DfT urged to clarify Crossrail loan repayment plans as costs hit £18.9bn

Public Accounts Committee also says department needs to set out how it is learning from major project failures
The Crossrail project's Woolwich Station, which is complete but not open to the public Credit: Balfour Beatty / Crossrail

By Jim Dunton

29 Oct 2021

The Department for Transport needs to explain how it expects to recover hundreds of millions of pounds worth of loans made to keep the capital’s late running and over-budget Crossrail project afloat, MPs have said.

Parliament’s Public Accounts Committee said the current cost estimate for the rail link connecting west London with Essex and Kent to the east is £18.9bn – 28% more than the £14.8bn budget set in 2010.

Services through the line’s central London tunnelled section were originally due to commence in December 2018 but have been repeatedly pushed back and are now not expected to take paying passengers until next year. Full through services on the whole line, which will be named the Elizabeth Line, may not run until 2023.

The committee’s latest update on the project, published today, said that despite some £2.9bn in taxpayer-backed loans made to the project, the middle-estimate for completing the programme was still £150m more than the available funding.

DfT and Transport for London – the mayor of London’s public transport authority for the capital – are jointly sponsoring the project. It is being delivered by arm’s-length body Crossrail Ltd, which is wholly owned by TfL.

MPs said that while DfT expected £750m in loans made to Crossrail to be financed and repaid from TfL’s own revenues, TfL was now estimating an 18% ongoing drop in demand for rail over the coming decade, compared to its pre-pandemic forecasts. 

Committee members said that as 72% of TfL’s income was generated by fares before the pandemic it was “very uncertain” where the shortfall in funding to complete Crossrail or money to repay the loans would come from.

The remainder of TfL’s Crossrail loans were made to the Greater London Authority and are expected to be paid back through London’s Business Rate Supplement and  Mayoral Community Infrastructure Levy over the next 22 years.

The government bailouts for Crossrail are separate to some £4bn in emergency government loans given to TfL to support it through a collapse in revenue caused by people staying at home when the coronavirus pandemic struck.

In addition to telling DfT and TfL to set out whether the loans for Crossrail would be fully repaid,  MPs also urged the bodies to detail their plans to maximise the benefits of the Crossrail service when it is eventually fully operational.

Committee chair Dame Meg Hillier MP said that while committee members were relieved to see progress being made on the physical delivery of the project after repeated delays, increased attention was needed on tying up its finances.

“We are finally, thankfully seeing a clearer sense of ownership, responsibility, and determination to complete the Crossrail programme from those in charge but there remains a serious, £150m funding gap to finish the programme. There must be a focus now on finding real solutions to this,” she said.

“With fares down because of the ongoing impact of Covid we also need more clarity on the plans and timescale for repaying the significant government loans.”

MPs also cautioned DfT that has yet to demonstrate how it is “embedding lessons learned” into its major programmes following “significant problems” with other major transport programmes, including the Great Western route modernisation and Thameslink.

Today’s report said that with the exception of detailing its approach to delivering railway systems on HS2, the department had not explained to the committee in practical terms how it had learned from mistakes highlighted in previous reports and what it was doing differently.

The PAC gave the department until the end of next month to demonstrate what has changed in its approach to delivering major programmes with its arms-length bodies and give “examples of tangible improvements or impacts on specific projects where possible”.

Civil Service World sought a DfT response to the report that addressed MPs’ particular concerns in relation to the department.

A DfT spokesperson said governance of Crossrail passed over to TfL in October 2020 and the TfL transport commissioner was now  responsible for the successful delivery of the project.

“The government remains committed to the rapid completion of the project in a way that is fair to taxpayers,” they said.

“We will continue working with TfL to see this railway open as quickly and safely as possible, maximising the benefits of the Elizabeth line."

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