06.11.15
TfL must plug £2.73m Croxley link shortfall after council offers £1 wasteland
Transport for London (TfL) will have to find £2.73m of unbudgeted funding before it can start works on the delayed Croxley rail link, after Hertfordshire County Council tried paying part of its share with wasteland valued at £1.
The Metropolitan Line Extension was formally initiated in late 2011, when the Department for Transport (DfT) approved a £76.2m contribution towards the £116m scheme. But since then, costs have risen and timescales have lengthened, and this year it was confirmed that TfL was to take the project over.
The link, which will extend the Metropolitan Line to Watford Junction via Watford High Street, was originally meant to be complete by May 2016. It would be funded by the county council, both in terms of predicted price and cost escalation risks.
Hertfordshire was also meant to lead the overall delivery of the extension, with London Underground (LU) only tasked with delivering certain specific elements – such as railway systems and design assurance – without any direct TfL financial contribution.
Since then, and from 2013 in particular, the county council began reporting soaring costs and missed milestones and, in mid-2014, the department started considering alternative options to plug the funding gap. At that point, LU was to take over overall responsibility for the programme’s delivery.
In January this year, TfL commissioned AECOM to look into the status of the project, at which point its costs had more than doubled to £284.4m. Shortly after, on 26 March, TfL took over responsibilities over civil engineering works, systems and rolling stock procurement.
It was meant to contribute £46.5m to the overall cost, including any extra cost risk. Another £70.7m would be provided in DfT grants, with Hertfordshire CC and Watford Borough Council stepping in with £40.23m.
But when the project was due to be formally transferred from the council to LU in September, Hertfordshire claimed £2.73m of its overall share would be delivered in the form of two parcels of land instead of cash.
One of these parcels, which the council valued at £1.8m, was a disused railway site it bought from Network Rail for £1. The other was a plot earmarked for use as a station car park, given a notional value of £900,000, which “will not transfer to TfL at any point”.
TfL will now have to look into its finances to locate the £2.73m gap left in the much-delayed project in order to start works next year – in addition to the contribution it had already committed to make.
The transfer date of the programme, hoped for in September, was brought to the table in a TfL board meeting this week (4 November), at which board members asked for extra assurances on the finances.
TfL board member Peter Anderson, managing director of finance at Canary Wharf Group plc, who chairs TfL's finance and policy committee, said: “We thought we were getting a contribution which we now find is in land, and it’s in land that we’re not even getting.”
He said failing to do adequate engineering and procurement studies ahead of major projects opened TfL up to financial risks later, and other board members raised concerns about the prospects of the costs rising further.
Mayor of London Boris Johnson admitted that his actions in signing off funding were “seemingly irrational”, but indicated they were part of a wider negotiation strategy with the Department for Transport and Treasury in this pre-Comprehensive Spending Review period.
He said: “I’m picking up [from the board] a strong view that we could strike a harder bargain with government and DfT. That is something we will try to do, but there is a very considerable threat to TfL’s very large capital funding package, and we have to make sure we sometimes play ball on some things and don’t always behave like a needy infant.”
The board decided to delegate the issue to the upcoming finance and policy committee meeting to examine in greater detail. That committee is due to give the green light to infrastructure procurement, rolling stock purchases and systems works in the New Year.
The board papers also noted that TfL may also bring in extra external programme delivery expertise from outside organisations, via the Joint Delivery Partner Initiative, created to help TfL manage its raft of major project work at the moment. The board was asked to "approve the entering into of such agreements with third parties as may also be necessary or desirable to implement the transfer and facilitate delivery".
The extension delivery has now been pushed to 2020-21, five years after the original deadline.
Click on the image to enlarge it.
The scope of the Croxley rail link scheme comprises two new junctions: one north of Croxley Metropolitan Line station and a second linking the Croxley rail link into the existing Network Rail track south of Watford High Street station.
From the Croxley junction, the route traverses roads and a canal via a new viaduct leading to the first new Croxley rail link station at Ascot road (to be known as Cassiobridge) and a second new station at Watford Vicarage Road.
The signalling will be based on LU legacy technology, while route paths on the Network Rail sections will rely on modified NR signalling.
Once complete, the intention is to run six Metropolitan trains per hour in the peak to Watford Junction and four trains per hour in the off-peak. The service will share two stations, Watford High Street and Watford Junction, with London Overground and London Midland services.