MD2424 Crossrail further funding update

Type of decision: 
Mayoral decision
Code: 
MD2424
Date signed: 
31 January 2019
Decision by: 
Sadiq Khan, Mayor of London

Executive summary

The Crossrail project is jointly sponsored by the Department for Transport (DfT) and Transport for London (TfL), with support from London’s business community. Once operational it will be known as the Elizabeth Line, connecting stations such as Paddington to Canary Wharf in only 17 minutes, transforming how Londoners and visitors move across the capital. The new railway will bring an extra 1.5 million people to within 45 minutes of central London and more than 200 million passengers are expected to use it every year. Crossrail Limited (CRL) announced on 31 August 2018 that the central section would not open in December 2018 as planned. CRL also exceeded its funding envelope in 2018. The Mayor and TfL’s focus remains on ensuring CRL complete their work in order to get the Elizabeth line safely and reliably into passenger service at the earliest opportunity.

Under MD2398, the Mayor approved the long term capital funding and financing solution for the completion of the Crossrail project, including a capital grant of £1.4 billion to TfL, supported by a loan from Government of £1.3 billion. Finalisation of the terms of that loan is progressing but is not yet complete. This Mayoral Decision Form seeks approval for a grant to TfL of £34m to cover the immediate needs of Crossrail Limited and ensure continuity of the project, pending agreement with Government on the terms of the arrangements previously described in MD2398.

Decision

The Mayor:

1) Authorises the payment of £34m by GLA to TfL by means of capital grant under section 120 of the Greater London Authority Act 1999 as part of that capital funding and financing solution for the Crossrail project’s completion; and

2) Delegates to the Executive Director of Resources or, in his absence, his nominated representative, authority to negotiate, execute and complete all documentation he considers necessary or expedient to recognise this payment as part of the agreements for the wider capital funding and financing solution for the completion of the Crossrail project described in MD2398.

Part 1: Non-confidential facts and advice

Introduction and background

The Crossrail project is jointly sponsored by the Department for Transport (DfT) and Transport for London (TfL), with support from London’s business community. Once operational it will be known as the Elizabeth Line, connecting stations such as Paddington to Canary Wharf in only 17 minutes, transforming how Londoners and visitors move across the capital. The new railway will bring an extra 1.5 million people to within 45 minutes of central London and more than 200 million passengers are expected to use it every year.

The Mayor and TfL’s focus remains on ensuring supporting Crossrail Limited (CRL) as they finalise the final infrastructure and testing to complete their work in order to get the Elizabeth line safely and reliably into passenger service at the earliest opportunity. CRL is the “nominated undertaker” for the purposes of the Crossrail Act 2008 and is a wholly owned subsidiary of TfL.

CRL exceeded its funding envelope in 2018. In December 2018, the GLA, Government and TfL announced that agreement had been reached on a funding package for completion of the project and this was described in MD2398. That package includes a £1.3 billion loan to the GLA which will then form part of a £1.4 billion grant to TfL. The technical arrangements are complex and, while negotiations are progressing well towards finalising the terms of the loan from Government, they are not complete and there is a need for funding to TfL for Crossrail Limited to be provided in advance of this.

It is proposed, therefore that a grant of £34m is made to TfL pending completion of the arrangement with Government; to be recognised in those arrangements and not in addition to the £1.4billion already approved.

Proposed funding and financing solution for the completion of the Crossrail project

GLA officers have been working with TfL and the Government in recent weeks to develop the terms of the loan to GLA of £1.3 billion. Those negotiations are nearing completion.

It is proposed that the interim measure of a £34m grant to TfL is made from the GLA temporarily borrowing for this amount.

While this is the first part of the arrangements described and approved under MD2398, it appropriate that it should have a specific approval as it is a standalone measure and the remaining parts of that funding package have not yet been completed.

Objectives and expected outcomes

The proposed funding and financing arrangements will enable the completion of the Crossrail project, which is a key measure in the Mayor’s Transport Strategy to improve London’s transport capacity and bring £42bn into the UK economy.

Equality comments

Under Section 149 of the Equality Act 2010, as a public authority, the Mayor of London must have ‘due regard’ of the need to eliminate unlawful discrimination, harassment and victimisation as well as to advance equality of opportunity and foster good relations between people who have a protected characteristic and those who do not.

There are no direct public sector equality duty implications arising from this Decision.

Financial comments

The GLA intends to finance the £34m grant by temporarily borrowing this sum from other local authorities. Once the loan facility is completed, this payment will be incorporated into that agreement. The costs of this temporary arrangement will be met from the Business Rates Supplement.