The taxpayer must cover a £160 million shortfall in private-sector funding for the Crossrail project after the Department for Transport failed to secure the expected contribution from Heathrow, a report revealed today.
Plans for the £14.8 billion rail line envisaged a £230 million contribution from Heathrow, to reflect the benefit it is expected to gain from the link to central London, Maidenhead in Berkshire, and Brentwood in Essex.
But Heathrow’s regulator, the Civil Aviation Authority, calculated that with the airport already running at or near capacity, Crossrail would deliver no net benefit in terms of additional passengers. After the CAA set aside a provisional pot of £100 million, the DfT lowered its proposal to £137 million, but this month the regulator decided that Heathrow’s contribution will be just £70 million.
The shortfall means that the DfT’s contribution to the project will rise from £4.8 billion to almost £5 billion, but this remains inside the £5.2 billion set aside in case it failed to secure sufficient funding from private sources, said spending watchdog the National Audit Office.
It found that taxpayers’ interests had been “well protected” in the project, which is “on course to achieve value for money” and to be fully open by its promised 2019 delivery date.
Crossrail is hailed for being on track even with funding setbacks
January 24, 2014
CROSSRAIL has been praised for sticking to its budget and overall schedule by the National Audit Office, despite a smaller-than-expected contribution from the private sector.
With the £14.8bn railway across London now half-built, the spending watchdog said Crossrail was set to provide good value for money.
“The sponsors and Crossrail Limited have so far done well to protect taxpayers’ interests, by taking early action to stop costs escalating and, during construction, tightly managing the programme,” said Amyas Morse, head of the NAO.
The route, co-sponsored by TfL and the Department for Transport, will run from Maidenhead and Heathrow in the west to Abbey Wood and Shenfield in the east when it is fully open by December 2019.
BAA, now known as Heathrow Limited, had originally pledged to chip in £230m towards construction in 2008, but this month pared back its contribution to £70m as part of negotiations with the Civil Aviation Authority on its five-year spending plan. Canary Wharf and Berkeley Homes are paying some of the construction costs for new stations.
Crossrail is expected to choose a train supplier in the first half of this year, in a contract set to be worth £1bn. The government had hoped to fund most of this deal using private cash, but axed the plan last May amid worries that the funding system could delay delivery of the trains.
“[T]he strategic need for Crossrail has become clearer over time as increased population and employment growth in London have been forecast,” the NAO said.
The Crossrail website states:
The funding framework for Crossrail was put in place in October 2007 when the Prime Minister announced that Crossrail’s cost will be met by Government, the Mayor of London and London businesses.
Following the Comprehensive Spending Review in October 2010, a funding envelope of £14.8bn was agreed to deliver the Crossrail scheme in its entirety.
The key elements of the funding package are as follows:
The Mayor of London, through Transport for London (TfL) and the Greater London Authority (GLA), will contribute £7.1bn. This includes a direct contribution from Transport for London of £1.9bn and contributions raised through the Crossrail Business Rate Supplement (BRS), section 106 and the Community Infrastructure Levy (CIL).
Crossrail farepayers will contribute towards the debt raised during construction by TfL.
Government will contribute by means of a grant from the Department for Transport of £4.7 billion during Crossrail’s construction.
London businesses will contribute £4.1bn through a variety of mechanisms, including the BRS.
Over 60% of Crossrail’s funding will come from Londoners and London businesses.
Network Rail will undertake works costing no more than £2.3bn to the existing national rail network raised through projected operating surpluses from the use of Crossrail services.
There are also considerable additional financial contributions from some key beneficiaries of Crossrail:
- The construction of Crossrail is part funded by the City of London Corporation, which has agreed to make a direct contribution of £200m and in addition will seek contributions from businesses of £150m, and has guaranteed £50m of these contributions.
- BAA has agreed to a £230 million funding package. (BAA now replaced with Heathrow Ltd).
- Canary Wharf Group has agreed to contribute £150m towards the costs of the new Canary Wharf Crossrail station at Canary Wharf. Canary Wharf Group will also design and build the new station.
- Berkeley Homes has agreed to construct a station box for a station at Woolwich.
The £14.8 billion funding envelope for the project is a fully inclusive cost, allowing for both contingency and expected inflation.
Taxpayers pay £1bn to fund Crossrail rolling stock
1 March 2013 (BBC)
New trains for London’s Crossrail scheme are to be fully funded by the taxpayer so that the £14.8bn project can start on time.
Initial plans for the £1bn Crossrail rolling stock procurement involved £350m public sector contribution.
But now the entire amount will be paid for by the public purse in a move the government said was “an appropriate course of action”.
Labour called the move “another humiliating transport shambles”.
Crossrail will connect 37 stations from Heathrow Airport and Maidenhead in the west, through central London and out to Abbey Wood and Shenfield in the east.
It is due to be completed in 2018.
Transport for London said the arrangement will help to ensure a deal for the new trains will be in place in 2014, with delivery and testing starting in 2017 ready for the opening of the new tunnels to passengers in late 2018.
London Mayor Boris Johnson said: “Nothing must get in the way of this fabulous new railway and it is fantastic news that we can now crack on with buying the wonderful fleet of brand spanking new trains.”
Transport Minister Stephen Hammond said the Department for Transport remained committed to the use of private finance in transport projects “where it provides value for money and fits with our timetables for planned investment”.
But he added that government believed Crossrail funding decision was “an appropriate course of action to deliver a very complex and unique infrastructure project within the delivery timetable”.
Shadow transport secretary Maria Eagle said: “This is yet another humiliating transport shambles.
“Labour has spent two years urging ministers to learn the lessons from the botched Thameslink contract.”
TaxPayers’ Alliance chief executive Matthew Sinclair said: “Taxpayers will be astonished to find that their contribution to Crossrail is to increase by such a huge amount.”
The 100% taxpayer funding arrangement was welcomed by rail unions RMT and TSSA.
RMT leader Bob Crow said: “This is a hugely important development.”
TSSA leader Manuel Cortes said: “We welcome the fact that Tory ministers recognise that it is cheaper and quicker to have publicly-funded new trains.”