Below, how innovative funding models could support the Strangford Lough Crossing (SLC) project, drawing particularly on lessons from the “Generating Land Value to Grow London” report from January 2025 and other supporting evidence.
Key Funding Model Opportunities:
1. Residential Tax Increment Financing (Resi-TIF)
The recent BusinessLDN report demonstrates how a “resi-TIF” model could help fund major infrastructure by capturing increased property tax revenues generated by new development. For the SLC, this could be particularly powerful given:- Current ferry service costs of £3.52m annually with only 41% cost recovery (DfI FOI Response 2024-0366) – Strong potential for new housing development, evidenced by population growth of 4.5% in Ards & North Down and 6.1% in Newry, Mourne & Down between 2011-2021 (Census Data 2021)- Clear infrastructure dependency, similar to the Bakerloo Line Extension case study where development is contingent on new transport links
2. Combined TIF Approach The evidence suggests a “combined TIF” model, capturing both residential and commercial tax increments, could be especially effective for the SLC given:- Export intensity of 24% in Newry, Mourne & Down – highest of all NI councils (Sub-Regional Economic Plan Technical Annex) – Growing business base with 4,815 businesses in Ards & North Down and potential for cross-border trade growth- Precedent from Northern Line Extension to Battersea which successfully used business rate retention
3. Public-Private Partnership EvolutionLearning from the “History of Roads Service 1973-2005” document, previous attempts at PPP/PFI for the ferry service weren’t successful. However, modern innovative approaches could work by:- Focusing on long-term asset value over 25-30 years, similar to successful Enterprise Zone timeframes – Combining multiple funding streams including developer contributions – Structuring around clear additionality tests as outlined in the London reportImplementation Considerations:The funding model would need to:- Demonstrate genuine additionality through unlocked development – Balance affordable housing provision with infrastructure contributions- Consider impacts on council tax revenues for local services- Account for cross-jurisdictional issues between councilsThe SLC project could potentially access a similar scale of funding to the DLR Extension to Thamesmead case study (£1.5bn over 25 years through resi-TIF), given comparable connectivity benefits and development potential.
Critical Success Factors :
1. Clear Policy Framework- Powers would need to be granted for tax retention – Agreement needed between councils on revenue sharing – Integration with existing planning frameworks
2. Robust Business Case- Detailed modeling of tax increment potential- Clear demonstration of dependent development- Strong governance arrangements
3. Stakeholder Support – Early engagement with Treasury on tax arrangements – Council agreement on funding priorities – Community buy-in on development plans. The innovative funding approaches outlined in the January 2025 London report provide a strong template that could be adapted for the SLC project, potentially unlocking significant value to help bridge the funding gap while delivering wider economic benefits to the region.y
A comprehensive analysis comparing potential funding approaches for the Strangford Lough Crossing (SLC), with specific calculations based on available data.
How a Strangford Lough Crossing Could Generate Funding Over 50 Years
Current Situation
According to “DfI 2024-0366 – Barry – Response.pdf”, the ferry service currently:
- Costs £3.52 million to run each year
- Generates £1.43 million in fares
- Requires £2.09 million in public subsidy annually
Over 50 years, continuing with the ferry would cost taxpayers approximately £104.5 million in subsidies.
Potential Revenue Generation
- Domestic Rates from New Homes
When new homes are built due to improved transport links:
- Each property pays domestic rates annually to the council
- Property values typically increase with better transport links
- If 10,000 new homes were built over 50 years (200 per year):
- Domestic rates could generate about £750 million (10,000 homes × average annual rates £1,500 × 50 years)
- Stamp Duty Land Tax could generate about £26 million (assuming each house is sold twice)
- Non-Domestic Rates from New Businesses
Enhanced connectivity would attract new businesses:
- These businesses pay non-domestic rates annually
- If 2,000 new businesses opened over 50 years:
- Non-domestic rates could generate about £1.5 billion (2,000 businesses × £15,000 per year × 50 years)
- Direct Savings
The bridge would:
- Eliminate the annual £2.09 million ferry subsidy (saving £104.5 million over 50 years)
- Reduce journey distance from 75km to 1km
- Create significant fuel and time savings for travelers
Total Potential Revenue Generation
Over 50 years, this could generate approximately:
- £750 million from domestic rates
- £26 million from Stamp Duty Land Tax
- £1.5 billion from non-domestic rates
- £104.5 million in ferry subsidy savings
Total: £2.38 billion
Practical Implementation
Using the Tax Increment Financing (TIF) model outlined in “Generating Land Value to Grow London”, future rates revenue could be used to secure upfront funding for construction. This approach has been successfully used for the Northern Line Extension to Battersea, where £270 million was borrowed against future non-domestic rates to help fund the £1.1 billion project.
For the Strangford Lough Crossing, using just 25% of the potential £2.38 billion in future revenue could provide about £595 million toward construction costs. Even a conservative 10% would provide £238 million.
Wider Economic Benefits
This investment would:
- Generate new employment opportunities
- Meet housing demand identified in both council areas
- Strengthen the local economy through improved connectivity
- Enhance access to essential services
- Provide 24/7 crossing capability
- Support environmental goals by reducing journey distances
The figures are based on data from council economic profiles and the Sub-Regional Economic Plan Technical Annex, with conservative growth projections applied over the 50-year period.