The Greater London Authority has finalised a £600M bond towards its share of Crossrail’s £14.8bn construction costs.
The bond issue, the first of its type by a local authority in 17 years, has reported to save taxpayers £65M according to London mayor Boris Johnson.
The GLA had previously raised £800M through the Government’s “Public Works Loan Board”. This is repaid through the Business Rate Supplement (BRS) collected from the capital’s larger businesses to pay towards Crossrail. However last October the Government made borrowing through the Board around one per-cent more expensive.
To ensure value for money for the capital the Mayor has sought more economical options in the financial markets and the issuing of this bond is around 0.17 per cent cheaper than the current option. The GLA is committed to delivering at least equivalent savings on further borrowings , and so a total of £65 million could be shaved off the cost of long - term borrowing for Crossrail.
This strategy gives the GLA the option to repay its £3.5bn loans earlier, potentially shortening the term of the BRS which is forecast to run until 2035. Alternatively it equates to an entire year’s BRS levy on all large businesses in outer-London, or a £4,000 saving per business property.
“Crossrail is going to transform our city but it must be cost effective , especially for London’s businesses,” said Johnson.
“This is a great example of the public and private sectors coming together and delivering an innovative solution to bear down on borrowing costs. I hope this is a model local government can develop for other important improvements we make to the capital and beyond.”