The delay to Crossrail, which is now set to open between October 2020 and March 2021, could cost Transport for London (TfL) £1bn in lost passenger revenue according to a major financial ratings agency.
Moody's saidthe loss between 2020 and 2022 amounts to approximately 5% of total TfL operating revenue in these years, roughly £300m-£400m more than anticipated in TfL's 2018 business plan).
However, the net impact is expected to be lower due to the avoided operating costs and abstracted revenue added back to other TfL services.
In terms of capital costs TfL is 'relatively insulated' from the delay's impact, which is expected to remain within the new £17.6bn funding envelope agreed with the Government in December 2018.
'Its liability for the capital cost overrun is currently limited to a £750m loan facility which will be made available to TfL from the Department for Transport if the cost overrun exceeds £1.7bn,' Moody's said.
Moody’s expects TfL to manage the lost revenue by 'accelerating its cost-savings programme, delaying capital expenditure and applying more of its mayoral business rates to its operating budget'.
Once hailed as a exemplar of good project planning, the Crossrail tunnelling apects worked well but the central section ran into difficulties over signalling and getting a number of stations up and running in time.
This prompted a bitter arguments between Crossrail Ltd, TfL and the mayor's office over who knew what when.
Crossrail Limited was forced to announce a second delay to the opening of the central section of the Elizabeth line – which will extend from Paddington station to Abbey Wood – to between October 2020 and March 2021, two years later than originally scheduled.
The impact of the Crossrail delay adds to other budgetary challenges that TfL faces in the medium term, which include a reduction in operating grant from 29% of total operating income in 2014 to 18% in 2018, stagnant passenger numbers and the continuing impact of the Mayor's fare freeze.
However TfL had made early progress on its transformation programme, which is aimed at removing £1.2bn of annual operating costs from the organisation by fiscal 2023.
Its recent budget showed that full year net cost of operations in fiscal 2019 will be £468m lower than initially budgeted (£500m vs. £968m).