£16bn bill that must keep Ken awake at night

The truth, of course, is that it would make almost no difference whatever to the planet if London were led by Kenny Livingstone or Kenny Everett. One of the more bizarre aspects of the current contest is quite how few policy differences - indeed quite how few policies - there are in it. The claim that the very future of the Earth hinges on the "issue" of whether or not a few thousand 4x4s can enter the congestion-charge zone seems like another example of how Mr Livingstone is losing his touch.

Yet last week, unnoticed amid the synthetic cries of doom, Planet Ken did mention one thing that could genuinely damage London's public services beyond repair, could genuinely destroy any Mayor in its path, and could genuinely come to deserve that overused word "disaster". Unfortunately, it's an issue of Mr Livingstone's own making.

That issue is Crossrail, the £16 billion, seven-mile central-London rail tunnel linking existing surface lines in "the largest transport project in Europe". Mr Livingstone, as ever, is claiming credit for bringing the parties together to agree the route in "one of the most spectacular negotiations of the Mayoralty".

That might surprise the Government, which actually chose the route, which is paying the largest single grant, £5.1 billion, towards the cost, and which in 2005 described Mr Livingstone's interventions over Crossrail as "not terribly helpful". Ultimately it was Gordon, not Ken, who pressed the start button. Another £2.3 billion will come from the state-owned Network Rail and about £600 million from BAA, Canary Wharf and the City.

But it is true that Ken's body TfL will own the company which builds Crossrail. TfL will also contribute £2.7 billion in grants, £1.1 billion from savings and land sales, secure £300 million in further developer contributions and take out £3.5 billion in loans, with the interest funded by a new supplementary business rate and the principal repaid from fare revenues once the line is open.

That is scary enough for London taxpayers. What if savings, land sales and developer contributions fall short? What if fare revenues cannot repay that monster loan? But the really frightening part is what Ken's "spectacular negotiation" has lumbered us with if the cost goes above £16 billion. Last Thursday, in a speech at Canary Wharf, he said he had agreed a deal in which every penny of any overrun must be paid by Londoners.

In the Mayor's words: "As a highly placed official in the Treasury put it during the negotiations: 'You're taking the risk.' ... If the project goes wrong, then London alone picks up the cost. The national government's contribution-is fixed." An overrun, Ken continued, could " devastate London's finances", imperil "the ability to afford police and other services" and bring "30 per cent increases in fares and doubling of supplementary business rates".

The reason this is a real and terrifying prospect is that few recent British transport projects have come in anywhere near their initial pre-construction budgets. The West Coast Main Line modernisation is costing around £8.6 billion, nearly four times the original estimate. The Channel Tunnel Rail Link was budgeted at £3 billion; it came in at £5.2 billion. The Highways Agency's 36 most recent major road improvements cost 40 per cent more than originally estimated. The Jubilee Line extension went £1.4 billion over.

If Crossrail overran by Chunnel Link proportions, that would be £12 billion - four times the cost of the Metropolitan Police. Repaying this sum over 10 years through the council tax could, with interest, put perhaps £500 a year on your bill. The alternative would be savage cuts in services.

So why on earth has Ken called our attention to this truly spectacular failure of negotiation? His argument in his speech was that only he, and definitely not Boris, has the competence to ensure Crossrail does not go over budget. Anyone familiar with Mr Livingstone's and TfL's budgeting will smile wryly at that.

In Ken's first year, 2000-01, the annual subsidy to London's buses (at 2007 prices) was £57 million. It is now £625 million - an elevenfold increase - with fares shooting up well over inflation, too. The buses are certainly better than they were in 2000, but they are not 11 times better. They are certainly carrying more passengers - but about 45 per cent more, not 11 times more. And the suburban railways, which aren't run by Ken and haven't had any increase in subsidy, have seen passenger numbers grow almost as much. Transport usage tracks the economy, not the absurd fortunes squandered by TfL on, for instance, multi-million pound salaries for Bob Kiley to do no work.

That other big project, the Olympics, also shows the Livingstone slippery calculator finger. In 2005, the budget was £2.4 billion. Only two years later, it was £9.3 billion - and will almost certainly go up again in the next four years. Here, there is at least a deal to cap the amount London council-tax payers must bear. With Crossrail, Ken has secured precisely the opposite: unlimited liability. And that, surely, is the real dagger through his claim to competence.

The actual picture may not be quite as bleak as Livingstone says. There is a contingency element in the Crossrail budget, though the amount is secret. Crossrail's cost estimate seems more realistic than that of the Olympics. And the Crossrail "heads of terms" agreement between TfL and Whitehall suggests that overrun risk is, in fact, to some extent shared between them under a complicated (and again undisclosed) formula.

Crossrail is, of course, officially a Good Thing. But the agreement needs renegotiating, and Londoners' liability must be clarified. Until then, if I were Mayor, it would keep me awake at night.