Crossrail

03.03.16

Business funding needed for Crossrail 2 to succeed, says Hendy

Funding will be needed from business as well as the government if railway projects such as Crossrail 2 are to succeed, the chair of Network Rail has said.

Sir Peter Hendy told the London Assembly Transport Committee recently that there was an urgent need for railway capacity to increase and that London businesses could fund as much as 50% of Crossrail 2.

He said he supported the position of Lord Adonis, chair of the National Infrastructure Commission, who also appeared before the committee and said there should be a partnership to fund Crossrail 2, following the success of the supplementary business rate as part of Crossrail.

Sir Peter, formerly the commissioner of Transport for London, said: “It is really important businesses believe in it, they are willing to pay for some of it and we should get on with it.”

He added that similar business investment will be needed in other projects as Network Rail faces unprecedented financial challenges in CP6.

Sir Peter predicated that CP6 will set challenges to the capacity of the railways to absorb new work and to funding after Network Rail returned to public ownership.

He said: “One of the real reasons why CP5 had to be reviewed was that the whole basis of funding the railway changed the day that Network Rail came back into public ownership. It exchanged the virtually unlimited access to cheap government-backed borrowing off the government’s books with a fixed Treasury limit.

“That was a really severe change not just for Network Rail but for the whole of the industry. I do not think you could make any predictions about permanent ‘latening’ of work in CP6. The big challenge in CP6 will be to get it all funded, frankly. In CP6 we are going to have to see more third party contributions to some of these costs than anybody has seen so far.”

Network Rail’s debt is estimated to reach £50bn by the end of the decade. It has hired banking firm Citigroup to look at different options for solving its financial problems, including the option to sell 18 major stations. Citigroup are due to report back by the end of this year.

Sir Peter has already released an Enhancements Delivery Plan Update with £460m cuts in CP5 to projects including the National Stations Improvement, Access for All and the East Coast Connectivity Fund.

Lord Adonis told the committee: “When it comes to major projects on the scale of Crossrail 2, there needs to be a bespoke funding package.”

However, he also said that Crossrail 2 needed to run alongside other projects which were equally important, such as the Transport for London takeover of suburban railway services.

The peer’s comments echo his remarks at last year’s TransCityRail North event, where he called for wider sources of funding for projects such as Crossrail 2 and HS3.

When asked by the committee about the future of railway connectivity to airports, which a recent Transport Committee report says must improve, both men said there were no immediate plans for it.

Sir Peter said there were no plans to introduce four-tracking to Stansted in CP5 and Lord Adonis said he had not been asked to advise on commercial negotiations about connections to Heathrow.

 (Image c. Stefan Rousseau)

 

Comments

S   04/03/2016 at 08:51

RTM - I do not think football has got anything to do with this article or is even relevant for this website??

RTM   04/03/2016 at 08:53

We're just in the process of taking it down.

Den   04/03/2016 at 13:02

More money for London while the North is left with excuses why we cannot have new East/West lines/electric trains and grudgingly are told we can have replacement for pacers in a few years time. Transport money should be the same per head of population.

David   04/03/2016 at 22:39

Den, the CAF order includes new electric trains as well as Pacer replacement. And then there's a proper TransPennine intercity line in development. Funding for Crossrail 2 will follow on from the existing business levy which is generated in the city.

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