Crossrail 2, a proposed £12bn new south-west to north-east rail line providing services between Hertfordshire and Surrey and Middlesex via a new tunnel under central London, can meet key Treasury demands.
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London Firststudy found that by combining funding from passengers, property developers, Network Rail, London businesses and residents that challenge for green-lighting Crossrail 2 can be met.
The reportidentifies over £23bn of potential funding – almost double the estimated £12bn cost – with those who benefit most from Crossrail 2 doing most to fund it.
Last year Chief Secretary to the Treasury Danny Alexander challenged Crossrail 2 supporters to show “how at least half of the cost of the scheme can be met through private sources, ensuring it will be affordable to the UK taxpayer”.
Even at the higher end of the cost estimates – which include a 66% risk premium required by the Treasury – the study found the line would generate £1.80 for every pound spent, rising to £4.10 for every pound spent if wider economic benefits are taken into account.
This suggests the final cost of the project could be split roughly into three equal parts, with central government and Network Rail paying one third, TfL and Crossrail 2 commuters another, while property developers, London business and residents would contribute the final portion.
The report also highlights that increasing the proportion of tax revenue generated by London that is kept by the Mayor and the boroughs to pay for infrastructure needs would add extra flexibility to funding.
Just seven per cent of all tax paid by London residents and businesses is kept by the Mayor and the boroughs. The equivalent figure for New York is over 50%.
Contributions could be sourced from council tax payers, based on the significant congestion benefits Londoners would see right across the public transport network. As for the Olympics this could equate to £20 a year for a Band D property.
Crossrail 2 is based on the Chelsea-Hackney route, which was first planned in the 1970s alongside an east-west link, which eventually became Crossrail. Land along the proposed route remains protected from new development.
The report concludes the new line will be crucial to meeting otherwise 'intolerable pressure' on the capital's transport network as London grows by an additional 1.5m people over the next 20 years.
Crossrail 2 already has overwhelming public support, with a recent Transport for London and Network Rail consultation showing 95% of almost 14,000 respondents 'strongly supporting' or 'supporting' the scheme.
The report, '
Funding Crossrail 2', was produced by a taskforce formed by business group
London First.
Taskforce members included KPMG, John Lewis, BAML, Tony Travers from the London School of Economics, and former transport secretary Lord Adonis.
Taskforce chair Francis Salway, former Chief Executive of Land Securities, said Crossrail 2 was key to easing chronic over-crowding on many of London's rail lines in the near future.
“Failure to invest would make life intolerable for Londoners, hamper London's economic growth and hit government tax receipts,” he warned.
“We may be half way through Crossrail 1, but its success – and the pressing need for extra capacity in London – means now is the time to be pushing forward with plans for Crossrail 2.”