Half of the £27.5bn cost of Crossrail 2 in London could be met with revenue from fares, business rates and a tax on new developments, according to a report into the project’s viability.
It means the proposed rail line linking southwest and northeast London would meet a key requirement that at least 50 per cent of the cost comes from sources other than central government.
But little or no money would come from taxing increased business activity and “large-scale transformational developments” along the route, according to the study by consultants PwC, which also rejects private financing or investments from sovereign wealth, pension and other big funds as unrealistic.
Fares generated by the line’s passengers, plus the business rate supplement introduced for Crossrail 1 and the London Mayor’s community infrastructure levy– which could potentially be doubled – are seen as the main generators of funding. Continuing the council tax precept paid by Londoners for the 2012 Olympic Games and selling off land and property no longer needed once construction is finished are proposed as top-up funds.
The central section of Crossrail 2 would comprise 36km of twin tunnels from Wimbledon to Tottenham Hale and New Southgate. According to the regional version of the project, trains would emerge from the tunnels to run further out into Surrey and Hertfordshire. PwC envisages the scheme being ready in 2030 – slightly later than Transport for London’s projection.
As well as construction costs, the £27.5bn figure includes new rolling stock and connecting the scheme to the existing network, as well as a 66 per cent “optimism bias”. The shorter, London-only “metro” variant would cost about £20bn, the report said.
Boris Johnson, London’s mayor, said: “Crossrail 2 is an essential infrastructure project and this report shows the range of financing initiatives we could employ to get it moving. We will now be discussing those financing options closely with London’s boroughs, business groups and other key players who have a stake in getting behind Crossrail 2.”
TfL officials said they were hoping for George Osborne, the chancellor, to make a “sign of commitment” to Crossrail 2 in his Autumn Statement on December 3 by allocating the project up to £20m. This would fund more detailed studies and designs, as well as preparations to apply for the powers to go ahead.
Mr Osborne said: “Our long-term economic plan for London involves preparing now for the infrastructure our capital might need in the future. That is why I’ve said we should look at the case for Crossrail 2. This PwC report is a useful contribution to that work.”
David Leam, director of infrastructure for London First, the lobby group for the capital’s businesses, said: “This report shows London is capable of shouldering a significant proportion of the costs of major infrastructure projects.”
While the report could have been “more ambitious” on development opportunities such as new housing at either end of the line, he said Crossrail 2 had “a strong and positive business case . . . it will be helping London to grow, and jobs and the economy to grow”.
Val Shawcross, Labour transport spokesperson in the London Assembly, said the project would have “a transformative effect on the UK economy far beyond the capital” so it was right that a “significant portion of the funding comes from central government”.
Mr Leam said he would be “extremely disappointed” if there was no support from the Treasury in the Autumn Statement, but he added: “The big decision point is in the spending review [which will have to] consider this and London’s needs against the wider capital pressures in the country.”
The PwC report comes a week after the transport department set out detailed plans for the route, including maps showing exactly what it goes under and where it thinks the stations will be located. This “safeguarding” document, which alerts householders, businesses and developers to the proposals, will be out for public consultation until the end of January.
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