There is something of the Mayor’s cheerful optimism in this press release this morning. “Crossrail deal finalised” and “Full speed ahead for Crossrail”. The Mayor is dead right to focus on Crossrail and his opponents are dead wrong to bemoan what they characterise as his “Bonfire of transport projects“. Crossrail is a no-brainer for London and the whole country.
We desperately need the additional transport capacity and its ability to link east and west through to the West End and the City will help keep London competitive for many years to come.
Only yesterday Christian Wolmar was opining to the BBC that Crossrail’s funding was in doubt. Today’s announcement is designed to keep the momentum up. Unfortunately the first and third paragraphs of the announcement are pretty much a repeat of what was announced back in October 2007 by the City of London itself. At the time the Â£200 million squeezed out of the City of London was seen as being the last bit of the Crossrail funding jigsaw.
5th October 2007 from City of London:
At a special meeting on Tuesday 2 October, the Court of Common Council agreed to support a financial contribution for Crossrail of Â£350 million. This includes a one-off lump sum, payable to the government in 2015/2016, of Â£200 million from the City of London Corporationâ€™s own funds. Michael Snyder and the City Corporation have also agreed to lead the efforts to raise additional contributions totalling Â£150 million from businesses across London.
Today from Mayor of London:
A deal worth up to Â£350m that will help deliver Crossrail on time and on budget has been finalised with the City of London Corporation. The agreement was announced today by Andrew Adonis, Transport Minister, Boris Johnson, Mayor of London and Sir Michael Snyder of the City of London Corporation.
The City of London Corporation has agreed to make a direct contribution of Â£200m to the Crossrail project. In addition, the City Corporation will seek contributions from businesses of Â£150m, and has guaranteed Â£50m of these contributions.
I guess the Â£50 million guarantee is additional. It is somewhat modest in the face of an overall bill of Â£16 billion no disrespect to the City of London intended.
The important part of the announcement seems to be that TfL and the DfT have agreed the governance arrangements for the project – indeed an important milestone. But, the scheme’s funding arrangements do seem to be based still on nice decade assumptions rather than credit crunch/recession ones.
The GLAâ€™s Â£3.5 billion contribution is a proposal to raise debt finance by levying an extra increment on non-domestic rates where businesses have a rateable value over Â£50,000. Â£500 million from sales of surplus land and property is assumed as are Â£300 million of developer contributions and Â£300 million from the London planning charge (such Statutory Planning Charges are in effect an extension of the Section 106 system that allows local authorities to extract â€œplanning gainâ€ from developers). That sounds like Â£4.6 billion of froth funding to me. Another Â£5.0 billion comes from TfL and Network Rail. That sounds like higher fares to me. The government in the shape of DfT is only providing Â£5.1 billion of the total Â£15.9 billion. It doesn’t sound to me like they are pulling their weight.
I met Peter Hendy, London’s Transport Commissioner, last Tuesday. He said of TfL and its time under Livingstone that with the exception of the West London Tram “we never stopped doing anything here”. I should imagine he is relieved not to be wasting money and management time on projects that would never be funded by central government and which could never be funded from TfL’s own resources. Johnson is right to prioritise and protect Crossrail. He is right to have cleared away a long list of relatively minor transport projects that the old mayor should have canned. But, the Crossrail funding package does need to be re-opened and the government needs to do more if confidence in the project is to be maintained.