Charles Wright: Crossrail’s tale of London money and flawed governance

Charles Wright: Crossrail’s tale of London money and flawed governance

It was in 2005 that the Crossrail Bill was introduced in Parliament, designed to secure the powers required for build a new east-west railway across the capital. Now, 17 years, five prime ministers and three Mayors of London later, the Elizabeth Line is finally with us.

The project has a longer history, of course. Plans for it were considered as part of the city’s post-World War II reconstruction, a route was defined for it in the 1989 Central London Rail Study, and there were stalled attempts to start the scheme during the 1990s before the current one began to take shape from 2001.

The sheer scale of the Crossrail project, described by the company’s chief executive Mark Wild as “the most complex railway ever to be built in the UK”, has been well documented: 50 kilometres of tunnels, nine major new stations, 200 million passengers a year, with journey times of just 11 minutes between Paddington and Liverpool Street and 38 minutes between Heathrow and Canary Wharf. 

But media coverage has inevitably focused too on the scheme’s history of delays and cost overruns, and the tangled politics of the relationship between Crossrail’s joint sponsors, the government and Transport for London. 

It began well and, contrary to Boris Johnson’s recent claims, under a Labour government and a Labour Mayor, with the initial budget of £15.9 billion agreed between Gordon Brown and Ken Livingstone in 2007. 

As former Sadiq Khan adviser and now Centre for London chief executive Nick Bowes has pointed out, the capital’s contribution was 69 per cent of that total, with a supplement to the capital’s business rates and a mayoral community infrastructure levy on new developments contributing £6 billion, and TfL borrowing a further £5 billion against future fares revenues.

In addition, more than £1.2 billion was raised from the City of London Corporation, Heathrow Airport Limited, developers including the Canary Wharf Group, and from the sale of land and property along the route.

The first setback came in 2010, when the new coalition government took more than £1 billion out of the agreed budget. However, in 2013 Johnson, as Mayor, secured a £500 million loan from the European Investment Bank, on top of the £1 billion of backing it provided in 2009. He remained optimistic that the line would open on the scheduled date of late 2018.

Johnson has recently repeated his assertion that Crossrail was “on time and on budget” when he left City Hall in 2016, but prior to that date there had been warnings from the National Audit Office that problems had started to emerge and that “opportunities to change approach were missed”. By 2015, it seemed, the eyes of the joint sponsors in Whitehall and City Hall were off the ball.

For specialist rail journalist Christian Wolmar, it was increasingly a situation of the “emperor’s new clothes”, with no one wanting to admit the unreality of the deadline while problems mounted. It was not until 26 July 2018 that officials admitted the inevitable to Mayor Khan, with the formal announcement coming in August, just four months before the planned opening of the line’s central section.

The delays and cost overruns which have left the project four years late and some £4 billion and counting over the agreed 2010 budget, are both embarrassing and expensive, according to Bowes. And at this point, he says, critically for London’s government, Crossrail “suddenly” stopped being a joint project between the DfT and TfL. 

“Blame and the job of finishing the thing became London’s problem,” he says. “Almost all the burden of extra costs was shifted to the city. To get it finished, London has had to mortgage itself.” That shift was signalled clearly in October 2020 when new TfL commissioner Andy Byford secured a vital extra £825 million loan from government and also handed complete control of what had been, to that point, a joint project. 

In fact, as Byford told Wolmar, he had insisted on taking over the project for its final stages: “Crossrail was why I took the job.” He promised no further delays or cost overruns beyond the final £18.9 billion budget “envelope” agreed with Whitehall, and has proved true to his word, even reportedly to the point of making daily progress-chasing calls to Wild, even while on holiday.

Finger-pointing about where the blame lies for Crossrail’s difficulties has, of course, long since begun and seasoned London Assembly Liberal Democrat Caroline Pigeon has called for lessons to be learned on all sides. And delays to a complex £19 billion project were hardly surprising: the Scottish Parliament at Holyrood cost more than 10 times its original £40 million budget and was completed three years late; the British Library opposite St Pancras saw its costs triple; the Channel Tunnel’s budget doubled. Back in 2018 the Financial Times story about Crossrail’s travails noted that large-scale rail projects on average run over budget by 38 per cent.

All that might soon be forgotten as the Elizabeth Line becomes reality. But there are serious implications for TfL, with no capital funding deal in prospect and, as Bowes says, now burdened with government loans at commercial interest rates which have effectively “maxed out London’s credit card”. The pandemic’s impact on public transport travel has further hampered TfL’s ability to borrow against future fare revenue.

Crossrail’s funding problems exposed the limitations of devolution to the capital, Bowes says.  The Elizabeth Line can now be celebrated, but a new settlement is needed if investment in London’s vital transport networks is to continue.

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Categories: Analysis

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