Andrew Mourant
With doubts over funding and the eventual route, ANDREW MOURANT asks if the £30 billion-plus pan-London project is any closer to gaining approval
“The Government says it will consider Crossrail 2 in the autumn spending review. That’s too late, according to Khan, who in November pleaded for clarity ‘well before… so we can consult to safeguard that route’.”
Anyone following Crossrail 2, the grand project to link London and the Home Counties north to south, would be forgiven for thinking that the scheme is comatose. Not yet dead (although no one knows if, ultimately, it will live or die), but in a deep, prolonged slumber.
Nothing has been added to C2’s website news feed since May 30 2018. At that stage, it
declared that things had “moved a step closer to beginning, with updated plans… outlining new work to take the scheme forward”.
This included “defining the infrastructure needed to build and operate the railway”, and “exploring and - where feasible - addressing key issues raised during the last consultation”.
But there’s a reluctance to publicise the latest thinking. Freedom of Information (FoI)
We’re quite fearful about Crossrail 2 going ahead because of what’s happened with Crossrail 1. Caroline Pidgeon, Chairman, London Assembly Transport Committee.
requests are rejected, even when made by senior MPs.
The final route and the means of financing are still unknown - and this in 2019, the year a Parliamentary Hybrid Bill was originally due to have been passed, kick-starting the project. The 2017 General Election shunted this date backwards, but Crossrail 2 Managing Director Michèle Dix anticipated work starting in the early 2020s with the first services running in 2033.
It’s easy to blame any paralysis on Brexit. Yet last summer Mike Gerrard, former managing director of Thames Tideway Tunnel, produced an independent affordability review (IAR) for Secretary of State for Transport Chris Grayling. However, its recommendations remain concealed, despite the efforts of (among others) Liberal Democrat leader Sir Vince Cable to have them aired.
Following a recent Parliamentary question, all Cable could glean from Transport Minister Andrew Jones was that Gerrard’s study “included recommendations for further work to ensure the scheme is affordable. This is currently being taken forward to inform the next steps… and complete the review. We intend to publish the findings when we have completed further work.”
According to London Mayor Sadiq Khan, Transport for London ( TfL) intends to publish the IAR “once the Government has reached a decision on Crossrail 2’s route and potential phasing” and “subject to DfT agreement”.
For a long time, it’s been widely understood that the projected costs of C2 are around £ 31.2 billion. According to TfL, this included an allowance of more than £10bn for risk. But Khan’s projected 2019-20 capital spending for the Greater London Authority showed (for many) a startling figure… £41.3bn.
Dix says it’s “simply false” to say costs have shot up. “As is standard practice with infrastructure projects, the £ 30bn cost has been quoted at a baseline year, in this case at 2014 prices. We’ve been working with government to make the scheme more affordable, and the IAR has explored ways to make savings in the design and delivery to ensure best value for money.
“The £ 41.3bn reflects the projected cost in future years, including allowances made for construction inflation. The nominal costs have always been in the region of £40bn. These have come down following our submission to the National Infrastructure Commission
[NIC] in 2016, when they were £45.3bn.” This may not quell the unease of those spooked by the cost overrun of Crossrail 1 (the Elizabeth Line) - its budget bust, and the opening over a year behind schedule. With Crossrail 2, Caroline Pidgeon, who chairs the London Assembly’s Transport Committee, believes government “is buying time to work out how to pay for it”.
“We’re quite fearful about Crossrail 2 going ahead because of what’s happened with Crossrail 1,” she tells RAIL.
“We’ve no idea when that’s going to open, not even the central section. It won’t happen this year - that was confirmed by the TfL board. I think it’s making government jittery. Money we were planning to put into C2 is being diverted to C1.”
This would be drawn from the Mayoral Community Infrastructure Levy (MCIL) and business rates supplement earmarked for Crossrail 2, Deputy Mayor Heidi Alexander revealed in January. Given that London is expected to fund 50% of C2, that puts further strain on its budget.
“We don’t know how TfL has added up to get to its 50%,” Pidgeon adds. “We haven’t a clear idea of how it would fund it - for instance, if through borrowing, how it would be repaid.”
The Government says it will consider C2 in the autumn spending review and share its thoughts by then. That’s too late, according to Khan, who in November pleaded for clarity “well before… so we can update the business case and, crucially, consult to safeguard that route”.
One Conservative minister told RAIL that if Crossrail 2 doesn’t get financial backing in the autumn, it “could go in the deep freeze for four or five years”.
In January, TfL commissioner Mike Brown told a board meeting that the authority was continuing to “develop and refine the scheme - working with government to assess plans for [C2’s] schedule, including possible phasing”.
But Pidgeon fears phasing could add to the bill. “If you do things in bits it will cost more, but it might be the only way to get the project going,” she says.
NIC had already suggested a delay in building the north western branch, running beyond Alexandra Palace to New Southgate. It said this would also provide the opportunity to consider an eastern branch from Hackney as an alternative.
As for raising money, much is made of the
Brexit has consumed the Government’s bandwidth. We have to accept that we’ve dropped the ball on this project and fallen behind on delivery. David Leam, Executive Director for Infrastructure, London First
potential for land value capture - obtaining a levy from developers permitted to build along the C2 route, where land prices are expected to shoot up. According to TfL, this could yield up to £ 60bn, although how that figure is calculated remains unclear.
Khan says that one lesson learned from the Elizabeth Line is that “we did not fully capture the increase in value of land… many years in advance”. He says London is looking at “innovative ways” to rectify that - a pilot development rights auction model and other means of cashing in, particularly around stations.
Last summer, business campaigning group London First produced its Paying for Crossrail
2 report, suggesting how the project might be funded. Land value capture was one plank of that. Other proposals included:
■ A one-off fare increase on TfL and “relevant national rail services” in the early 2020s. A 1% rise would generate around £ 30 million a year, according to London First.
■ A council tax supplement, as used for the London 2012 Olympic Games. For example, a supplement of £40 for a Band D London property.
■ A rate supplement for larger businesses,
as used for the Elizabeth Line. ■ Retaining a proportion of stamp duty or business rate uplifts, as was used for the Northern Line extension to Battersea.
David Leam, London First’s executive director for infrastructure, welcomes “vastly improved proposals” for key sections of C2, such as a choice between Balham and Tooting Broadway for a new station, and by looking at what building C2 means for Wimbledon town centre. But he too is frustrated by silence surrounding the project, saying: “Local communities are none the wiser about proposed changes.”
He tells RAIL that political turmoil and overspending on the Elizabeth Line have slowed everything down.
“Brexit has consumed the Government’s bandwidth. We have to accept that we’ve dropped the ball on this project and fallen behind on delivery. We’d very much benefit from an update for the C2 route - the last public consultation was in 2015. I think that it’s a lot more advanced than is in the public domain.
“The NIC has concluded that C2 is affordable within the remit set out by the Treasury. But it would be reckless to raise all your hopes with the holy grail of land capture. We’d say to TfL: ‘look at everything you own. Is there anything you can sell?’ For instance, it might be possible to sell the Crossrail 1 tunnel to a long-term pension fund to finance other work.”
Although TfL produced a land value capture report in February 2017, Dix says there is “currently no process, powers or legislation in place to apply this. Any new proposal would need to be carefully considered and new powers granted.”
Her own preference for funding C2? When asked by Stephen Hammond MP, at a Policy Forum for London event in October 2018, Dix replied that she’d look to increase taxes. But according to TfL, this was her personal opinion in answer to a “philosophical question”. Leam appears nonplussed by the £41.3bn figure projected recently by the Greater London Authority: “It doesn’t correspond to the numbers we’re used to.”
He also feels that cost-beneficial lessons have been learned from C1: “Tunnelling is now a known quantity. We understand signalling better, but still have a lot of learning to do.”
And he believes that building C2 in phases would be acceptable, if only to kick-start things.
“Momentum is everything - if we can start we can finish. But there’s an irreducible core, the central tunnel, broadly from Wimbledon to Tottenham. There isn’t a project smaller than that - the smaller phased option is still quite big.” R About the author Andrew Mourant, Contributing Writer Andrew Mourant is a freelance journalist specialising in education, business and the rail industry.
We’ve been working with government to make the scheme more affordable. Michèle Dix, Managing Director, Crossrail 2