LondonUnlocked

The Money Trail

Articles, LondonUnlockedEditor

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Geoff Hoon, the newly installed Transport Secretary, is on the record in Gulf News as stating that CrossRail will not be delayed:

“The government is fully committed to Crossrail and is determined that the project will be funded as planned, delivered on time and on budget.

“If we are to stimulate Britain’s economic growth it is essential we make the right long-term decisions and investments in our transport infrastructure.”

His statement flies in the face of suggestions that the project could be delayed to plug the funding gap which was created when Tube Lines increased its estimated costs by up to £2.1bn for maintenance work on the Tube.

So, where will the money come from? CrossRail is still not fully funded, whilst BAA and City firms are dragging their heels about putting further funds into the pot. Government has already guaranteed a £5.1bn grant whilst taking a £2.7bn loan off future fares. The status of that loan is unknown given the current financial climate.

The second largest source of funding for CrossRail, a £3.5bn levy on London businesses, is not ring-fenced and could, in theory, be used elsewhere. Negotiations continue between the DfT and City Hall as to ownership of the CrossRail project - if leadership is handed to Boris Johnson he may decide that London's priority lays with underground maintenance and capacity upgrades and spend these funds there instead.

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A wise Secretary of State for transport would do well to ring-fence all CrossRail related funds to ensure that this does not happen.

Given the financial over-stretch of TfL, the only realistic way for CrossRail to be fully funded and completed to deadline would be for Government to step in and guarantee the remainder of the funds needed. Is that what Mr Hoon is suggesting will occur?

Whilst not explicitly going so far, Mr Hoon hints at a new strategy for London, and Britain's economic growth:

“If we are to stimulate Britain’s economic growth it is essential we make the right long-term decisions and investments in our transport infrastructure.”

This is a strategy which has been endorsed by Baroness Valentine, Chief Executive of London First:

The diagnosis is clear. London is bound for tough times. Whether or not we're officially in recession, it already feels tough for many Londoners and for many businesses. So London needs what it needed in the boom time is investment in its fabric. It's the infrastructure, stupid!

Thus preparations for 2012 now appear a godsend. Thames Tideway, Crossrail and the Tube improvement programme provide further counter-cyclical investment and jobs. The downturn provides an extra reason to invest: generating activity which can keep construction companies in business and Londoners in jobs.

Indeed, the Mayor himself has penned a similar article, urging the Government to 'dig for prosperity'.

Is Government on side? At the moment we don't know for certain, though it would appear that finally it is willing to admit London's role as a rainmaker for the remainder of the UK. That is a welcome move in itself.

CrossRail is progressing. The compulsory purchasing of sites deemed essential to the project began on Friday, giving the project further backing from the Government (still nominally in charge until the negotiated reigns are handed to the Mayor).

The Mayor finds himself fighting fires across the transport network, none of them of his own making. He has spoken eloquently in the past about the dire consequences for London if essential upgrades and new infrastructure builds are not implemented. Now is the time for him to work together with Government and London's vibrant agencies, pushing for economic stimulus, starting in the Capital.