A new report suggests Crossrail2 could be funded within Treasury guidelines.
he report – Funding Crossrail2 – was produced by a taskforce formed by business group London First. It says that the proposed new £12 billion underground rail line could ease chronic overcrowding on London and the South East’s trains, and that it could be built with less than half the cost coming from central government, meeting a key Treasury demand.
Crossrail 2, the proposed new south-west to north-east rail line beneath the capital, would add 12% to London’s rail transport capacity and should open by 2030, the report found.
It concludes the new line will be crucial to meeting otherwise ‘intolerable pressure’ on the capital’s transport network as London grows by an additional 1.5m people over the next 20 years.
Crossrail 2 already has public support, with a recent Transport for London and Network Rail consultation showing 95% of almost 14,000 respondents supporting the scheme.
Taskforce members included KPMG, John Lewis, BAML, Tony Travers from the London School of Economics, and former transport secretary Lord Adonis.
Taskforce chair, Francis Salway, former Chief Executive of Land Securities, said Crossrail 2 was key to easing chronic over-crowding on many of London’s rail lines in the near future.
“Failure to invest would make life intolerable for Londoners, hamper London’s economic growth and hit government tax receipts,” he warned.
“We may be half way through Crossrail1, but its success – and the pressing need for extra capacity in London – means now is the time to be pushing forward with plans for Crossrail2.”
Last year, announcing the government’s contribution of £2m to support initial work on the project’s feasibility, Chief Secretary to the Treasury Danny Alexander challenged Crossrail 2 supporters to show “how at least half of the cost of the scheme can be met through private sources, ensuring it will be affordable to the UK taxpayer”.
The London First study found that by combining funding from passengers, property developers, Network Rail, London businesses and residents, that challenge for green-lighting Crossrail2 can be met.
London First’s report identifies over £23bn of potential funding – almost double the estimated £12bn cost – with those who benefit most from Crossrail2 doing most to fund it.
Even at the higher end of the cost estimates – which include a 66% risk premium required by the Treasury – the study found the line would generate £1.80 for every pound spent, rising to £4.10 for every pound spent if wider economic benefits are taken into account.
London First’s suggested funding breakdown has Central Government contributing £4bn, with Network Rail, TfL and Crossrail putting in £8.1bn, property developers contributing just under £1bn with a further £2.4bn coming from intensification of development, and with council tax and business rates putting in £2.7bn.
London first identify a further £5.2bn that could be brought in to the funding pot from fiscal devolution – allowing an increase in the proportion of tax revenues retained by local authorities and the Mayor of London.
This suggests the final cost of the project could be split roughly into three equal parts, with central government and Network Rail paying one third, TfL and Crossrail 2 commuters another, while property developers, London business and residents would contribute the final portion.
