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Funding fears blight Crossrail planning

News - Once again London's Crossrail project faces a major political test.

Over the next few months, ministers and civil servants from the Department for Transport (DfT) and the Treasury must agree on how the colossal £8bn Crossrail project between east and west London is to be funded.

The outline funding package needs to be thrashed out ahead of the enabling Bill to get the project planning permission going before Parliament early next year.

Network Rail deputy chairman and former merchant banker Adrian Montague chaired the review of the project for the DfT.

Last week he explained that the project's scale and the banking sector's nervousness about investing in privately funded mega projects makes funding it entirely with private sector cash impossible.

It would not be possible to raise even £5bn of the total cost through the private sector, he said. This is because the scale of the project would make it impossible for the government to stand aside if there were funding difficulties.

As a result a mixture of Treasury funding, private finance, increased business rates and government underwritten bank loans will all be needed to get Crossrail built.

Despite the effort to thrash out a funding package, there is no guarantee that Crossrail will be built, even if the Bill survives an expected General Election in the spring.

Fears about unforeseen cost overruns and delays continue to undermine efforts to get the project off the ground.

The Treasury is as nervous as the banks about committing funds to the scheme, even though it has clear regeneration and congestion relief benefits. It does not want to commit to a project that turns into a Eurotunnel-style black hole funded by the taxpayer.

The key uncertainties lie in the project's extensive interfaces with London Underground, Network Rail and the utilities.

The central London section will cross nearly every Underground Line, while each end will have to dovetail with complex and busy sections of the national rail system.

But these problems have to be overcome. Having conducted a review of the project for the DfT, Montague believes London's future depends on Crossrail. He believes the project is now one that prime minister Tony Blair himself can support.

'When I looked at the project I wanted to give ministers enough confidence to give it their personal support, ' said Montague last week.

'Personally I don't think it can come soon enough, ' he said But the ball is now firmly in the politicians' court and amount of time and millions of pounds spent on feasibility studies and route options are making it increasingly difficult for them to walk away from it.

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