Victory for London

The new £16 billion rail link is not just about making the Tube less crowded. Most of London's working population lives in suburbs and beyond. A population equivalent to that of Sheffield has been added over the past 15 years. In the next nine years, another 800,000 inhabitants are expected, with more than 400,000 jobs added in the financial and business service sector, Britain's biggest area of economic activity. They will not be able to get to work without Crossrail.

Crossrail is important not only for the City, but for the regeneration of east and south-east London and beyond. The new station at Woolwich, part of the new branch via the Isle of Dogs to Abbey Wood, will bring residents of a particularly deprived area closer to the jobs generated in Canary Wharf, the City and West End. Likewise, using existing lines that will link into the new part of the route, residents from Stratford out as far as Shenfield will benefit from better links, relieving strain on the Central line. And Crossrail is important for Britain, too: perhaps a fifth of all corporation tax comes from the City, while the extra 100,000 jobs forecast for the Square Mile alone could bring in over £1 billion a year in income tax.

Foreign observers find it extraordinary that London's achievements in attracting overseas capital and workers have not been backed up by more generous investment in transport. But it is always hard for politicians to find money in the present for a project years away from completion. That is why, for nearly 20 years, Crossrail has seen false dawns.

First mooted in 1987, the Conservative government of the day failed to commit funds; back then it would have cost just £2 billion. Back in 1993, Labour's transport spokesman Brian Wilson accused the project of seeming "to consist of announcements, studies and ministerial hype". In 1995, the Montagu report found that there was a "robust" case for Crossrail but warned against it on the grounds that it would complicate the impending privatisation of the railways.

In office, Labour was soon mired in similar indecision. In 1999, Deputy Prime Minister John Prescott promised that the Government "would be happy" to discuss the project "with any new Mayor who wants to broker a viable deal". Labour often seemed too ready to listen to voices from its heartlands that resented further investment in the South-East. In 10 years as Chancellor, Gordon Brown never gave a clear signal of Treasury commitment to the project.

After the euphoria of today's news, we must remember that this is just the start of a huge project. There will be difficulties ahead. It is essential that today's announcement is not followed by the unravelling of a deal painfully negotiated over recent weeks. Contributions from BAA, Canary Wharf and other large City firms are said to be in place, but all the names of those signing up and the size of their contributions have not yet been revealed. Nor has there been much indication of how high fares will be. Details of the supplementary business rate to be paid by London companies from 2010 - long before the estimated completion date of 2017 - have not yet been disclosed either. Legislation to raise this rate could hit trouble in Parliament, while the enabling Bill has still to reach the statute book.

There will also, inevitably, be years of disruption as new stations and tunnels are built beneath congested streets, requiring closures at Paddington and Bond Street, for example, for weeks or months. It will be worth it in the end, but Londoners will have to grit their teeth first. And all those involved in reaching today's announcement - London First, the Corporation of London, government agencies, the major contributors from the private sector - must keep up the pressure to ensure the timetable is met.

Lastly, the Crossrail go-ahead should not obscure the chaos still surrounding the collapse earlier this year of Metronet, one of the two Tube maintenance contractors. For the same economic reasons that make Crossrail essential, the costs of Metronet's collapse must not be imposed upon London taxpayers, but borne at national level. Nor must progress on Crossrail be an excuse for delaying plans for the Thameslink upgrade, Chelsea-Hackney line and other rail improvements.

It would have been much better if what we see today could have been delivered far earlier, perhaps enabling the line to open in time for the Olympics. But the Prime Minister and his Transport Secretary, Ruth Kelly, do now deserve credit for their commitment. Now London can get on with the task of financing and building the railway it needs to prosper.