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10/12/2018

£1.4bn bailout for Crossrail

Words: Laura Edgar
Crossrail

A financial package worth £1.4 billion has been agreed between the government, the Mayor of London and Transport for London (TfL) to cover the costs of Crossrail's delayed opening.

KPMG is currently reviewing the project’s ongoing funding requirements, to ensure the right scrutiny and oversight are in place, Andrew Jones, Parliamentary Under Secretary of State at the Department for Transport (DfT), with responsibility for the railways, said in a written statement to Parliament.

Jones explained that emerging findings from the reviews into Crossrail’s finances indicate the likely range of additional capital cost, due to the delayed opening of the central section, could be in the region of between £1.6 billion and £2 billion.

This includes the £300 million already contributed by the DfT and TfL in July 2018, leaving between £1.3 billion and £1.7 billion to cover the predicted additional costs of the project.

The DfT will provide a loan of up to £1.3 billion to the Greater London Authority (GLA). The GLA said it intends to repay this loan via London’s Business Rate Supplement (BRS) and from the Mayoral Community Infrastructure Levy. The GLA will also provide a £100 million cash contribution, taking its total contribution for this package to £1.4 billion.

A contingency arrangement has been agreed between TfL and the DfT because the final project cost have not been confirmed. The DfT will loan TfL up to £750 million in the event that further finance is required for the project.

This combined financing deal will replace the need for the £350 million interim financing package the DfT announced in October 2018.

Crossrail Ltd appointed Mark Wild as CEO on 19 November 2018. He is conducting an extensive review of the remainder of the programme and will provide clarity in the new year on the opening date of future phases.

The DfT and TfL have recommended to the Crossrail Ltd board that they appoint Tony Meggs as chair. Meggs has been the cief executive of the Infrastructure and Projects Authority. The DfT has also accepted TfL’s nomination of Nick Raynsford as the deputy chair.

The full written statement can be read here.

Image credit | Crossrail

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