A majo revamp of the business rate system could undermine efforts to secure funding for London's £10.3bn Crossrail project, the scheme's supporters warned this week.
They want a Crossrail funding package agreed by November, ahead of the publication of plans to revamp the business rate system.Fears about the funding package surfaced on Tuesday as London mayor Ken Livingstone announced that Crossrail was more important to the capital's future than the Olympics.Business lobby group London First warned that a deal must be done before Sir Michael Lyons publishes his review into local government funding in December.Part of the review will determine the mix of public and private funding for Crossrail.If no deal is done before the Lyons review is published, the £3bn that is expected to come from a 3% increase in business rates across the capital will be jeopardized.Influential business groups including the CBI have tentatively signed up to paying higher rates for Crossrail on the understanding that it is a one-off scheme of national importance.The Lyons review is expected to recommend a nationwide revamp of the business rate system. Local authorities across the country are expected to be told to raise rates to pay for new infrastructure. This would draw Crossrail into several years of debate and consultation over the proposals.'The Lyons inquiry in a way weakens the case we've been making on Crossrail - that it is a one off - because it will get caught up in an extended debate about the whole philosophy,' said London First director of policy Irving Yass. Livingstone this week launched a campaign to revive momentum behind the scheme to force a deal through.'Crossrail is the single most important issue facing London,' said Livingstone. 'What we specifically do not want to hear is 'let's move on to that after the Olympics.' That is too big a gap.'If we do not get an increase in capacity [in public transport] sometime after 2008, me or my successor would have to start directing the refusal of planning applications in central London.'Livingstone is looking for £3bn to £3.5bn of central government funding, and £3bn from business rates with the remainder coming from Transport for London loans secured against fare revenue.Crossrail chairman Doug Oakervee pledged to keep costs below the 2004 forecast of £10.3bn, excluding inflation. If costs exceed that, TfL will bear the extra costs.Mark HansfordRelated links:Today's top stories