Transport for London (TfL) has confirmed a new financing agreement with the government to deliver the final stages of Crossrail, revealing that the delayed project is now expected to cost a further £1.6bn to £2bn.
TfL announced today that the emerging findings of a KPMG review into Crossrail Ltd’s finances indicate that the likely capital cost impact of the delay to the project announced in August could be “in the region of between £1.6bn and £2bn”. The new Crossrail chief executive also said that he didn’t know when the project would be finished because there is much more work left to complete than originally thought.
Crossrail Ltd announced in August that it expected the Elizabeth line to open through central London in autumn 2019, rather than December 2018. TfL said today that it has now become clear that “more work is required than had been envisaged to complete the infrastructure and then commence the extensive testing necessary to ensure the railway opens safely and reliably”.
Crossrail chief executive Mark Wild said that having reviewed the work still required to complete the project, an Autumn 2019 opening date could no longer be committed to at this stage, and his team was working on a robust and deliverable schedule. TfL said that core elements of the infrastructure being delivered by Crossrail Ltd, including the stations and the fit out of the tunnels, are at varying stages of completion and more funding is therefore required to complete it, as well as the extensive safety and reliability testing needed for the new railway systems.
The emerging findings of the KPMG review, commissioned by London mayor Sadiq Khan, into Crossrail’s finances show that the likely capital cost impact of the delay to the project announced in August could be in the region of between £1.6bn and £2bn. This figure includes the £300m already contributed by the Department for Transport and TfL in July 2018, leaving an estimated £1.3bn to £1.7bn to complete the project.
The mayor of London and the government have agreed a financial package to cover the shortfall which will see the Greater London Authority (GLA) borrowing up to £1.3bn from the DfT. The GLA will repay the loan from its existing business rate supplement and the mayor’s community infrastructure levy. The GLA will also provide an additional £100m cash contribution, taking its total contribution to £1.4bn which it will provide as a grant to TfL for the Crossrail project.
Given the uncertainty over the final costs of the Crossrail project, a contingency arrangement has also been agreed between TfL and the government in the form of a loan facility from the DfT of up to £750m, should the higher end of the estimate be realised. The new financing deal will replace the need for the £350m interim financing package offered by the government in October.
The London mayor and the secretary of state for transport have also confirmed that they have nominated Tony Meggs as the new chair of Crossrail Ltd, and if ratified by the Crossrail board he will replace Sir Terry Morgan who resigned on last week. Meggs will step down from his role as chief executive of the Infrastructure and Projects Authority to oversee the final stages of delivering the Crossrail project.
The Crossrail Ltd board will also be further strengthened with the nomination of former MP and a previous minister for London Nick Raynsford as deputy chair.
Mayor of London, Sadiq Khan, said: “I haven’t hidden my anger and frustration about the Crossrail project being delayed. This has a knock-on consequence of significant additional cost to the project. It has been increasingly clear that the previous Crossrail Ltd leadership painted a far too optimistic picture of the project’s status. I have ordered the release of all Crossrail Board minutes in the last five years to provide transparency to Londoners on their decision making and working with the DfT, brought in a new leadership team.”
Crossrail chief executive Mark Wild said: “It is evident that there is a huge amount still to do. Stations are in varying stages of completion and we need time to test the complex railway systems. This means that I cannot at this stage commit to an autumn 2019 opening date. My team and I are working to establish a robust and deliverable schedule in order to give Londoners a credible plan to open the railway and provide a safe and reliable service. Once that work is completed we will then be in a position to confirm a new opening date.”
Commenting on the latest developments, David Leam, director of infrastructure at London First, said: “After all the mudslinging, this new funding and financing package must signal the final chapter for Crossrail. It’s vital that all efforts now focus on getting it completed. London’s firms are bearing a significant chunk of the costs of these overruns and, in return, want to see a clear timetable for opening and better governance, including a stronger business voice on its board."