A London business lobby has suggested more of the funding for Crossrail 2 should be shifted to the region's population through some combination of fares, council tax, business rates and property value uplift.
Government has given initial backing to the £25bn-£30bn scheme, but challenged City Hall to meet half the costs.
Transport for London (TfL) estimates that replicating the Crossrail 1 funding package - which included a Business Rate Supplement, contributions from development along the route and the expected net operating surplus once the service is up and running - could generate the money needed.
However business group London First highlight that only some of this will be available during the construction period for Crossrail 2, as revenue streams such as future fares only come through once the line is open.
Jasmine Whitbread, chief executive of London First, said: ?'We need to step up planning for long-term investment in the UK’s infrastructure and it’s clear that London has to pay its way. This means London’s commuters, businesses and residents will have to put their hands in their pockets to see the benefits of better and quicker journeys, and more homes being built along the route.
'What we need now is for the mayor and government to strain every sinew to get costs down and ensure tax and fare rises are a last resort, rather than the easiest option. This means learning from the experience of Crossrail 1 to save money when building tunnels and stations, using private finance for new trains and considering the sale of existing assets, like the Crossrail tunnel itself to free up funds.'
Business First estimates London needs to find around £200m a year during construction to support additional borrowing and help meet its share of the up-front costs.
Transport secretary Chris Grayling and London mayor Sadiq Khan have set up an independent affordability review to examine the options for filling the funding and financing gap ahead of the autumn Budget.
The news comes as London's Crossrail 1 project is running almost £600m over its revised budget with extra funding required to complete the £15.4bn work.
The Department for Transport and TfL are each providing £150m of additional funding to complete construction of the scheme.
An extra £290m will also be paid by the DfT and Network Rail to upgrade the existing rail network linked to the project.
Crossrail 2 funding options?
London First suggested a finance package for Crossrail 2 should include some combination of the following:
A one-off fare increase on TfL and relevant national rail services in the early 2020s. A 1% rise on TfL services would generate around £30m per annum . This would be equivalent to an extra £1.50 a month for someone using a monthly travelcard for zones 1 – 3. A similar rise for South Western Railway and West Anglian Main Line passengers who would benefit from Crossrail 2 would generate around an extra £5 – 10m p/?a. This would be equivalent to around an extra £2 — £2.50 a month for commuters from places such as Epsom and Broxbourne who would see their services transformed.
A council tax supplement, as used for the London 2012 Olympic Games. A supplement of £40 for a Band D London property – less than a pound a week – could generate around £150m p/?a. A similar precept for districts with a Crossrail 2 station in Hertfordshire and Surrey would generate around an extra £8.5m p/?a.
A Business Rate Supplement for larger businesses, as was used for Crossrail 1. TfL’s current proposed funding package for Crossrail 2 assumes the existing Crossrail Business Rate Supplement of 2p in the £1 will continue. Further contributions would be difficult, but as an example an extra 0.5p increase as part of a wider package could be worth around £68m p/?a.
Retaining a proportion of stamp duty or business rate uplifts, as was used for the Northern Line Extension to Battersea. By transforming transport links in areas it serves, Crossrail 2 will generate significant increases in taxes such as business rates and stamp duty for the Exchequer. A proportion of this uplift could be ringfenced to help pay for the scheme.
Land value capture. Crossrail 2 will generate significant windfall gains for land and property owners along the route. Further work is needed from the review to identify and agree new mechanisms for capturing these uplifts with a growth-promoting planning policy.
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