We pay billions in tax so you fund Crossrail, the City tells minister

Corporation of London chief Michael Snyder hit back at ministers' claims that the City is not paying its fair share towards the £8.7 billion cost of the East-West rail link.

Writing in the Evening Standard, Mr Snyder countered that many firms and individuals in the Square Mile already pay huge amounts in tax and are entitled to ask why the billions they hand over to the Exchequer are not enough.

The Standard has learned that the row, which has ensured there will be no announcement during the Labour conference, centres on the final £300 million to £400 million needed for the project.

With the City and ministers playing "hard ball", there are questions over whether a deal can be reached in time for the Chancellor's comprehensive spending revew next month.

Transport Secretary Ruth Kelly is understood to have rejected a £250 million lowinterest loan offered by the Corporation, claiming that it would worsen the Government's borrowing figures.

Other deals involving planning consents and a "top-up" to a pan-London supplementary business rate are also part of the fraught negotiations.

Ms Kelly, who infuriated many in the City last week by claiming those who would benefit most from Crossrail had a duty to pay more, has set a new deadline of next Tuesday for the City to come up with extra money.

Ministers claim that while Canary Wharf has privately pledged to stump up £500 million and BAA and BA are coming up with their own sums, the Square Mile is dragging its feet on a final figure.

Some Labour insiders are confident that a deal will done and it is understood the Department for Transport has already started drawing up its press release for the announcement.

Mr Snyder today made plain that the City was doing all it could to find a funding solution and declared its businesses were also "utterly committed to Crossrail".

He pointed out that "the argument is upside down" because the onus was on ministers to bridge the funding gap.

"We're prepared to pay our share. But we're not going to hand the Government a blank cheque," he said. "Our national principle is that general taxes should pay for general benefits. Rather than complaining that the City is not doing enough for public transport, it would be more accurate to say that public transport is not doing enough for the City and City workers."

Mr Snyder said that, on income tax alone, the 50,000 extra City workers generated by Crossrail would amount to more than £1 billion a year.

"Those businesses in the Square Mile being asked to pay more for Crossrail are entitled to ask why the billions they pay in taxes are not already enough."

He pointed out that the City of London Corporation collects £700 million a year in business rates, and 90 per cent of this is passed to central government.

"The City is ready to keep talking to find a solution. But ministers need to find one soon."