London can find the £15bn it needs to fund Crossrail 2’s construction through a combination of fare rises, council tax hikes and business rate uplifts, a major business group has said.
London First, which represents more than 200 employers in the capital, estimated London would need to find around £200m a year to support additional borrowing to meet its share of the upfront costs.
The group’s Paying for Crossrail report said a series of new funding mechanisms such as fare increases and council tax contributions, as well as increases to existing funding streams such as the capital’s infrastructure levy, would be needed when construction starts.
The report suggested these revenue streams could be borrowed against to cover the city’s 50 per cent contribution towards the £30bn rail line.
Last July transport secretary Chris Grayling said Crossrail 2 would only get the green light if London was able to fund 50 per cent of the scheme during construction.
As part of London First’s plan to meet this target, the group has suggested a one-off fare increase for Transport for London and relevant national services in the early 2020s.
It said a 1 per cent rise on TfL services and South Western Railway and West Anglia Main Line services would create an additional £35m annually.
Other proposals include a new council tax supplement that would mirror the one used for the Olympics and create £150m a year, and an increase of 0.5p in the pound to business rates that would generate £68m a year towards the scheme.
London First also said increases to the Mayoral Community Infrastructure Levy, which provided £600m for Crossrail 1 through charging residential and commercial developers on new developments, could also help meet Crossrail 2 funding requirements.
A green light for Crossrail 2 has been repeatedly delayed by the government due to concerns over funding.
Mr Grayling revealed in March that an independent affordability review would assess whether the scheme represented value for money; this is expected to be published ahead of the Autumn Budget.
As part of efforts to prove Crossrail 2’s affordability, London First has put forward a series of new funding mechanisms not used before to fund major schemes.
One of these is land value capture, which would see developers or property-owners pay TfL a proportion of the increases to the value of their investments caused by Crossrail 2.
The group also called on the government to ringfence a proportion of the stamp duty and business rate payments driven by the Crossrail 2 line.
The National Infrastructure Commission’s National Infrastructure Assessment earlier this month, which set out plans for the UK’s infrastructure, urged the government to approve Crossrail 2 as a priority.
The report added that there was a need to secure new and innovative ways of funding and financing infrastructure projects like Crossrail 2 through the public sector, but also from private investors.
London First chief executive Jasmine Whitbread 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.”
A Department for Transport spokesman said: “Crossrail 2 has the potential to unlock new housing, jobs and development and provide London with infrastructure that will support its growth.
“We need to ensure the public gets an affordable scheme that is fair to the UK taxpayer, and we are clear that we must improve transport in lockstep across the whole country.
“Crossrail and HS2 have all been subject to external scrutiny which has become key to their success and progress today. This follows best practice and is why we have commissioned the Crossrail 2 Independent Affordability Review alongside TfL.”