Crossrail has secured the funding it needs to complete the railway, after the government approved plans by the GLA to borrow £825 million against future income.
In a statement, it was said that “the £825 million of additional borrowing will be made available to the GLA by the DfT and passed to TfL as a grant for the purposes of the Crossrail project. This grant is intended to be provided to the Crossrail project once TfL’s £750m loan facility, agreed as part of the previous £2.15bn financing package, is exhausted.”
TfL has confirmed that the GLA will repay the loan from future Business Rate Supplement (BRS) and Mayoral Community Infrastructure Levy (MCIL) revenues.
The GLA loan of £825m will be split into a £500m loan with a fixed repayment profile and a £325m loan that will be repaid subject to MCIL and BRS revenues going forward. The Government will need to make some legislative changes to enable this borrowing, which it has agreed to do.
The repayment model is similar to what was agreed when the government agreed to a £2.15 billion funding package in December 2018.
That leaves £275 million to be found of the £1.1 billion overspend that was announced in the autumn, and TfL’s Commissioner, Andy Byford says that he is confident that the project can be delivered for only £875 million extra, so that they don’t need to go back to government for further funding.
The decision came on the day that the GLA’s Transport Committee is due to hold a meeting about the Crossrail project, and just days after it was reported that the project was close to being mothballed due to lack of clarity over its funding situation.
That meeting is likely to offer more clarity on how the remaining funds will be found, and how the government offer is being managed.
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Updated – some clarity, the original statement implied a grant from the government, when it’s actually a loan, and some details from the GLA meeting.
That is good news, but does it mean that business rates will increase?
Business rates are set by central government.
The Crossrail business rate supplement was set as 2p in the rate poundage by the previous mayor with agreement from the Government with an estimated timeline that it would end once the debt had been paid off in the mid 2030’s
Given the debt to be funded by the business rate supplement on business with a rateable value of more than £70,001 has increased the repayment timetable will be extended rather than the rate increased
So the Crossrail project continues even though it’s still behind schedule and is now possible for completion in late 2021 or early/mid 2022.