The hole in the financing for the infrastructure element of the Thames Gateway regeneration cannot be funded solely by developers. Nadia Elghamry searches for possible sources of investment to plug the gap
It is not a difficult sum. Infrastructure to support the Thames Gateway’s regeneration is going to cost £300m. About £17m has been secured through the government’s transport plan, and developer Land Securities is digging deep into its pockets for its share. But there are a few raised eyebrows and blank faces when the balance is discussed.
This doesn’t exactly fit in with the Thames Gateway’s idea of becoming the UK’s prime location in the South East. Over the next 20 years the area between Dartford, Gravesend, Medway and Swale is set to become Europe’s largest single regeneration area, creating up to 100,000 jobs, 50,000 homes and 26.9m sq ft of office space.
Land Securities is playing a massive role in this. The developer plans to piece together nearly 22 square miles of brownfield sites just south of the river Thames, providing offices, homes, retail and leisure. It hopes this will entice businesses out of the City and Docklands, attracted by lower rents and an eight-times-an-hour peak train service taking just 17 minutes from Ebbsfleet to St Pancras. But is there a hole in the regeneration infrastructure budget?
A report by the Thames Gateway Kent Partnership, published in April 2002, had already identified serious shortfalls in the budget. Although admitting it would be hard to quantify the exact amount required for a fast-track bus service, it estimated that there was a £45m gap (see box, p86). This assumed that half of the project’s cost could be met through private investment. It added that an £800m extension to the Thameslink service would have to come from the Strategic Rail Authority because it was “impossible” to see how it could be raised elsewhere.
Funds were already thinly spread, but then the Strategic Rail Authority gave the scheme an extra special Christmas present. Richard Bowker, chairman of the SRA, announced that the future of major rail improvement projects was under threat. In a speech last December, Bowker said that the government’s £33.5bn, 10-year budget had virtually gone. Without drastic cost cutting, he added, long-promised improvements would not happen.
The public purse
Land Securities is definitely writing the cheque for its £900m regeneration, but with SRA’s news, and sparse funds in both local authorities and governments coffers, will public finances be able to come up with the necessary infrastructure?
The success of the new towns will rely heavily on improving transport links. The grand scheme includes building an international station at Ebbsfleet as part of the Channel Tunnel Rail Link (CTRL), a fast-track bus service to link residential and commercial property, extending the Thameslink train service, improving the North Kent train services and including Ebbsfleet in plans to link west and east London through the Crossrail service.
SRA is due to publish a report this month detailing which projects will be axed, but popular belief is that Thameslink 2000 will be one of them. Other victims include Crossrail, plans to replace Connex’s slam-door stock, and upgrading tracks on the north Kent railways.
Land Securities is playing down the effect of this on its plans. The company’s development director, Nick West, believes CTRL is far too advanced for it not to go ahead and that Ebbsfleet was never contingent on Crossrail. “In fact it is only in the past nine months that extending Crossrail this far has been discussed.”
Land Securities may be dismissing the news, but not all agree. “The major issue for Ebbsfleet is founded on better communication,” says Tony Chadwick, senior planning and regeneration services officer for Gravesham borough council. He believes that the development will act as a pressure valve for London, and that the Channel Tunnel Rail Link will be the driving force. Parliament has undertaken to build the link and work has begun on phase two to join north Kent to St Pancras.
That hasn’t stopped the cynics. A widely held view is that despite the cash already spent, phase two will never come to fruition. “Business has been sceptical of phase two but CTRL is an essential part of the Thames Gateway regeneration and it has to have the highest priority,” says Chadwick.
The problem, he adds, is that people tend to be very sceptical.
Things are being built, and according to Union Railways – which is charged with building the CTRL infrastructure – cash has been raised, the money is in the bank, and phase two will definitely be completed. But this only provides the infrastructure. “There are worries about the SRA finding a franchise that will sponsor the level of domestic service Thames Gateway regeneration wants,” explains CTRL’s Richard Jones. “Our role is to provide the infrastructure and that will go ahead. How it is used is up to the SRA.”
The SRA’s Jonty Alone maintains that rolling stock for services will be procured in good time for the start of the fast link. But the debate rages in the rail industry about whether the SRA will use technical difficulties to obscure cash problems. Alone fiercely denies this, saying the final decision will be a balance between technical feasibility and cost benefits.
The government does seem committed to putting down funds and has given an extra £5bn for public services, says Graham Hickson Smith at Reid architecture in London. “But until it is actually committed and we see it being built, then anything could happen and the infrastructure would not come to Kent,” he says.
Healthy scepticism
This is about educating people, says Andrew Mason, director at DTZ. “Both the agency community and businesses have a healthy dose of scepticism over whether phase two will be completed,” he admits, “but my personal view is that it will go through. We have as good a guarantee as you can have from government.”
If trust is the key, then it could hit a few problems. According to a recent poll, the British public finds Tony Blair less trustworthy than Mickey Mouse. “People are cynical, especially in this part of the world,” admits Raymond Amosso, associate director of Caxton’s chartered surveyors.
He adds: “There have been so many broken promises that things are going to happen in north Kent.” Despite this, Amosso believes that phase two is almost inevitable. “John Prescott has made all the right noises about north Kent and there is just too much riding on it.”
The size of the spreading gap is a matter of some speculation. Dartford council estimates that the infrastructure bill for Kent Thameside redevelopment stands at £300m – a figure it has serious misgivings about reaching.
No one developer can afford all the improvements, says Gravesham council’s Chadwick. The rest will have to be met by central government. This may be difficult with government staring into a £20bn fiscal black hole and part of the local authorities’ talent will be to bend existing government programmes.
This is slowly being realised, says Chadwick. “Government has registered that this regeneration is a sensible use of money and we can produce a big bang for little buck.”
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Accessibility to central London |
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New train lines could halve the commuting journey times to London |
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Source: Rail Link Engineering/Union Railways |
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Improvements to the region |
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Crossrail Crossrail, a joint venture between Transport for London and the Strategic Rail Authority, is developing two new routes through London: Crossrail 1, an east-west line, and Crossrail 2, a northeast-southwest line. Some £154m was allocated by central government to carry out feasibility work. Thames Gateway London Partnerships is talking with Crossrail 1 to look at options to run the line further east to Ebbsfleet. Thameslink 2000 The existing Thameslink service is to be expanded with the intention of having trains terminate at Ashford, Dartford and Sevenoaks, and improved connections to north London, and interchanges with Crossrail. Completion is expected in 2008. North Kent Improvements are planned to the North Kent line to create faster and more frequent services between Thames Gateway (south) area and London. The Thames Gateway Strategic Executive has proposed a crossing linking north and south Thames Gateway areas in Dartford and Gravesham, and a rail river crossing to the east of Dartford to link Kent and Essex. Improvements also include lengthening platforms and replacing all slam-door trains. Channel Tunnel Rail Link A high-speed line running for 68 miles between St Pancras station in London and the Channel Tunnel. Phase one, between the Channel Tunnel and Fawkham junction in North Kent, has been under construction since October 1998 and is 92% complete. Construction of phase two to St Pancras will be complete by the end of 2006. Fast-track The first phase of this new public transport system will link Dartford, Bluewater shopping centre and Gravesend. Construction will start in 2003 and is due for completion in 2006. A link with Ebbsfleet will be operational by 2007. It will be segregated from traffic to avoid getting caught up in congestion. Links are planned for Eastern Quarry, the remaining Riverside sites and Swanscombe Peninsula. |
