Crossrail construction given national status

Crossrail given national status as GBP15 billion construction project

ust prior to the Summer Recess, the House of Commons approved by a large majority the principle of the Government's Crossrail Bill, which is that a new railway should be built across London, terminating at Maidenhead in the West and Abbey Wood in the East.

It was plain from the tone of the debate that the whole project will be highly controversial even though it has been welcomed in principle.

The Secretary of State for Transport, Alistair Darling, told the House that the Bill would provide the powers to build Crossrail, a new railway which he claimed would bring enormous benefits not only to London, but to the South East and the wider United Kingdom.

In other words, it is seen by the Government as a national rather than a regional infrastructure project.

The legislation takes the form of a Hybrid Bill, a peculiarly British invention, which allows people who feel their interests are directly affected by its provisions to take part in the Parliamentary process.

If the Select Committee agrees, petitioners will be able to put their concerns to a group of MPs adjudged by the House to have no personal or constituency interest in the project.

Mr Darling made it clear to the House that the Government has an interest in having a railway network that not only serves London but is part of the national network.

But what the House wanted to know was how much Crossrail will cost and how it will be financed.

This was his reply: "We think that Crossrail will add some GBP20 billion to the United Kingdom's gross domestic product.

It will also benefit London substantially through congestion relief and additional capacity, which will assist commuters.

That is why it is necessary to build Crossrail.

We think Crossrail will cost some GBP15 or GBP16 billion at today's prices.

Adjusted upward to take account of inflation, that is the probably order of magnitude.

"I said last year that my Department together with the Treasury and Transport for London would take forward work on alternative funding mechanisms that could be used to raise a contribution from London.

Most London business organisations are willing to contribute, because they perceive the direct benefit that London as whole will receive." Decisions on what the Secretary of State called the detailed balance of funding on Crossrail and consultations on alternative funding mechanisms are however being deferred until a study now in hand on local government funding has been completed.

In short, the House of Commons was being told that the Government doesn't yet know how Crossrail will be funded.

Nevertheless, Mr Darling said that establishing the principle and route of Crossrail, which the House proved very willing to do, demonstrated the Government's commitment to the project.

He admitted that the cost of Crossrail was a huge challenge, both in terms of funding and 'the wider fiscal position', an expression which no doubt relates to the means by which the money will be raised.

It is understood that the Department for Transport's consultations with Transport for London on the funding issue will be moving forward over the summer recess.

This project, if it goes ahead, plus the Olympic preparations and the Thames Gateway development, will be making huge calls on the resources of the Greater London Council and the London boroughs over the next ten years.

It will also be making huge demands on the construction industry, an issue which Nick Raynsford raised later in the debate.

Mr Darling confirmed that his department has been studying a proposal to extend Crossrail to Reading, which as he said would involve substantial extra cost.

But the Reading extension does not form part of the Crossrail Bill, so although the subject may well come up for discussion before the Select Committee there will be no petitions on that account.

From the Opposition side, Alan Duncan (Conservative) made it plain that many in the House were far from satisfied with the vague indications given by the Secretary of State on the means by which Crossrail might be funded.

He reminded the House that Crossrail had previously been described as a GBP10 billion project and now it appeared that there would be a funding shortfall of about GBP7 billion.

He asked in view of the scale of the project what sort of undertakings and guarantees would be given that the money would be available to see it through to completion.

"All of us", he said, "can cast our minds back to the Channel Tunnel, a comparable infrastructure project that was always bedevilled by increased costs and insufficient funding, such that it almost went bankrupt.

We need to make sure that Crossrail is fully underpinned and can definitely go ahead.

We need a clearer picture of the structure of revenues and funding." As the debate progressed it became apparent that no such assurances would be forthcoming.

Tom Brake (Liberal Democrat) referred to a report that Goldman Sachs and Lexicon have been appointed to advise the Government on funding, "with the possibility of a special London business rate being levied to help finance it".

He predicted an epic Parliamentary journey for the Crossrail Bill - "a bit of a roller-coaster".

Development gains may be key to funding It was at this point that Nick Raynsford, formerly Minister of State at the Office of the Deputy Prime Minister, Labour Member for the London constituency of Greenwich and Woolwich, intervened, declaring an interest as deputy chairman of the Construction Industry Council.

The scheme he said was highly expensive, depending on two new tunnels being bored through Central London, for which the likely out-turn figures could be between GBP15 and GBP16 billion.

"That inevitably poses important and difficult questions about how the costs should be met, and specifically what the balance should be in the contributions respectively of the fare-paying users of the service, the general taxpayer and the business interests that stand to gain, some very significantly, from the project.

"The scope for substantial increases in values of property and of development sites adjoining and surrounding stations is increasingly understood.

How best to recover a proportion of that planning gain is less well understood.

In my view, it is essential for us to look carefully at this in respect of Crossrail and other new rail and infrastructure developments, because I believe that this holds the key to making possible development that might otherwise not be regarded as economic.

What is not, in my view, sustainable is the defeatist notion that because of the scheme's high costs, further delay is inevitable or even desirable." George Galloway, recently elected as Member for Bethnal Green and Bow, followed Mr Raynsford with a fiery denunciation of the whole proceeding.

He said: "Members of Parliament are being asked to vote for the Bill even though the finances for the Crossrail scheme are not being presented to Parliament.

"There can be no other country in the world that would seriously pass a Bill in its Parliament for a project that might cost GBP20 billion or more with the derisory amount of time the Bill has been given by the Government devoted to the issue of who will pay for it.

I suspect that the public will end up underwriting a very considerable amount of the cost." His words may well prove to be prophetic, but on the other hand there are few countries in the world that would allow people affected by construction of a new railway the opportunity of personal participation in Parliamentary business.

Mr Galloway's constituents can be expected to make full use of this facility as the Bill makes its way through Parliament.

Back to top