The Treasury is to underwrite the entire £12bn cost of the Crossrail project to build a rail link across London after deciding it will not be a public-private partnership.
Though it will look for contributions of up to £2bn from London businesses and input from Transport for London, the Treasury has accepted that the PPP model will not work for the giant project.
Crossrail was created as a joint venture between the Strategic Rail Authority and TfL, which is part of the London Mayor's office. However, since then it has been approved by the Transport Secretary, Alistair Darling, and plans have been announced to abolish the SRA. The Treasury and the Department for Transport last week moved to assert their control over the project, appointing financial troubleshooter Adrian Montague as chairman.
Mr Montague wrote the report that led the Government to back the project. The Treasury, TfL and London business leaders are working on a funding package but it is understood that a rise in fares has been ruled out. Higher business rates may be used but that is unlikely to raise more than £2bn.
Civil servants have persuaded the Treasury to keep the project under public control to minimise costs. "It will be publicly funded and publicly cliented," said a well-placed source.
- More about:
- Alistair Darling
- Department Of Finance
- Labour Party
- Transport For London