Crossrail – Late and Over Budget As Forecast

Crossrail, that mega-project to link east and west London, is running late and needs more funding to cover the cost. It was supposed to open as the “Elizabeth Line” this week, but it was announced in October that it would be delayed until at least Autumn 2019 and according to a report in the Financial Times: “a number of people close to the project now believe it may not be ready until late 2020”.

After an extra £590m in July and a further £350m was granted to the project in October the cost of the scheme is now expected to be £15.8 billion. But it looks like even more money is probably going to be required.

It’s interesting to look back at what I wrote about this project in October 2004 – yes I have been writing on London transport issues for that long. This is some of what I published then when the forecast cost was only £10 billion, give or take a few billion: “The project review document [from the DfT] actually suggests the real “Net Present Value Cost” may be somewhat less at £8 billion after taking account of contributions from the business community of over £2 billion and other adjustments but that is still an enormous cost. In other words, instead of showing a positive return on the investment, it will show a gigantic loss. To give you some idea of the scale, assuming Londoners are primarily going to pay for it one way or another (through higher public transport fares, as is one suggestion, or through taxes), that means that it will cost London households as much as £3,000 each after taking into account the benefits they gain – so the real cash cost is even higher.

Of course it also ignores the risk that such large projects typically overrun on costs, and that fare revenue is often less than forecast, so the chance of the budget being adhered to is also fairly remote.

One reason why it loses money apparently is because only about a third of trips on the new line would represent new public transport trips – the rest are simply diversions from other rail or bus journeys so there is little financial advantage. But the costs above take into account the time saved by passengers on more convenient trips.

Only Ken Livingstone could have sold this financially disastrous project to the government. Anyone who is familiar with basic economics and capital project evaluation would immediately see that it is fundamentally financially unsound. Any project with a negative Net Present Value like this one would never even be looked at in a commercial environment. One can understand exactly why previous governments over the last 30 years have consistently shelved such a project).”

Well at least I forecast the likely failure to meet even the enormous budget then planned. But it just shows what typically happens with rail projects where construction is very expensive and complex when compared with building roads.

Note that Members of the London Assembly have accused Sadiq Khan of misleading them and the public over the delays to Crossrail and that the delays are due to his mismanagement. He only announced it at the end of August when it is alleged that he knew about it earlier. I wonder when a new opening date will be announced. He’s probably hoping it will before his re-election campaign commences in 2020.

Postscript: A KPMG report has suggested that as much as an extra £2 billion will be required to complete the project. When the Mayor was asked on television if he could give assurances as to when it would be complete and for how much, he said “no”.

Roger Lawson

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Crossrail Delay and Sadiq Khan Balloon

It has been announced that the opening of Crossrail is to be delayed until Autumn 2019. It was scheduled to open in December this year. This a major blow to transport plans for London as it was intended to provide a major improvement to public transport capacity across London, and provide correspondingly large revenue increases to Transport for London (TfL).

This could blow an even bigger hole in Mayor Sadiq Khan’s transport budget which was already heading for a deficit of £1 billion pounds in the current year. Crossrail was expected to contribute substantial revenue to TfL in the next financial year but that will now be much reduced. Falling passenger numbers, particularly on buses, and Khan’s inept promise to freeze London transport fares two years ago are the main causes of his budget problems. The promise on fares was a big factor in his election.

The Conservative party have suggested that there were no delays to the ten-year Crossrail project when they ran City Hall.

Mr Khan has also been under attack for his failure to tackle knife crime in London. The latest symptom of this was the launch of a balloon showing Khan in a bikini which emulated the one flown of Donald Trump in Parliament Square. Many people complained that Khan should not have given permission for that as there should have been respect for a foreign head of state and that dabbling in the affairs of other countries was not the role of the Mayor of London.

The latest balloon seems to also be a complaint about other aspects of Khan’s regime and his record on free speech. The organiser was Yanny Bruere who raised £60,000 in a crowdfunding campaign and apparently intends to continue to promote that Khan should be removed. See https://www.crowdfunder.co.uk/giant-sadiq-khan-baby-balloon-to-fly-over-london for more information or if you wish to comment.

Note that the ABD has been very critical of Khan’s policies and in particular his “Mayor’s Transport Strategy” – see our campaign on that here: https://www.freedomfordrivers.org/against-mts.htm

It is undoubtedly the case that the Mayor’s Transport Strategy and his tax raising ULEZ proposals will not be changed unless he is removed from office by the electorate so supporting this initiative is surely worthwhile. Ridicule is a good a way as any of getting the message across that many people think Sadiq Kahn has demonstrated that he is the worst Mayor of London that we have yet had – and his predecessors were pretty poor. From car-hating Ken Livingstone to cycling fanatic Boris Johnson, none have shown much wisdom.

Directly elected Mayors in London have proved to be very dubious and the extent of their powers means that they have dictatorial control in effect. They are also impossible to remove. The current Mayor even wants to extend his powers over vehicle taxation, the surface rail network and in the planning area. Surely time to reconsider the governance structure in London and for the Government to take more direct control. Mrs Thatcher went so far as to abolish the previous left-wing dominated Greater London Council (GLC) in 1986. That got rid of Ken Livingstone but only temporarily. We now have another populist Mayor in Sadiq Khan who makes promises he cannot keep to win elections – just like Livingstone did. Perhaps you will recall the promise he made to solve traffic congestion with a “Congestion Charge” which naturally did not work. We get similar “gestures” from Sadiq Khan such as the ULEZ proposals which will not cure London’s air pollution problems but will impose very major costs on Londoners.

Time for central Government to intervene and ensure that whoever runs London is more representative of the overall electorate in the metropolis. No more dictators please. And time for Sadiq Khan to go!

Roger Lawson

Twitter: https://twitter.com/Drivers_London

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