrastructure needed to support new development.

The proposed Nine Elms enterprise zone would include a "new speeded-up planning process" but would not include rate reduction incentives, according to Lister. 

The Mayor of London Boris Johnson also announced the establishment of the London Enterprise Panel last week. The panel's role will be to advise the Mayor on how to attract strategic investment to support private sector growth and employment, promote enterprise, increase skill levels and protect and enhance London’s competitiveness.