Liberal Democrat shadow transport secretary Norman Baker last week raised fears about the future of Crossrail after sounding out the cost of cancelling the £15.9bn project.
Baker had asked transport minister Sadiq Khan what abandoning the project after next year’s General Election would cost the taxpayer.
Khan said the cost of cancelling the project would exceed £1.6bn. Up to June 2010 project delivery costs, including fees paid to consultants would be £950M.
Another £700M would have been spent on land purchase costs plus the “uncertain” costs of cancelling contracts let to date. “It is not possible to produce precise estimates as to overall expenditure if the project were to be cancelled,” said Khan.
“The resolution of contractual arrangements would be a matter of economic uncertainty.”
Transport minister Sadiq Khan
“The costs associated with any cancellation would be substantial but would be contingent on a number of different factors, including contractual commitments and potential income from land no longer required.
“Naturally, the resolution of contractual arrangements would be a matter of significant commercial sensitivity and economic uncertainty.”
Liberal Democrat economic spokesman Vince Cable has already warned that the £16bn east-west rail scheme for London was unlikely to be a “key priority”, should his party have influence in the next government.
Crossrail and its parent Transport for London (TfL) are working hard to secure the funding needed to build the scheme.
In September TfL announced that it had agreed a £1bn loan with the European Investment Bank (EIB) to finance part of its £7.7bn contribution to the project.
The £15.9bn funding framework was put in place in October 2007 when prime minister Gordon Brown announced that Crossrail’s costs will be met by the government, TfL and London businesses. The government will contribute by means of a £5.1bn Department for Transport grant.
TfL will also contribute £2.7bn directly.
Crossrail fares will contribute £3.5bn to the repayment of project debt raised by TfL. Network Rail will put in £2.3bn.
London businesses will contribute through the Supplementary Business Rate.
There are also financial contributions from some key beneficiaries of Crossrail including City of London Corporation (£200M), BAA (£230M) and Canary Wharf. (£150M).
Canary Wharf Group is also designing and building the new station.