Supporters of London’s Crossrail scheme have called for more to be done to demonstrate the economic value creation of major infrastructure projects.
Crossrail chairman Terry Morgan has told the ICE that more work needs to be done to prove the worth of infrastructure investment, after transport secretary Philip Hammond stressed the scheme remains under “constant review”.
“We have a huge job to do [to demonstrate the worth of schemes] and more needs to be done to demonstrate the ecomonic value created by projects,” said Morgan.
Morgan spoke out at the launch event for the ICE’s annual State of the Nation report, to be published tomorrow.
His comments came as business lobby group London First published a report that showed Crossrail’s business case to be one of the weakest of 17 major schemes currently in planning or under construction. It looked at a range of schemes across London and the rest of the UK including the Tube upgrade and High Speed 2.
While London First calculated Crossrail to bring in the greatest overall economic benefit of £9bn, this is less than 60% as a percentage of cost. It also has a benefit to cost ratio (BCR) of just 1.8, which London First said undervalued the scheme because wider economic benefits of infrastructure are currently not captured in BCR calculations.
Upgrades to the London Underground bring in far more benefits as a percentage of overall cost.
Ugrading the subsurface lines will generate £7bn of benefits, at 150% of overall cost. The Piccadilly Line upgrade will deliver just under £4bn of benefits but this is 320% of its cost. Its BCR is 4.2 - twice that of Crossrail.
ICE State of the Nation steering group chairman David Orr said that while maintaining existing assets such as the London Underground was vital, Crossrail was a special case.
“London is an exemplar in its approach to local transport. The Tube is absolutely essential to the working of the capital city. But let’s not forget that Crossrail will provide 10% additional public transport capacity. London is a special case and I would argue that investment – whether new or old – is equally vital.”
Transport secretary Philip Hammond yesterday reiterated his desire to see the £15.9bn mega-rail scheme placed under scrutiny to ensure it delivered value for money.
Hammond was visiting work for the route’s Canary Wharf station and gave the firmest commitment to the scheme yet seen by the new government.
“We live in difficult economic times, but that does not mean that we should scrap big projects which would give the economy a vital boost in the future,” he said, adding that there were no plans to reduce the scope.
“But it does mean that we must ensure that every pound we invest is well spent. I am determined that this scheme remains affordable – Londoners, business and the taxpayer would expect nothing less.
“The project will be under constant review but we want to see it delivered in its entirety,” he said.
But Hammond later added at London First’s launch event that less visible, “but every bit as important”, was London Underground’s major programme of investment in the Tube.
Chief construction adviser Paul Morrell, speaking at the launch of the ICE report, said that the balance between providing new and maintaining existing infrastructure was one of the toughest choices ahead.
“We are sitting on a wasting asset,” he said. “And that is far, far more expensive in the long run than not maintaining it.”
London First said that the highest priority should be given to transport investment most likely to sustain growth.
“The current state of public finances means it is unlikely that all schemes with a net positive value will receive the necessary funding, let alone that are seen as socially desirable,” said its report.
“Given the coalition government’s stated twin objectives of tackling the deficit and encouraging private sector growth, a comprehensive and consistent method of assessing economic benefits is needed,” it said.