Boris Johnson's proposal to seek payments towards Crossrail from developers of new office blocks in Waterloo and Elephant & Castle has been rejected by a panel of independent inspectors.
In 2008 the Mayor of London announced his intention to vary the London Plan to enable him to insist that developers building office blocks in the central activities zone (CAZ) pay a contribution towards the cost of the east-west railway line via section 106 (planning gain) agreements.
Southwark Council, Lambeth Council, South Bank Employers' Group and Waterloo Community Development Group all gave evidence to the panel arguing that Waterloo and the Elephant & Castle should be excluded from the charging area as Crossrail does not serve SE1 and both areas have their own requirements for transport investment.
Southwark had warned that a Crossrail charge could render the Elephant & Castle regeneration project "unviable" and "stifle" office development in area.
Their view has been upheld by the inspectors, who say in their report: "It is the panel's view that [Elephant & Castle] area is unlikely to attract travel to work trips on sufficient scale and on sufficiently sensitive parts of the Central London rail network to warrant Crossrail mitigation. We therefore recommend its exclusion from the proposed Central London Contributions Area."
On the question of Waterloo the panel warns that regeneration should not be put at risk by the deterrent effect of an extra charge on developers.
"On the Balance of arguments before us, the panel concludes that it would be neither prudent nor justified to include the Waterloo Opportunity Area within a Crossrail contribution area," says the panel.
However the panel does support the inclusion of the London Bridge, Borough and Bankside opportunity area in the Crossrail charging zone, given "the closer proximity of the London Bridge area both to the City and Isle of Dogs, as well as to Crossrail, and the greater physical evidence of a dynamic office development market".
The panel's recommendations, which must now be considered by the Mayor, have been welcomed by local groups.
"We're heartened that after a full week's inquiry the planning inspector has agreed with WCDG and the local authorities that development in Waterloo and the Elephant shouldn't have to pay a surcharge to fund Crossrail," says Michael Ball, director of Waterloo Community Development Group.
"Even the Mayor admitted Crossrail is not going to significantly reduce tube congestion for south Londoners, especially on the Northern line.
"The inspector concludes a surcharge on Waterloo may well not be legal and would be a deterrent to regeneration.
"We hope Boris will have the sense to accept the inspector's recommendations – if he doesn't, and can't give good reason why, then he is likely to face a legal challenge, and could plunge the area into numerous lengthy legal battles with individual developers."
The levy on new large-scale office developments is separate to the Crossrail levy on business rates that will affect businesses of all types.
Cllr Paul Noblet, Southwark's executive member for regeneration, said: "With local businesses already feeling the pinch, an additional business levy for a project which would have a negligible benefit to them is the last thing they need.
"The panel's comments will be welcome news for some but it's still concerning that some businesses closer to the Thames will still have to help foot the bill for Crossrail."