NAO report endorses Crossrail
A National Audit Office report has broadly endorsed the Crossrail programme for managing its budget well and keeping cost escalation in check.
The £14.8bn project is jointly sponsored by the Department of Transport, and Transport for London, and is expected to be fully operational in December 2019. The construction work was slightly behind schedule in September 2013, however, with 43.7% of infrastructure works completed as against a target of 45.2%, but the promoters are confident the scheme will be completed in time.
The NAO says there are still some risk areas: The above figure, for example, does not cover the cost of procuring the new trains, which will add another £1bn. £900,000 will come from TfL (the rest from DfT), but any delay in meeting the April contract deadline could have a knock on effect on the rest of the programme.
This expensive project draws finance from the following sources: TfL accounts for £1.9bn of direct funding, and is responsible for £5.2bn from the private sector; DfT accounts for £4.8bn of direct funding, and is responsible for £480m from the private sector; Network Rail is contributing £2.3bn; and there is £100m voluntary commitment from London businesses.
NAO notes that the DfT will have to make good any shortfall in the expected £480m private sector investment. In particular, the contribution from Heathrow Airport Ltd is down from £230m, to £70m following a CAA ruling. (Heathrow argued the airport wouldn’t benefit much as it was close to capacity). DfT will have make up the £160m difference, and that is likely to push the Department’s direct contribution up from £4.8bn to £5bn.
On top of this, the DfT will also be responsible if Network Rail’s expenditure breaches its £2.3bn ceiling, and if Crossrail Ltd’s spending exceeds £12.5bn.