A workman is seen through a drill after the Crossrail breakthrough into the east end of Crossrail's Liverpool Street station in London.
Construction work on Crossrail in central London © Anthony Devlin/PA

Plans for a Crossrail 2 rail line from north to south London were left hanging by a thread on Tuesday after Transport for London disclosed the extent of its financial crisis.

TfL, which has just agreed a £2.15bn rescue package with the government, admitted on Tuesday that it was already delaying several station upgrades in London, including Holborn and Camden Town, in an attempt to control costs.

Plans for Crossrail 2, which would link Surrey and Hertfordshire, are popular with business leaders who believe the £30bn project is crucial for tackling congestion in the South-East.

But the plan was thrown into disarray on Monday by Sadiq Khan, the mayor of London, when he announced the rescue plan for the original east-west Crossrail scheme.

The government is providing up to £2.15bn to bail out the £17bn Crossrail 1, which was supposed to open this week but has been delayed by more than a year.

Crucially, that includes a £1.3bn loan from central government that will be repaid over 10 years from two London business taxes — a “business rate supplement” and a “community infrastructure levy”.

The levy money had until this week been earmarked from next April to provide £4.5bn of funding for Crossrail 2.

Without that funding it is not clear how TfL can deliver its promise of providing half of the funding for the new north-south scheme. TfL said it was still weighing various funding options.

The central government has promised to provide half of the money but has resisted pressure from TfL to take a bigger share of the upfront costs.

Tony Travers, director of the Institute of Public Affairs at the London School of Economics, said he could still see Crossrail 2 opening, but not until “2048 or 2050” — compared with its original scheduled start of 2033.

“The truth is that unless the government comes up with more central government cash, or a new way for TfL to raise extra taxes, Crossrail 2 is in the distant pending pile,” he said.

TfL said the mayor remained “fully committed” to Crossrail 2.

It still hoped to submit a hybrid bill in 2021 and begin construction “by the mid-2020s”, TfL said. That timeframe is later than originally intended, however: Crossrail 2’s website says construction should start in the “early 2020s.”

Shaun Bailey, the Conservative candidate for mayor of London, said the project was now “in jeopardy” and questioned whether Mr Khan would “get the next Crossrail signed off in his term”, which ends in 2020.

TfL is facing an escalating crisis of disappointing passenger numbers, the delay at Crossrail 1 and cuts in government funding.

Ministers are loath to put more taxpayer money into the scheme after criticism that the government had prioritised investment in London over transport infrastructure in the regions.

David Leam, infrastructure director at London First, a business group, said the only chance of getting Crossrail 2 on track was to find new sources of funding — such as increasing fares or selling assets.

TfL on Tuesday published a revised business plan for 2019-20 to 2023-24, which revealed a £2.1bn drop in forecast fare revenue to £28.5bn over the five-year period compared with expectations a year ago.

The report blamed the revenue shortfall on “a subdued economy [which] has slowed down ridership and reduced fare revenue, a trend affecting the country”. The average Londoner took 15 per cent fewer trips last year compared with 2013-14, the report said.

“This business plan shows the impact that a perfect storm of government cuts, reduced farebox income and Crossrail delays is having on Transport for London,” said Mr Leam. “Delays to station improvements, new trains and the Piccadilly line signalling upgrade mean that more Londoners will have to get used to less reliable and more overcrowded journeys.”

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