Crossrail - The Mayor's Millennium Dome for taxpayers
notocrossrail | 09.06.2006 08:30 | Globalisation | London
The Mayor has given no guarantee for his recent claim that the City will put 3 per cent on business rates for Crossrail. Previously the Mayor and Crossrail chairman waited until the Government brought the Crossrail Bill to Parliament to back out paying for the scheme leaving taxpayers to pay for the next 30 years. Crossrail will be the millennium dome of public transport projects. Read on to find out more...
Crossrail aims to link the City, Canary Wharf and Heathrow through an east west high speed rail link. The Montague report states that the project requires £17bn peak funding (including financing costs) during the period of construction. This figure does not seem to include future interest , operational costs or project cost overruns 1 The London plan commitment to Crossrail is designed to protect the City’s global financial position but its concentration on giving preferential is detrimental to London’s other smaller economies. Despite its vast cash funds and property assets, the City of London wants to expand using development and transport as its strategy to preserve its position as a world financial centre worth £20bn per annum. The City of London local authority, The Corporation of London earns substantial income from properties in its vast portfolio and is set to be the major beneficiary of Crossrail.
Transport secretary Alistair Darling appointed Adrian Montague CBE to produce a report on the viability of Crossrail. Montague’s previous ventures have resulted in the Government agreeing to underwrite debt, which has not been good value or in the interest of the taxpayer. The Crossrail Review was presented to the transport secretary Alistair Darling in January 2004.
The case for the highly expensive Crossrail using public funds has yet to be proven. There is concern about the feasibility of the Crossrail scheme and its social and environmental impact on urban inner city areas. CLRL has failed to make the case for why two-thirds of London should pay for a line that will support a third of London’s richest community most of whom are commuters. The Crossrail project is now said to be costing £11.25billion, the projected revenues are estimated to be £200m pa. There will be interest costs of at least 5 per cent per annum (in monetary terms at least £450m PA) and there is, at present, no agreement as to who will fund this enormous debt burden. The operational costs of Crossrail are likely to be in excess of £100m before depreciation and capital repayments. Banks involved in previous rail financing schemes such as Railtrack & Eurotunnel may be unwilling to bridge the financial gap on such a risky venture like Crossrail.
Crossrail has recently been mooted as a premium line in order to pay access charges for the BAA Heathrow Express line, this will be viewed as social exclusion and just not value for money in terms of taxpayers. It also appears the additional burden will be placed on taxpayers.
The government would like business interests to fill the extensive gap in contribution for Crossrail but there appears to be little will to do so. The City and Canary Wharf, who are the major beneficiaries, seem to vacillate on financial contributions towards the scheme but the latest offers from the City and Canary Wharf are a surcharge of 9million for 30 years with options to reduce the duration if fare revenue exceeds expectations.2
The Government is insistent that it will not contribute more than £2billion. But a study produced by the Department of Transport proposes to use council tax rises leaving Londoners to pay £8billion over 30 years.3 CLRL has thus failed to prove the viability of what is fast becoming an exclusive scheme beneficial to City personnel, which looks as it will be producing an annual £350-400m deficit. The TfL own passenger forecasts have recently been questioned as to why they included stations at which Crossrail trains were not stopping.
Londoners who have endured 226 delays caused by privatised companies Metronet and Tube Lineswere both fined only £15.6million despite receiving subsidies worth more than a billion from taxpayers. This is on top of £109 million paid to consultants and lawyers involved in the part-privatisation. 4 The government has already paid CLRL start up subsidies of £300million to ensure it obtains necessary powers and meets a timetable for a bill deposit. Claims that the likely revenue will be £200million a year still leaves the public to pay for the interest payments on a shortfall of at least £4-5billion with little or no mention of operational costs.5 In 1989, Crossrail received £144 million from conservative transport minister Paul Channon which resulted in an office block in Victoria and a host of extremely well-paid consultants. 6
Crossrail’s now £15bn scheme predicts easing peak time congestion by 7 per cent but the alteration of service patterns including variations to timetables and stopping times could increase existing capacity by 5 per cent. 7 Public private transport projects that fail to deliver cost the public purse and concern has already been expressed about council planners involved in Crossrail fulfilling duties under the Construction (Design and Management) Regulations “to help ensure that the project’s time, cost and quality constraints are met.” 8
Londoners faced with rising council taxes and the Mayor’s recent proposal to take over commuter franchises within a 20-mile radius of central London are unlikely to have an appetite to increase their contribution to transport subsidies.9
The total cost of Crossrail was previously forecast at £11.2bn pre financing costs Total peak funding was estimated at a staggering £15bn, after government and local funding promises there was still a £6bn plus funding deficit. Already the mayor has proposed inflation busting fare increases on the buses and trains, many more of these are needed to pay for Crossrail, also proposed are substantial business rate surcharges an possibly a levy on the council tax, this is all on top of the tax that the government has pledged already!!! Whatever happens this project will cost the whole population of the UK and London dearly. The project is wholly economic as even the fares will never cover the costs of operating the system and never recoup the build costs. The Montague report states that Crossrail project is unlikely to raise fund in the traditional financial markets due to the risks involved, Either the government funds this project (unlikely given the treasury's lack of funds available for transport) or the project is highly unlikely to proceed due to lack of funding.
1 Crossrail Review: The Montague Report
2 Property Week 12 March 2004
3 Evening Standard April 22, 2004
4 Evening Standard June 17, 2004
5 Major Projects Association Seminar Great George Street, London 25 April 2002
6 Evening Standard January 22, 2004
7 London’s Railways Response to Government Rail Review Transport for London 6 May 2004
8 Building 2003 Issue 34 April 30, 2004 Brian Law, chief executive of Planning Supervisors
9 The Sunday Times June 20, 2004
Transport secretary Alistair Darling appointed Adrian Montague CBE to produce a report on the viability of Crossrail. Montague’s previous ventures have resulted in the Government agreeing to underwrite debt, which has not been good value or in the interest of the taxpayer. The Crossrail Review was presented to the transport secretary Alistair Darling in January 2004.
The case for the highly expensive Crossrail using public funds has yet to be proven. There is concern about the feasibility of the Crossrail scheme and its social and environmental impact on urban inner city areas. CLRL has failed to make the case for why two-thirds of London should pay for a line that will support a third of London’s richest community most of whom are commuters. The Crossrail project is now said to be costing £11.25billion, the projected revenues are estimated to be £200m pa. There will be interest costs of at least 5 per cent per annum (in monetary terms at least £450m PA) and there is, at present, no agreement as to who will fund this enormous debt burden. The operational costs of Crossrail are likely to be in excess of £100m before depreciation and capital repayments. Banks involved in previous rail financing schemes such as Railtrack & Eurotunnel may be unwilling to bridge the financial gap on such a risky venture like Crossrail.
Crossrail has recently been mooted as a premium line in order to pay access charges for the BAA Heathrow Express line, this will be viewed as social exclusion and just not value for money in terms of taxpayers. It also appears the additional burden will be placed on taxpayers.
The government would like business interests to fill the extensive gap in contribution for Crossrail but there appears to be little will to do so. The City and Canary Wharf, who are the major beneficiaries, seem to vacillate on financial contributions towards the scheme but the latest offers from the City and Canary Wharf are a surcharge of 9million for 30 years with options to reduce the duration if fare revenue exceeds expectations.2
The Government is insistent that it will not contribute more than £2billion. But a study produced by the Department of Transport proposes to use council tax rises leaving Londoners to pay £8billion over 30 years.3 CLRL has thus failed to prove the viability of what is fast becoming an exclusive scheme beneficial to City personnel, which looks as it will be producing an annual £350-400m deficit. The TfL own passenger forecasts have recently been questioned as to why they included stations at which Crossrail trains were not stopping.
Londoners who have endured 226 delays caused by privatised companies Metronet and Tube Lineswere both fined only £15.6million despite receiving subsidies worth more than a billion from taxpayers. This is on top of £109 million paid to consultants and lawyers involved in the part-privatisation. 4 The government has already paid CLRL start up subsidies of £300million to ensure it obtains necessary powers and meets a timetable for a bill deposit. Claims that the likely revenue will be £200million a year still leaves the public to pay for the interest payments on a shortfall of at least £4-5billion with little or no mention of operational costs.5 In 1989, Crossrail received £144 million from conservative transport minister Paul Channon which resulted in an office block in Victoria and a host of extremely well-paid consultants. 6
Crossrail’s now £15bn scheme predicts easing peak time congestion by 7 per cent but the alteration of service patterns including variations to timetables and stopping times could increase existing capacity by 5 per cent. 7 Public private transport projects that fail to deliver cost the public purse and concern has already been expressed about council planners involved in Crossrail fulfilling duties under the Construction (Design and Management) Regulations “to help ensure that the project’s time, cost and quality constraints are met.” 8
Londoners faced with rising council taxes and the Mayor’s recent proposal to take over commuter franchises within a 20-mile radius of central London are unlikely to have an appetite to increase their contribution to transport subsidies.9
The total cost of Crossrail was previously forecast at £11.2bn pre financing costs Total peak funding was estimated at a staggering £15bn, after government and local funding promises there was still a £6bn plus funding deficit. Already the mayor has proposed inflation busting fare increases on the buses and trains, many more of these are needed to pay for Crossrail, also proposed are substantial business rate surcharges an possibly a levy on the council tax, this is all on top of the tax that the government has pledged already!!! Whatever happens this project will cost the whole population of the UK and London dearly. The project is wholly economic as even the fares will never cover the costs of operating the system and never recoup the build costs. The Montague report states that Crossrail project is unlikely to raise fund in the traditional financial markets due to the risks involved, Either the government funds this project (unlikely given the treasury's lack of funds available for transport) or the project is highly unlikely to proceed due to lack of funding.
1 Crossrail Review: The Montague Report
2 Property Week 12 March 2004
3 Evening Standard April 22, 2004
4 Evening Standard June 17, 2004
5 Major Projects Association Seminar Great George Street, London 25 April 2002
6 Evening Standard January 22, 2004
7 London’s Railways Response to Government Rail Review Transport for London 6 May 2004
8 Building 2003 Issue 34 April 30, 2004 Brian Law, chief executive of Planning Supervisors
9 The Sunday Times June 20, 2004
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