'Risks remain' on Crossrail project
12:24am Wednesday 23rd July 2014 in © Press Association 2014
Considerable risks remain in delivering the £15.8 billion cross-London Crossrail programme by its target time of 2019, a report by MPs has said.
The Department for Transport (DfT) did not fully realise how the Crossrail programme would benefit London businesses, the report from the House of Commons Public Accounts Committee also said.
This meant the department had mixed success in securing the contributions it had negotiated with businesses.
The report said Heathrow Airport Ltd would now only provide £70 million for Crossrail - less than a third of the funding originally agreed.
The MPs said the full rationale for proceeding with Crossrail was not made clear. Also, the ratio used in deciding whether the project should go ahead excluded certain measurable benefits such as increased productivity from a greater clustering of firms, changing property values or land use.
But the committee said the Crossrail programme was proceeding well and was on course to deliver value for money to the taxpayer.
Costing £14.8 billion, with the trains costing a further £1 billion, Crossrail will stretch from Reading in Berkshire to the west as far east as Shenfield in Essex and will transform cross-London train journeys.
The committee said the scheme was "broadly on schedule and being delivered within budget".
But it went on: "However, construction is not yet complete, and considerable risks remain in delivering the programme by 2019, particularly managing the transition from building the railway to operating it, and delivering the Crossrail trains.
"This project also raises questions about how Government compares different transport projects when making its investment decisions."
The report said Crossrail had a benefit-cost ratio (BCR) of less than 2:1, meaning that for every £1 spent there would be a £2.1 benefit.
On a scale of one to four, a BCR of 4:1 is considered to offer good value for money, with a 1:1 being see as poor value for money.
Committee member Richard Bacon (Con: South Norfolk) said: "Major, complex infrastructure projects are notoriously difficult to deliver on time and in budget. With Crossrail we see a textbook example of how to get things right.
"The Department should capture the lessons it has learned from the Crossrail programme and apply these to its other projects, most notably HS2."
He went on: "There are also lessons to be learned about how transport projects are appraised. Benefit-cost ratios are used that do not capture the full benefits, and the case for investment is understated.
"With Crossrail, the ratio was around 2:1, or medium value for money. However, when wider economic benefits, such as increased productivity from greater clustering of firms and labour market effects, it was more like 3:1. The full rationale for proceeding with Crossrail was not made clear.
The department cannot maximise contributions from private sector beneficiaries of transport projects if it does not fully understand the benefits that projects will bring."
Newly-appointed Rail Minister Claire Perry said: "I am delighted with the committee's finding that Crossrail is a 'textbook example' of getting things right and that we are progressing well with this complex and exciting project.
"We have every confidence that Crossrail will be completed on time and, alongside Transport for London, we are working closely with the delivery company, Crossrail Ltd, to ensure it meets its construction timetable.
"We have always made clear that those who stand to benefit from Crossrail should contribute, which is why around one third of the scheme is being funded by businesses.
"Heathrow Airport's contribution of £70 million was always subject to approval by the Civil Aviation Authority, and we allowed for this when planning the project."