The threat of Crossrail being mothballed was lifted today as a new bailout deal was agreed to enable it to “press full steam ahead” and open in about 18 months.
It also means the capital’s bigger firms will have continue paying a surcharge for Crossrail for another two decades.
A deal was announced this morning between the Treasury, Department for Transport, Mayor Sadiq Khan and Transport for London.
The Government will loan the Greater London Authority the £825m – which it will have to repay using business rates and the “community infrastructure levy” (CIL) already imposed on bigger businesses due to benefit from Crossrail.
Business rates and CIL levies are already being used to fund the line – meaning businesses will face demands for many more years than at present.
Last year the Standard revealed that businesses would have to continue paying for Crossrail until 2037-38, some 28 years after the Crossrail levy was introduced in 2010. It was initially due to end in 2033-34.
Heidi Alexander, the deputy mayor for transport, told the London Assembly today: “In essence, we will be borrowing against these income streams for longer in order to put more money into the project.”
Crossrail will have to reduce its costs – which have soared to £19bn - to plug the gap.
TfL commissioner Andy Byford said: “We may choose to park a few things – non-safety critical.”
But he repeated his vow of “no further slippage, no further recourse to public funds” and told the assembly transport committee: “We have had enough delays. Let’s get it done.”
Last week Mr Byford said £825m in loans had been secured by the GLA to give to Crossrail but insisted the £275m was also necessary. Without it, and the Government guaranteeing Crossrail’s ability to enter into new contracts, he said the line would have to be mothballed.
He said that Britain would become a “laughing stock” and it would be “unconscionable” and “madness” not to persevere with Crossrail as it neared completion.
The central section of line under the West End, originally due to open in December 2018, is now scheduled to open in the first half of 2022.
Mr Khan said today: “Securing this financing package enables us to press full steam ahead with getting the central section of the Elizabeth line open as soon as possible.
“The Government have insisted London must pay the shortfall – despite the overwhelming majority of the tax income that will result from Crossrail going to the Treasury.
“I do not want this project to be stalled so it is vital that we dig deep to get the railway up and running. I will continue to monitor progress closely and do everything I can to minimise costs - helping ensure London and beyond can enjoy its many benefits sooner rather than later.”
TfL says that “further independent analysis of costs” at Crossrail is to be carried out. Governance of Crossrail transferred directly to TfL in October, with Mr Byford in overall charge. The project remains jointly sponsored by TfL and the DfT.
Transport Secretary Grant Shapps, in a written statement to Parliament, said today: "The Government remains committed to the rapid completion of the project, in a way that is fair to UK taxpayers, and has committed to financing the completion of Crossrail. However, London - as the primary beneficiary – must ultimately bear any additional costs.
“Crossrail Ltd is committed to reducing its funding shortfall, and will take all necessary steps to complete the project without requiring further additional funding. TfL is ensuring that further independent analysis of costs are carried out.”
Dr Alison Moore, Labour chair of the London Assembly transport committee, said: “Whilst it is welcome that the Government is coming forward with the funds to help deliver Crossrail, Londoners may rightly be concerned that this comes in the form of a loan and that they will be left to pick up the considerable tab.”
When fully open, the Elizabeth line will link Reading and Heathrow with Shenfield and Abbey Wood and increase central London's rail capacity by 10 per cent, being able to carry more than half a million passengers per day.