Crossrail secures additional loan to complete the railway

The government has agreed to provide a £350 million short term loan to Crossrail to help fund the final fit-out of the delayed railway.

Technically, the “short term repayable financing” is being made to the GLA through the Mayor of London, not direct to Crossrail or TfL.

This could be a way of evading a problem at TfL in that it’s debt, at nearly £12 billion is close to the limit permitted by the Local Government Prudential Borrowing regime. TfL’s borrowing must also be contained within annual limits of £500-£900 million until the financial year ending 31 March 2021, limiting its flexibility to raise unexpected debt above planned spending requirements.

A previous cost overrun estimate, announced in July 2018, was for up to £590 million above the total estimated project cost of £14.8 billion, with £300 million related to Crossrail works and £290 million for Network Rail works. The Department for Transport (DfT) agreed to contribute £150 million of the £300 million of additional funding made available to Crossrail.

It’s worth noting that when approved in 2007, Crossrail’s budget was £15.9 billion. This was cut to £14.8 billion in 2010, only to now return to the original figure of £15.9 billion thanks to the “cost overuns”.

TfL’s finances are expected to receive a boost from the anticipated £800 million receipts from the sale and leaseback of Elizabeth line trains, although that will only repair TfL’s finances to the point where its liquidity, which currently covers 50 days of operating costs returns to its historic norms of around 80 days of cover.

In a statement, TfL said the funding will go towards Crossrail completing the final fit-out of the tunnels, work on stations and the extensive safety and reliability testing needed for the new systems.

TfL and the DfT have also commissioned an independent review of Crossrail’s governance and a separate review on Crossrail’s finance and commercial position.