Afternoon:
10°c
Crossrail backers raise doubts over financing
Nicholas Cecil, Chief Political Correspondent7 Aug 2008
Serious doubts were raised today over funding for Crossrail with warnings that the landmark project could be hit by delays.
The Standard can reveal that vital finance for the rail scheme has not been agreed nearly a year after the Government claimed a £16billion deal had been struck.
Airports operator BAA is refusing to publicly commit a specific sum to the cross-London rail link despite being expected to put in around £250million.
Concerns are also growing that City chiefs will struggle to raise a further £150million for the project from London businesses in the economic downturn.
Experts are warning that the funding agreement could unravel, delaying the long-awaited scheme for up to five years.
Failure to raise funds from the private sector could lead to the Treasury dragging its feet over releasing billions for the project, particularly in an economic slowdown, one former minister said.
But the Department for Transport denied that the funding package would be revised and said business had to make a "fair contribution".
Questions also remain over the three main funding pillars - £3.5 billion from a special levy on London businesses, £2.7billion to be borrowed on the back of future rail fares and £ 5.1billion from the Government.
The Mayor's office stopped short of giving a cast-iron reassurance that the billions expected from the supplementary business rate would be raised.
The financial worries emerged weeks after the Crossrail Bill received Royal Assent, effectively giving the project outline planning permission. Former Tory transport minister Steve Norris said: "Don't let anybody believe that there are not some serious question marks over the project. It could slip."
Mr Norris believes the Government will only release the billions needed once a deal is finalised and that this needs to be done swiftly so contracts can be signed and work progressed.
Sir Peter Hall, professor of planning at University College London, said he was stunned to learn that BAA had not yet agreed how much it was putting in.
Speaking from China, he told the Standard: "These deals have a habit of unravelling. That's why it is astonishing that the details are so vague. There are serious concerns over whether the package is really there." He also warned of the risk of construction delays.
BAA said it would pay towards Crossrail and that it was "working with" the Department for Transport and Crossrail on a final amount.
The flow of cash for Crossrail is due to hit more than £1billion by 2010 and £2billion-a-year by 2012 before slowing ahead of its planned opening in 2017.
The line will run from Maidenhead and Heathrow under central London to Shenfield and Abbey Wood in the east.
The City of London Corporation has pledged £200million and to lead efforts to raise another £150million from business by 2016. It has underwritten £50 million of these extra funds but £100 million remains unguaranteed.
Sir Peter warned: "Private contributions could be unforthcoming if London sees a crash."
But Tony Halmos, the corporation's director of public relations, said he was confident of bringing in the funds.
Boris Johnson is committed to raising £3.5billion from a supplementary business rate. It is due to be charged from April 2010. But officials at Transport for London are said to harbour concerns over the pace of work on the SBR.
A spokesman for the Mayor's office said: "We have every confidence that Crossrail will be delivered to the existing timetable."
TfL insisted the funding was secure.
Reader views (6)
I've got an idea for raising the money: divert the money that would be spent on a third runway for Heathrow.
- Liz, London, 08/08/2008 11:03
Report abuse
I prefer Crossrail for the simple fact that it has greater capacity than an additional tube line. We never 'future proof' our projects by allowing for extra capacity. Personally I would rather the government start building an additional tube track on every line so we can have a 24 hour network and the system doesn't fall over whilst tracks are maintained.
- Aesir, London, 08/08/2008 09:00
Report abuse
It has already been hit by delays. I remember one edition of Red Ken's publicly funded propaganda rag included a map that showed Crossrail 1 would be complete in 2011 and Crossrail 2 in 2016. And I doubt that those were the original published targets.
- Oliver Chettle, Bedford, 08/08/2008 00:29
Report abuse
A far cheaper option would have been to modify the now disused Post Office Railway which runs under Paddington, Oxford Street and Liverpool Street. Or close and modify the northern section of the snail-paced Circle Line to create a fast every two-minute link from Paddington to Liverpool Street (via Farringdon), terminating the Hammersmith Line at Paddington and the Metropolitan at Baker Street. You could even link it to Thameslink to serve North and South at Farringdon. Why do they insist in coming up with the most expensive ways of creating necessary infrastructure when cheaper options are so obvious?
- Dave, North London, 07/08/2008 15:07
Report abuse
Crossrail is, and always has been, merely a device to enable management consultants to issue invoices against, and for politicians to attach themselves to at opportune [for them] moments.
It has nothing to do with building a trans-London rail route, it is a trough of similar magnitude to the Olympics.
- Oscillator, London UK, 07/08/2008 14:53
Report abuse
Crossrail has not been properly thought through from the outset. It will come into Paddington, which already has several tube lines, but will omit Marylebone which is used by everyone coming in from Buckinghamshire and who have no direct connection to the City. Moreover, it will provide no benefit to people living in South and South East London who will still find it incredibly difficult to get to West London and the western Home Counties. We only have 1 connection to the Docklands, which itself is not easy to reach, and we still have no proper connections to the London Underground despite promises going back decades.
It would make more sense to scrap Crossrail and use the money to build an Underground line that would connect all the main railway termini, so that for example one could travel from London Bridge to Paddington or even Fenchurch Street without having to change lines. In addition, the Northern line should be connected to Clapham Junction; and East and West Croydon and Crystal Palace should all be connected to the Underground network.
- Gladiatrix, London, England, 07/08/2008 12:58
Report abuse
