With London asked to foot half of the bill to deliver Crossrail 2, business advocacy group London First has come up with a plan to pay for the capital’s next mega project.
Expected to cost in the region of £25-30 billion, Crossrail 2 will be even bigger and even more ambitious than its predecessor. But to go ahead, the government is asking London to cover half of the total project cost and to make some of the funding available to support additional borrowing and cover the initial costs during the construction phase.
London First, which represents more than 200 businesses in the city, has come up with a set of measures that it believes will generate the funding required to make Crossrail 2 happen.
Crossrail 2 will connect North East London and Hertfordshire with South West London and Surrey. The core section through central London will include a 38km twin-bore tunnel, with connections at Euston St Pancras, Tottenham Court Road, Victoria, Clapham Junction and Wimbledon.
While the same funding model that was used for Crossrail 1 could be applied to Crossrail 2, it wouldn’t generate the cash needed during construction, which London First estimates will be around £200 million a year.
An independent affordability review was set up earlier this year to identify potential funding mechanisms. Its findings are due to be published ahead of the Autumn Budget.
In its report ‘Paying for Crosstail 2’, London First said it believes the money could be found through a combination of fares, business rates, council tax and stamp duty:
- A one-off fare increase on TfL and relevant national rail services in the early 2020s. A 1% rise on TfL services would generate around £30m p/a. This would be equivalent to an extra £1.50 a month for someone using a monthly travelcard for zones 1 – 3. A similar rise for South Western Railway and West Anglian Main Line passengers who would benefit from Crossrail 2 would generate around an extra £5 – 10m p/a. This would be equivalent to around an extra £2 — £2.50 a month for commuters from places such as Epsom and Broxbourne who would see their services transformed.
- A council tax supplement, as used for the London 2012 Olympic Games. A supplement of £40 for a Band D London property – less than a pound a week – could generate around £150m p/a. A similar precept for districts with a Crossrail 2 station in Hertfordshire and Surrey would generate around an extra £8.5m p/a.
- A Business Rate Supplement for larger businesses, as was used for Crossrail 1. TfL’s current proposed funding package for Crossrail 2 assumes the existing Crossrail Business Rate Supplement of 2p in the £ will continue. Further contributions would be difficult, but as an example an extra 0.5p increase as part of a wider package could be worth around £68m p/a.
- Retaining a proportion of stamp duty or business rate uplifts, as was used for the Northern Line Extension to Battersea. By transforming transport links in areas it serves, Crossrail 2 will generate significant increases in taxes such as business rates and stamp duty for the Exchequer. A proportion of this uplift could be ringfenced to help pay for the scheme.
- Land value capture. Crossrail 2 will generate significant windfall gains for land and property owners along the route. Further work is needed from the review to identify and agree new mechanisms for capturing these uplifts with a growth-promoting planning policy.
Credit: London First
As well as coming up with a fair funding model for Crossrail 2, London First said it was important that lessons are learned from the delivery of the Elizabeth line to reduce costs.
Jasmine Whitbread, chief executive of London First, said: “We need to step up planning for long-term investment in the UK’s infrastructure and it’s clear that London has to pay its way. This means London’s commuters, businesses and residents will have to put their hands in their pockets to see the benefits of better and quicker journeys, and more homes being built along the route.
“What we need now is for the Mayor and government to strain every sinew to get costs down and ensure tax and fare rises are a last resort, rather than the easiest option. This means learning from the experience of Crossrail 1 to save money when building tunnels and stations, using private finance for new trains and considering the sale of existing assets, like the Crossrail tunnel itself to free up funds.”
She added: “Crossrail is an amazing achievement and shows what can be done when business and government work together. Finding the money for Crossrail 2 is a big challenge, but one London can rise to. We now need government to commit to Crossrail 2 at the upcoming Budget, and that means giving the green light to consult on the route, as part of a UK-wide infrastructure programme including Northern Powerhouse Rail. As Brexit approaches, we can’t afford to stand still on investing in the infrastructure the UK so clearly needs.”