Written evidence submitted by WSP [HLV 038]

WSP is a world-leading multi-disciplinary professional services consultancy which supports significant projects in both the built and natural environments. We provide engineering, planning, design services, valuation and strategic advisory support to public and private sector clients in the transportation and infrastructure, property and buildings, earth and environment, power and energy, resources and industry sectors. Our team in the UK of over 11,000 engineers, surveyors, scientists, environmental specialists and planners, is part of a talented family of more than 74,000 global changemakers, transforming what is possible to build a smarter, greener future for all.

Our planning expertise spans delivering consents across the UK and Ireland. This includes Development Consent Orders (DCO) for Nationally Significant Infrastructure Projects (NSIP), Developments of National Significance (DNS), planning permissions, Section 36 Consents, and Transport and Works Act Orders for critical local infrastructure. Beyond our work for infrastructure promoters, we support the Planning Inspectorate and statutory consultees, including local authorities, in engaging with infrastructure and development planning.

We are at the forefront of innovation in the transport sector and are committed to playing a key role in the UK’s journey to a net-zero transport network. Our valued clients across the UK include National Highways, Transport for London, and Network Rail, with whom we have built relationships spanning over 10 years. Our services include planning, design management, systems integration, and signalling. As a leading consultant on major rail projects such as Crossrail, HS2, Great Western route modernisation, Northern Hub, and Thameslink, we help the industry reduce costs, improve efficiencies, enhance performance, and increase route capacity.

Question 1: How effective and efficient are current mechanisms of land value capture in England?

WSP and BusinessLDN, with support from Transport for London (TfL) and London Councils, explored current mechanisms for land value capture in our recent report ‘Generating land value to grow London’, and our conclusions remain unchanged: current mechanisms of land value capture have not delivered their desired outcomes and a new approach could be adopted which is more effective in delivering public infrastructure and housing.

The Housing, Communities and Local Government Committee’s 2018 report ‘Land Value Capture’ similarly found that efforts to capture land value increases following public policy decisions have had mixed success.

While developer contributions through the Section 106 agreements and the Community Infrastructure Levy have played a role in securing funding for infrastructure and affordable housing, these mechanisms are often negotiated on a site-by-site basis, leading to delays and uncertainty. A more effective, systematic approach is needed to unlock infrastructure investment and housing delivery at scale.

Question 2: What alternative methods of land value capture might be most suitable for England?

Our aforementioned report proposes an evolution of the current Tax Increment Finance (TIF) model to improve land value capture.  Traditional TIF mechanisms fund infrastructure investment by retaining the increase in business rates on commercial property. We propose expanding this to include residential property taxes from new homes unlocked by the infrastructure that is delivered, or what is termed Residential Tax Increment Financing (resi-TIF).

This new ‘combined TIF’ model would:

• Capture revenue from residential property taxes as well as business rates, creating a broader funding base.
• Allow infrastructure to be financed upfront, with repayments linked to future tax receipts over a fixed period.
• Provide a framework for agreements between government, local authorities, and developers to secure funding in advance, avoiding the need for complex, site-by-site negotiations (e.g., as seen with the Elizabeth Line).

Question 2a: Would alternative mechanisms of land value capture deliver more affordable housing and public infrastructure than the current section 106/Community Infrastructure Levy regime?

WSP believes a Resi-TIF model would positively link infrastructure investment with housing delivery by using tax receipts from new developments to fund transport and other public services, resulting in the following benefits:

• An increase in the overall funding pool for infrastructure, enabling more projects to proceed;
• Support for higher-density, transport-oriented development (TOD), which could facilitate the delivery of more affordable housing;
• A more predictable funding stream than Section 106 agreements which allow for strategic planning but are agreed on a case-by-case basis when appropriate development comes forward.
   

Resi-TIF would not be a replacement for existing sources of funding, but rather an additional tool to support public infrastructure-led growth and the provision of more affordable housing stock in support of the Government’s mission-led agenda.

Question 2b: How could the benefits of alternative mechanisms of land value capture be realised across England, including regions with lower average land values?

Land value capture is most effective in areas where there is a strong underlying land value uplift, such as London, Cambridge and Milton Keynes.

In regions with lower land values, additional government support may be needed, potentially via:

• Central government co-investment in infrastructure to kick-start development;
• Targeted use of Development Corporations or Mayoral Combined Authorities to coordinate land assembly and strategic investment;
• Adaptation of Resi-TIF to prioritise employment-generating development in lower-value areas.

Question 3: What are the economic and practical opportunities and challenges of pursuing land value capture policies in England?

In 2017, TfL published its report on capturing land value uplift resulting from transport investment. Their research demonstrated the following positive effects of the Elizabeth Line in driving economic growth:

• A 6% increase in housing delivery and an 11% increase in employment accessibility near stations;
• A 150% increase in office sales in Paddington;
• Over £600 million raised through developer contributions and the Mayoral CIL.

However, land value capture is most effective in urban areas with a strong demand for new development. As stated, in rural and lower-value areas with lower usage rates of public transport, complementary funding mechanisms would be required to support infrastructure investment and, in turn, housing delivery.

Question 5: Should reforms to land value capture be pursued through changes to the current section 106/Community Infrastructure Levy regime, or by introducing a new mechanism?

The Resi-TIF model is intended to complement, rather than replace, existing mechanisms of land value capture. While it provides an alternative route to funding infrastructure, it does not necessarily eliminate the need for site-specific developer contributions. The benefits such a model may assist in a more strategic and comprehensive approach to funding larger infrastructure projects than is allowed for under the current section 106/CIL value capture regime.

However, in cases where future receipts can be reliably forecasted and secured, there may be scope to reduce or reallocate some upfront Section 106 obligations or CIL. The extent of this would need to be determined on a case-by-case basis and would likely depend on factors such as local planning policies, viability assessments, and the scale of infrastructure required.

For example, Milton Keynes successfully combines a “Roof Tariff” with Section 106 contributions, demonstrating that multiple mechanisms can work together to secure funding at scale. Clarification would be needed on whether Resi-TIF contributions could offset or complement existing transport-related developer obligations.

Question 5a: What changes to planning law and guidance would be needed to introduce a new mechanism of land value capture?

To support the implementation of Resi-TIF, we suggest the Government consider the following changes to planning law and guidance:

• Empower mayors to designate Enterprise or Growth Zones where future tax receipts can be captured;
• Link transport investment to masterplanning efforts, ensuring new developments can reliably contribute to funding;
• Provide legal certainty that local authorities or Development Corporations have the necessary powers to retain and reinvest locally generated tax revenues.

Question 5b: Would new methods of land value capture be compatible with human rights legislation, regarding property rights?

Yes, existing land value capture mechanisms operate within legal frameworks that balance property rights with the public interest. In devolved areas, Mayoral Combined Authorities, Unitary Authorities, and Development Corporations already have powers to allocate funding to social infrastructure.

Question 6: How could different mechanisms of land value capture complement the Government’s ongoing planning reform agenda, including delivery of New Towns and the release of ‘grey belt’ land for development?

The WSP and BusinessLDN report has a London focus, but the principles of land value capture are applicable to other high-value areas. Where land values are strong, Resi-TIF can help ring-fence funding for social infrastructure, giving both the public and private sectors confidence in delivery.

In these locations, land value capture mechanisms could support planning reforms by ensuring that necessary infrastructure is in place for the delivery of New Towns and new housing developments. However, in areas with lower land values, where such mechanisms may not generate the sufficient funds, alternative funding approaches may need to be considered to ensure delivery.

Question 7: Overall, would reforming land value capture support or distract from the Government’s target of delivering 1.5 million new homes by the end of this Parliament?

We believe that reforming land value capture by combining new models like Resi-TIF with existing Commercial TIF can help unlock development more quickly. This approach provides certainty around funding lines and ensures the delivery of public transport and other infrastructure that supports the Government’s housing targets.

It should be noted that such infrastructure not only enables physical development but also promotes social value by improving connectivity and access to education, healthcare, and other vital services, thereby enhancing the quality of life for local communities up and down the country.

Furthermore, aligning this reform with the devolution of powers to Mayoral Combined Authorities (MCAs) will give them the ability to more effectively drive forward infrastructure projects that are suited to the needs of their localities. In regions with strong land values, land value capture is a powerful tool to help accelerate housing delivery and ensure that the required social infrastructure is in place. It has been noted, however, that in areas with lower land values, alternative mechanisms may need to be considered in order to meet the Government’s housing targets.

March 2025