London's Crossrail project could be delayed by five years because of funding difficulties, a leading economist warned this week.
Fears were raised that the funding package for the £15.9bn cross London rail route could start to unravel, even though the Crossrail Bill to enable construction is expected to receive Royal Assent next Wednesday.
Professor Tony Travers, who is director of Greater London Group at London School of Economics claimed that senior Transport for London (TfL) figures were seriously worried about the funding for the scheme that is due to start on site in 2010.
"At the moment all the signals are amber because the money has to be secure before they start letting the first contracts.
"Whatever anyone says it still has not got the go ahead and until I see the Queen with her silver spade start the digging I won't believe it's going ahead," said Travers.
"I've certainly heard from senior sources within TfL that the project is less secure than people outside might imagine. Royal Assent doesn't mean it will get built straight away."
Travers said that the government still faced a major challenge tying together the three main income flows for the project – the London business rate supplement, the direct government contribution and borrowing against fare revenues.
He said there was a lack of progress on primary legislation to introduce a Supplementary Business Rate (SBR) in London of 2p in the pound. This is expected to cover £3.5bn of the project cost.
"I haven't seen anything for London Borough directors of finance putting them on standby to implement a SBR of 2p in the pound by April 2010," he said.
A Department for Transport (DfT) spokesman told NCE that a Business Rates Supplement Bill was expected to be included in the Queen's Speech on 3 December.
But Travers also cast doubt on TfL's ability to borrow £2.7bn against future fare revenue in the current economic climate as credit is scarce and the cost of debt high.
Travers warned that the forthcoming review of the London Underground Public Private Partnership (PPP) in 2010 would show the need for between £6bn and £9bn to be pumped into the PPP to stick to the original programme.
He said there was also likely to be pressure to fund, likely cost overruns to the London 2012 Olympics.
These factors will create a black hole in the capital's finances that could see Crossrail delayed by five years, said Travers.
Travers' concerns were echoed by a senior figure at the City of London Corporation, which will be providing substantial funds towards Crossrail.
"There is a deafening silence with regard to Crossrail funding from [the DfT] and I think Professor Travers makes a very well merited point," said the source. He added that there was concern within the corporation at the lack of progress on other "pre-construction activities" not dependent on the Royal Assent.
A spokesman for Crossrail client Cross London Rail Links dismissed the fears said that the project was "green to go" once Royal Assent is gained.
The DfT said TfL and the government remained "fully committed" to the delivery of Crossrail.
Click here for Crossrail Map
WHO PAYS FOR WHAT
Transport for London
SBR debt £3.5bn
Borrowing against future fare revenue £2.7bn
Saving from combined Tube stations £400M
Surplus land sales £500M
New London planning charge £300M
Department for Transport
Direct contribution £5.1bn
BAA/City of London Corporation £500M
Network Rail £2.3bn
Depot operating lease £500M
City of London Corporation £100M
Less costs already incurred (£400M)
TOTAL COST £15.9bn