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Crossrail 2 funding plan rejected by City of London

The City of London has refused to back Sadiq Khan’s new levy to pay for Crossrail 2 unless it is “reassured” that funding for the project will not jeopardise new development in the Square Mile.

In its response to the mayor of London’s consultation on the proposed £31bn rail line, the local authority backed the scheme in principle.

However, the City objected to the mayor’s new levy on businesses to help pay for the line, known as the Mayoral Community Infrastructure Levy 2 (MCIL2), unless it was given assurances that the new tax would not harm investment in new development.

According to notes from the City of London’s planning and transportation committee, part of the response to the Mr Khan’s consultation was amended to state: “The City Corporation supports the principle of delivering Crossrail 2 part-funded by Mayoral CIL2 contributions, but objects to the proposed MCIL2 rates for the City until it is reassured that they are supported by robust evidence that takes account of City-specific viability issues.”

Commenting on the proposals for the new line through the capital, the City said: “While Crossrail 2 does not directly serve the City, the scheme will provide a significant increase in capacity to London’s congested transport network, and is a key requirement to support the High Speed 2 link.

“The scheme will support growth and provide access to thousands of new homes and jobs. The City Corporation supports the delivery of Crossrail 2 as soon as possible.”

However, the City also said it “expresses concern that the cumulative impact of the proposed Mayoral CIL charge, alongside City Corporation’s City CIL and City s106 charges, could have an adverse impact on the viability of development in the City”.

The initial Mayor Community Infrastructure Levy, brought in to pay for the £14.8bn Crossrail 1 project and is set to continue paying for Crossrail 1 for a further 16 years.

The proposed MCIL2, which would come into force in April 2019, would see a rate of up to £80 per sq m applied to new developments in eight London boroughs: the City of London as well as Camden, the City of Westminster, Hammersmith and Fulham, Islington, Kensington and Chelsea, Richmond-upon-Thames and Wandsworth.

Lower MCIL2 rates of £65 and £25 per sq m would apply to other London boroughs.

According to the mayor of London the estimated income that will be raised from MCIL2 to assist the financing of Crossrail 2 is some £8.6bn in nominal terms from 2019-20 to 2042-43.

Speaking to CN in August, Crossrail 2’s managing director Michèle Dix said that the original MCIL had not had any effect on development.

Ms Dix said: “Lots of people have said that if you put an MCIL in you would adversely affect and slow down development, but we have seen [through the current MCIL] it has not had that effect.”

The Department for Transport has insisted that the mayor of London comes up with a robust business case as part of the agreement to secure government funding for the Crossrail 2 project. 

Last week it was revealed that parts of the Crossrail 2 line could be delayed by up to a decade in order to secure funding for the project.

A Transport for London report published in March suggested the completion of some parts of the line could be pushed back until the 2040s.

The report said TfL could “extend construction over a longer period and open in stages, with full services operating by the early 2040s”. 

The idea of phasing the project in had been found to be “feasible” in an earlier analysis, the report added. 

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