A new report published by PwC has estimated the cost of the Crossrail 2 project at £27.5bn, around £6.6bn higher than estimated in 2012.
The report, compiled by PwC with input from Transport for London, the Department for Transport, the Treasury, Network Rail and Infrastructure UK, sets out the funding and financing options for the rail project, which draws on funding mechanisms currently being used for Crossrail 1.
It estimates that the total cost of delivering the regional Crossrail 2 option, which would connect to National Rail routes at either end of the new line, would be £27.5bn in 2014/15 prices.
The line runs from New Southgate and Tottenham Hale to Wimbledon via Euston and Victoria.
London mayor Boris Johnson, who announced the preferred route for the scheme in October, initially estimated the cost of the scheme at £20bn.
In 2012, Mott Macdonald estimated the capital expenditure for the regional option to be £20.9bn in its engineering feasibility and capital cost study.
However, the latest study by PwC has increased the capital cost in 2012 prices by £4.5m to £25.4m, to also include the purchase of rolling stock and required station upgrades to provide step-free access and lengthen platforms to accommodate Crossrail trains.
PwC has then converted 2012 prices to 2014/15 prices using the tender price index to take the total capital cost to £27.5bn.
Funding mechanisms considered include paying back investment through a combination of revenue generated through fares, and continuations of the Business Rate Supplement and Mayoral Community Infrastructure Levy (CIL), which is currently being used to fund Crossrail 1.
Other options for funding include retaining the Council Tax contribution arrangements that were introduced to help fund the 2012 Olympic Games, as well as potentially increasing the Mayoral CIL.
Funding from property related developments and from land owners adjacent to the line could also be part of the mix of contributions. The report shows that over half the costs of the scheme could be met by London using existing funding mechanisms.
The report breaks down the estimated cost of the scheme by different categories.
Crossrail 2 cost breakdown
- Land and property - £1.16bn
- Tunnels - £2.3bn
- Stations - £5.66bn
- Systems - £1.43bn
- Surface works - £2.62bn
- Indirect costs - £2.07bn
- Rolling stock - £1.35bn
- Optimism bias - £10.95bn
- Total - £27.54bn
Commenting on the report, the mayor said: “Crossrail 2 is an essential infrastructure project and this report shows the range of financing initiatives we could employ to get it moving.
“We’ll now be discussing those financing options closely with London’s boroughs, business groups and other key players who have a stake in getting behind Crossrail 2.”
Chancellor George Osborne said: “Our long-term economic plan for London involves preparing now for the infrastructure our capital might need in the future. That’s why I’ve said we should look at the case for Crossrail 2. This PwC report is a useful contribution to that work.”
Crossrail 2 could potentially support 200,000 new homes along its route.