Latest Rail News

20.03.19

Crossrail delays to cost businesses £600m as TfL reports half a billion pound deficit

The delayed opening and financial chaos around Crossrail are to cost businesses and developers up to £600m, as TfL announces a budget deficit of £500m – nearly half that of original estimates.

A levy on business rates is to be extended for about four years to help repay the £2bn cost of the Elizabeth Line’s delayed opening, as well as millions earmarked for Crossrail 2 being redirected into the project.

Sadiq Khan agreed to fund an extra £1.4bn in December in Crossrail’s most recent bailout, and now it has emerged that the Crossrail business rates levy, which is paid by London’s 48,300 biggest firms, will remain in force until 2037-38.

This comes alongside the release of the London transport authority’s draft annual budget which showed that its £1bn deficit has been reduced.

The operating deficit of £968m in 2018-19 is now forecast to be almost halved by the end of the financial year to £500m.

An annual hike in Travelcard prices for tube passengers will generate £823m profit for the transport authority, and cost savings and a rise in Underground passengers prior to Christmas have helped in slashing the £1bn deficit.

TfL attributed some of its debt to an average £700m annual reduction in government grant, which despite “record-saving efficiencies” has meant it has had to pause non-safety critical renewal work on London’s road network.

Upgrades to the Piccadilly line’s signalling and at Camden Town station have also been put on hold by TfL.

Khan said: “By making TfL more efficient and almost halving its operating deficit, we are able to continue our vital work to transform the Tube network, take radical action to clean up our toxic air and freeze fares, making transport more affordable for millions of Londoners.

“But there is only so much that TfL can do when its government funding is slashed, it's locked out of funding for road maintenance and faces no certainty over future Government capital investment.”

TfL as a whole will make an overall £742m loss in 2019-20, largely due to a record subsidy of £722m needed to run the bus network.

As Crossrail awaits a new opening date estimate, developers building near Crossrail stations will also have to pay a community infrastructure levy in order to raise money for Crossrail 2.

City Hall documents published last week confirmed that the London mayor had signed a “mayoral decision form” approving the new Crossrail funding package.

It stated that the Greater London Authority will raise over £6m from business rates and levies for Crossrail.

Caroline Pidgeon, who is leading the London Assembly inquiry into the Crossrail crisis, said: “The true cost of Crossrail’s delayed opening is that Crossrail 2 has suffered a serious and potentially fatal blow.”

Sean Dempsey/PA Archive/PA Images

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