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Ministers aim to maximise private Crossrail funding

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THE TREASURY and Department for Transport (DfT) are this week working out how to limit the government's contribution to the £8bn Crossrail project.

They are developing an outline funding package ahead of publication of the project's enabling bill, said the project finance expert who chaired the review of the project for the DfT.

Crossrail will link rail networks east and west of London via a tunnel running between Paddington and Liverpool Street.

'Much of the work at the moment concerns the funding basis and the structure of funding, ' said Network Rail deputy chairman Adrian Montague, who chaired the review.

'The government wants to maximise the private sector's contribution, ' he said.

Montague said there was a strong government commitment to proceed with the project.

He added that the government would not waste parliament's time with a Bill if the basis for the funding package had not been worked out.

Montague told a private finance conference in Madrid last week that part of the private funding would probably come from increased London business rates.

He said that senior executives at 15 City institutions had backed the increase because of the project's importance to the capital.

This would combine with bank loans and equity finance from contractors to make up the private sector contribution to a mostly government funded scheme.

The debt-financed element could be government guaranteed, like the funding for the Channel Tunnel Rail Link, said Montague.

This would enable the project to be run like a private finance initiative scheme with a project company subcontracting construction, probably to a design and build contractor.

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