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BRIEFING PAPER

Number CBP00876, 23 January 2019

Crossrail (Elizabeth Line) By Andrew Haylen

Contents: 1. Background 2. Crossrail Act 2008 3. The route 4. Governance 5. Business cases and costs 6. Funding & financing 7. Construction 8. Rolling stock 9. Operation

2 Crossrail (Elizabeth Line)

Contents Summary 3

1. Background 4

2. Crossrail Act 2008 7

3. The route 10 Possible eastern extension 12

4. Governance 14 Recent governance issues 16

5. Business cases and costs 19 5.1 Value for money 19 5.2 Scheme costs 20

Cost overruns – 2017 onward 21

6. Funding & financing 25 The funding settlements 25 Changes to Crossrail funding 28

7. Construction 30 Who was responsible for delivering Crossrail? 30 Construction timeline 32 Delays to delivery 35

8. Rolling stock 37

9. Operation 40 Concession agreement with MTR 40 Track access agreements and charges 41

Cover page image copyright Transport for London Flickr [used by kind permission of TfL] [cropped]

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Summary Crossrail is the plan to join the mainline railways to the east and west of London through the construction of two tunnels beneath central London from Paddington to Liverpool Street. The project will deliver: a 74-mile railway; 13 miles of new tunnels under London; new, expanded or upgraded stations along the Crossrail route; and a new fleet of trains. When the project is complete, Crossrail services will run from Maidenhead and Heathrow in the west to Shenfield and Abbey Wood in the east. Overall, it will provide a 10% increase in London’s rail transport capacity.

The railway’s operations will be handed over to Transport for London (TfL) and run as part of London’s integrated transport network. Crossrail services were originally intended to be introduced as follows:

• Heathrow to Paddington (mainline platforms) – May 2018 (when the Crossrail concession takes over the Heathrow Connect service);

• Paddington (Crossrail platforms) to Abbey Wood (i.e. the central section of the line) – December 2018;

• Paddington (Crossrail platforms) to Shenfield – May 2019; and

• Full through service (including services to Reading) – December 2019.

The opening of the central section of the line was initially delayed to autumn 2019 in August 2018. It became apparent in early December 2018 that the revised opening date was also unrealistic. It remains unclear precisely when the project will be completed. The latest reports suggest that it could be delayed for another two years, driven primarily by delays to operational testing and the integration of the different signalling systems.

The original funding envelope agreed in the 2010 Spending Review was £14.8 billion. Additional funding has been required by both Crossrail Limited and Network Rail to complete this project because of cost overruns. In December 2018, the Government formally announced Crossrail’s third additional cash injection in the form of a loan of up to £1.3 billion to the GLA, which will have to be repaid via a supplement on the business rates. The combined total of the financing arrangements, means that the overall funding envelope for the project is now £17.6 billion, £3.1 billion more than was agreed in the 2010 Comprehensive Spending Review.

Information on other rail projects and aspects of how the railways are run can be found on the Railways Topical Page of the Parliament website. A briefing paper on the proposed Crossrail 2 scheme has been published and is also available on the Parliament website.

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1. Background The idea of a direct line from Paddington to London’s docks is not a new concept and was first proposed by the Regents Canal & Railway Company in the nineteenth century. Other iterations of the concept also came and went.1 The current iteration of Crossrail dates to the January 1989 Central London Rail Study, which was commissioned by the Thatcher Government to look at ways of addressing overcrowding on the London rail system. It suggested a number of new lines and extensions, including East-West Crossrail (Crossrail 1) and the Chelsea-Hackney line (Crossrail 2). Crossrail 1 was a planned route from Liverpool Street to Paddington/Marylebone. It had an outline capital cost (including rolling stock) of £885 million, though the study considered it as part of a ‘full cross’ scheme linking up with a north-south route from Euston/King’s Cross to Victoria. The Chelsea-Hackney line had an outline capital cost of £1.33 billion.2 These were truncated versions of what would later come to be wider, ‘regional’ ideas for Crossrail 1 and 2.

Crossrail 1 was taken forward by the Conservative Government in 1990, but the necessary Private Bill failed to get through the House of Commons in 1994. Attempts to use the Transport and Works Act procedure, which was an alternate approvals path to a Private Bill, as set out in the Transport and Works Act 1992, were abandoned in 1996 (at the request of the Government).

Safeguarding directions3 for the Chelsea-Hackney line were issued by the Secretary of State for Transport under the Town and Country Planning General Development Order 1988. Initial directions were issued on 7 February 1991 and revised directions issued on 12 November 1991.4 At about the same time (in 1992), the cost of Crossrail 1 was estimated at £1.94 billion and the Chelsea-Hackney line at £2 billion (both in 1992 prices).5

In 1999 the Labour Government asked the Strategic Rail Authority to study the requirements for extra passenger capacity to and through London.6 The London East West Study was published in late 2000. It recommended that both the East-West Crossrail and Hackney-Chelsea routes be resurrected and schemes developed to construct them.7

A joint venture company, Cross London Rail Links Ltd (CLRLL), was formed by Transport for London (TfL) and the SRA in 2001 and consulted with stakeholders on possible routes for Crossrail 1 and a

1 For more information about the history of the Crossrail concept, see: Crossrail,

Crossrail – from its early beginnings [accessed 3 January 2019] 2 DoT, British Rail and LRT, Central London Rail Study, January 1989, pp13-15 3 Safeguarding is an established part of the planning system, designed to protect land which has been earmarked for major infrastructure from conflicting developments which might otherwise occur. 4 HC Deb 12 November 1992, c963W 5 HC Deb 3 March 1992, c87W 6 Further details about the SRA are available in HC Library briefing paper SN1344 7 SRA, London East-West Study, November 2000

A detailed history of the Crossrail 1 project can be found in HC Library briefing paper RP 05/38, 1 June 2005

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feasibility study for a possible Crossrail 2 scheme. In the end, Crossrail 2 was kicked into the long grass and only Crossrail 1 was taken forward.

In July 2003 CLRLL submitted its final business case for Crossrail 1 to the Department for Transport (DfT). On 14 July 2003 the then Secretary of State, Alistair Darling, announced that the Government supported the principle of the link but wanted to be assured that CLRLL’s proposal was deliverable and financeable. He appointed a review team, led by Adrian Montague, to assess this. CLRLL’s business case outlined a benchmark scheme, involving a central east-west tunnel across London, with services extending to two branches to the east and two to the west, and was estimated to cost in the region of £10 billion.

The Review of the Crossrail Business Case was published in July 2004.8 In his response to the document, the Secretary of State announced that the Government intended to “introduce a Hybrid Bill at the earliest opportunity to take the powers necessary for Crossrail to be built”.9

CLRLL is now Crossrail Ltd. (CRL), a wholly owned subsidiary of TfL and is jointly sponsored by TfL and the DfT (see Section 2.3). More detail around the progress of the Crossrail legislation through Parliament and the subsequent construction and delivery of Crossrail is provided in subsequent sections of this paper.

A briefing paper on the proposed Crossrail 2 scheme has been published and is also available on the Parliament website.

8 DfT, Review of the Crossrail Business Case, July 2004 9 HC Deb 20 July 2004, c159

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Crossrail timeline, including original opening schedule10

10 NAO, Crossrail, HC965, Session 2013-14, 24 January 2014, p14

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2. Crossrail Act 2008 The Crossrail Bill (HC Bill 62 of 2004-05) was presented to Parliament on 22 February 2005. The Bill was subsequently carried over into the new Parliament following a vote on 7 April 2005 and republished in the following three sessions.11 The Bill was a hybrid bill.

What is a hybrid bill?

‘Hybrid’ bills are so called because they have characteristics of both public and private bills. What this means, in its simplest terms, is that while a bill may be of general application, its contents would significantly affect the interests of particular individuals or organisations. In effect, it is a public bill with a planning process attached, and as such it is normally used for big infrastructure projects. The procedures followed in Parliament in considering hybrid bills incorporate aspects of both public bill and private bill procedures. Promoters of hybrid bills do not need to prove the need for their bill (as promoters of private bills do), the principle of a hybrid bill is endorsed through it being given a Second Reading. Between a hybrid bill’s introduction and Second Reading, time is provided for members of the public to comment on the Environmental Statement (ES) published with the Bill and for a review to be prepared for consideration by MPs. Following Second Reading, hybrid bills are committed to a select committee to allow those directly and specially affected by the Bill to petition against aspects of the Bill to which they object. It can amend the Bill to address particular affects the Bill places on those who petitioned against it. After the select committee has reported, a hybrid bill is considered in Committee, on Report and debated at Third Reading, like a public bill.

The Bill took almost two years to pass its Commons stages (including 21 months in select committee) and six months to pass its Lords stages. The Bill received Royal Assent on 22 July 2008. Full details of the Bill’s progress through Parliament, including copies of the Bill, debates, amendments and reports can be found on the Crossrail Act page of the Parliament website.

The main provisions of the Act provided for:

• the authorisation of works necessary to build Crossrail and associated works;

• the acquisition of land and interests in land necessary for those works;

• the establishment of a planning and heritage regime for the works;

• the application of existing railway and other miscellaneous legislation to Crossrail;

• the handover by transfer scheme of property, rights and liabilities from relevant authorities to nominated undertakers; and

11 As HC Bill 1 of 2005-06 on 18 May 2005; as HC Bill 2 of 2006-07 on 16 November

2006 and as HC Bill 5 of 2007-08 on 15 November 2007. For more information, see: Crossrail Bill, Commons Library Research Paper 05/38, 1 June 2005

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• the devolution of control of the Crossrail project to the Greater London Authority, or TfL or a combination of the two.

A number of issues were debated and discussed during the passage of the Bill – some more controversial than others. Four key areas that were raised by MPs during debates on the Bill were: possible termini and routes, stations and other infrastructure and the remit of the Select Committee that considered the Bill:

• Termini: there was a debate as to whether the western terminus should be at Reading;12 the Government argued there was no case for this.13 In December 2005, two instructions were tabled on the Crossrail Bill, one of which was to enable (but not require) the Select Committee to consider whether Crossrail should extend to Reading or Ebbsfleet. The instructions were debated in the House on 12 January 2006.14 Crossrail eventually got extended to Reading.

• Routes: there were concerns about routes to and from Paddington.15 The Government explained that Crossrail would free up capacity.16 In March 2006 the Government announced changes to the tunnelling strategy through Tower Hamlets to significantly reduce environmental impacts in the borough.17

• Stations and other infrastructure: one of the most controversial features of the scheme – the proposed depot at Romford – was dropped in June 2006.18 Following a long debate in Select Committee19 and to-ing and fro-ing with the Government,20 in March 2007 it was announced that a new station would now go ahead at Woolwich in east London, paid for by a private company, Berkeley Homes.21

• Scope of the Select Committee’s remit: before the Second Reading debate, there was a short debate on the Business Motion relating to the committal of the Bill and the instruction to the Select Committee. The instruction circumscribed what the Select Committee could consider during the period it would be in operation. The most contentious aspect of the instruction was paragraph (b)(ii) which appeared to prevent the Select Committee

12 HC Deb 19 July 2005, c1203 13 ibid., c1212 14 HC Deb 12 January 2006, c458 15 see, for example, HC Deb 23 May 2005, c11W; HC Deb 7 June 2005, cc447-449W;

and: HC Deb 19 July 2005, c1149 16 ibid., c1134; Mr Darling said: “The intention is that Crossrail will use existing slow

lines, not the fast lines. The fast lines will benefit from the additional electrification to ease freight train access to which I referred, and fast train services ought to be able to run. Some of the stories appearing in Bristol and further south-west about 40 per cent. cuts in capacity are absolute rubbish. It is one person feeding off another and such stories are not justified. There is no way that I would sanction anything in London that would result in a 40 per cent. cut in trains from the south-west of England”

17 HC Deb 30 March 2006, c101WS 18 HC Deb 14 June 2006, cc65-66WS 19 Crossrail Committee, Crossrail Bill: Woolwich Station (first special report of session

2005-06), HC 1597, 1 November 2006 20 HC Deb 31 October 2006, cc226-231 21 HC Deb 22 March 2007, cc56-57WS; debate in the House: HC Deb 25 April 2007,

cc947-966

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considering termini other than those proposed in the Bill (Maidenhead, Shenfield and Abbey Wood). During the debate on the Business Motion, the then Minister explained how this would operate in practice; that the Committee would be able to consider the detail but not the principle of any realignment of the route.22

22 HC Deb 19 July 2005, cc1115-1116; see also: c1125 (Mr Darling); c1162 (Mr Luff)

and cc1210-11 (Mr Twigg)

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3. The route After extensive consultation and the lengthy hybrid bill process, the Crossrail route was finalised as part of the Crossrail Act 2008.

The western section of the Elizabeth line route will run on the existing rail network from Paddington to Heathrow and Reading. A summary of the anticipated Elizabeth line service pattern between Reading and central London is available on the Crossrail website. During the peak, there will be between 4 and 12 services per hour to central London, and during the off peak, there will be between 2 and 10 services per hour. A number of major upgrades have been carried out by Network Rail on this section of the route in preparation for the arrival of Elizabeth line services:

• a new flyover has been built at Stockley to add capacity at the busy junction to Heathrow;

• a new dive-under has been built in Acton to remove a bottleneck to the west of Paddington;

• the electrification of the railway in west London, South Bucks and Berkshire to pave the way for the introduction of quicker, greener, more reliable electric trains;

• A new depot at Old Oak Common; and

• Sidings at Maidenhead.23

In addition to the track upgrades, new ticket halls have been built at a number of stations in west London; new lifts and footbridges have been built where required to ensure step free access at every station; and platform extensions to accommodate the 200m long Crossrail trains.24

The central section of the Elizabeth line route will run from Paddington in the west to Whitechapel in the east, with a branch to Abbey Wood in the south-east. There will be up to 24 services per hour during the peak, and 20 per hour during the off peak. Ten new stations are being built in this section of the line, with each of the new stations to have their “own, distinct character, conceived by different architects which reflect the environment and heritage of the local area.” Step free access from street to train and straightforward navigation aims to ensure that the stations are accessible for all passengers.25

23 For additional detail, see: Crossrail, Track and infrastructure upgrades on the Great

Western Mainline [accessed 19 December 2018] 24 ibid. 25 Crossrail, Central and south east stations [accessed 19 December 2018]

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Crossrail route map26

26 Crossrail, Route Map [accessed 19 December 2018]

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The eastern section of the Elizabeth line route runs on the existing rail network between Stratford and Shenfield in Essex. A summary of the anticipated Elizabeth line service pattern between Shenfield and central London is available on the Crossrail website. During the peak, there will be between 12 and 16 services per hour to central London, and during the off peak, there will be 10 services per hour. A number of major upgrades have been carried out by Network Rail on this section of the route in preparation, including:

• significant trackwork has been carried out along the route;

• major rebuilds at Romford and Ilford;

• new sidings have been built at Shenfield and Gidea Park;

• improved ticket halls at a number of stations in east London; and

• new lifts and footbridges to provide step free access at every station.27

Possible eastern extension The early plans for Crossrail included running the line out towards Gravesend, but this was cut back in the 1990s, and a review in 2004 recommended stopping at Abbey Wood.28 However, land to enable an extension of the Elizabeth line was safeguarded as part of the Crossrail Bill and a safeguarding direction (i.e. preventing certain developments) is in place for an extension between Abbey Wood and Hoo Junction following the existing alignment of the North Kent railway lines. Some passive provision (i.e. allowances for possible future works) was also included in the station design at Abbey Wood to permit an extension to be added on later.29

In the latest transport strategy, the Mayor of London supported an eastern extension in principle but noted that it should be “taken forward by Government as a scheme of regional and national importance.”30 The Thames Estuary 2050 Growth Commission31 report, published in June 2018, highlighted the Crossrail to Ebbsfleet extension as a top priority that should be delivered by 2029. The report called on the government to provide around £20m to enable the detailed engineering, design, land and financial modelling and legal framework to be progressed.32 If approved, this would be the third extension of the Crossrail line, following the extension to Reading and Heathrow’s Terminal 5. The Eastern extension, according to the Growth Commission, could support the 55,000 new homes and 50,000 new jobs planned along the route in Bexley and north Kent.33

27 For additional detail, see: Crossrail, Eastern Section – Stratford to Shenfield [accessed

19 December 2018] 28 DfT, Review of the Crossrail Business Case, July 2004 29 Crossrail, Safeguarding [accessed 3 January 2019] 30 Mayor of London, Mayor’s Transport Strategy, March 2018, p228 31 The Thames Estuary Growth Commission is directed by Government to direct

investment in the Thames Estuary. 32 Ministry of Housing, Communities and Local Government, Thames Estuary 2050 Growth Commission, 2050 Vision, June 2018 33 op. cit., Thames Estuary 2050 Growth Commission, 2050 Vision,

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Potential Elizabeth Line Extension34

34 op. cit., Mayor’s Transport Strategy, p228

14 Crossrail (Elizabeth Line)

4. Governance Crossrail Ltd. (CRL), which was originally established in 2001 as Cross London Rail Links Ltd, is the company that has been set up to design and deliver the new railway. It is a wholly owned subsidiary of TfL35 and is jointly sponsored by the Mayor of London and the Secretary of State for Transport through the DfT.36 The CRL Board is accountable for the overall direction and management of the organisation to ensure the project is delivered in accordance with its statutory and contractual obligations and in line with the UK Corporate Governance Code. 37

The relationship between the sponsors and CRL is governed by agreements which define the overarching requirements and the role each party fulfils in the delivery of Crossrail. As described by Wright et. al (2017):

These agreements are crucial in aligning all parties’ objectives and providing the necessary protections to sponsors and the delivery organisation alike along with the definition of the high-level end-to-end scope.38

At the very top of the requirements hierarchy sits the Sponsors’ Requirements, which includes the high-level objectives in creating the project. These are formally bound into the primary contractual arrangement between CRL and the sponsors, namely the Project Development Agreement (PDA). The PDA drove the development of CRL’s organisation, assurance, governance and management capability.

Keen to insulate a publicly funded project from “political tweaking”, protections were wired into Crossrail’s governance.39 While the project remained within its tight budget “envelope”, its sponsors — TfL and the government — would have no rights of intervention and were confined to one board member each.40

The programme governance map is illustrated in the figure below. In terms of the corporate governance, the CRL Board is the ultimate decision-making authority for driving the project forward by delegating this responsibility through the executive structure to the appropriate level. Operational governance operates across the three levels below

35 Crossrail Ltd is a company controlled by a local authority within the meaning of Part V

Local Government and Housing Act 1989. 36 It was established as a 50/50 joint venture company between TfL and the DfT.

Crossrail Ltd. became a wholly owned subsidiary of TfL on 5 December 2008. 37 Sir Terry Morgan CBE served as Chairman of Crossrail between 2009 and 2018. Other

Board Members as at 19 December 2018 include: Mark Wild (Chief Executive), Phil Gaffney, Robert Jennings CBE (DfT Nominee), Andy Pitt (DfT Nominee), Anne McMeel (TfL Nominee), Dr Nelson Ogunshakin OBE, Mark Wild, Chris Sexton (Programme Director and Technical Director) and David Hendry (Chief Financial Officer).

38 Wright, S, Palczynski, R, and ten Have, P., Crossrail programme organisation and management for delivering London’s Elizabeth line, ICE Proceedings, Paper 1700016, p3 39 ibid. 40 ‘Crossrail: how Europe’s largest transport project stalled’, Financial Times, 20

December 2018

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corporate governance, beginning with programme, then sector (formerly area) and then finally at project level.

Crossrail governance map41

41 op. cit., Crossrail programme organisation and management for delivering London’s Elizabeth line, p7

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Crossrail also had an assurance process, which is described by Wright et. al (2017), as:

…the collective mechanism which integrates the Crossrail Limited organisation, its governance framework and the management and control systems which form the backbone of the project’s controls functions around time, cost, risk, quality and reporting.42

In addition to the industry standard ‘three lines of defence’, the project was “further assured” through a fourth and fifth line of defence from its sponsors through representation and external scrutinising authorities. The assurance framework is, according to Wright et. al (2017), the “the backbone of the project’s controls functions around time, cost, risk, quality and reporting.”43

Levels of assurance for Crossrail44

A comprehensive discussion of the evolution of the Crossrail’s organisation, assurance, governance and management capability is available in this 2017 ICE proceedings paper.

Recent governance issues The governance arrangements put in place for the Crossrail project were initially well regarded and the 2014 NAO report into Crossrail found that the “Department for Transport and Transport for London [had] established governance and oversight arrangements that provide a clear

42 op. cit., Crossrail programme organisation and management for delivering London’s Elizabeth line, p3 43 ibid. 44 op. cit., Crossrail programme organisation and management for delivering London’s Elizabeth line, p4

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view of risks to their financial interest and to successful delivery of the programme.” It added:

Based on our review of papers submitted to the Joint Sponsor Board at key decision points, and the minutes of these meetings, we found that sponsors are given clear, good quality information. Members of the Joint Sponsor Board engaged in frank discussion of the issue at hand and reached timely decisions.45

Questions started being raised around the governance arrangements at Crossrail after the extent of the construction, engineering and software problems were first made public at a TfL board meeting in January 2018.46 In a signal of discontent with the oversight of the project, sponsors TfL and the DfT increased their representation on Crossrail boards in July 2018, bringing their representation on the CRL Board to three and two directors respectively. Months after these arrangements were made, Mayor Sadiq Khan commented:

…with the latest revelations about the project's cost and schedule – I continue to have significant concerns over transparency on the project and the effectiveness of Crossrail's governance, strategic risk management, commercial arrangements and assurance regime.47

There was mounting scrutiny over the governance arrangements in response to the cost and scheduling problems and on 5 December 2018, Sir Terry Morgan resigned from his post as Chair of Crossrail.48 In response to the resignation, Mayor Sadiq Khan commented:

For a while now I have had concerns about the effectiveness of Crossrail Ltd’s governance. Not only was I angry when Crossrail Ltd informed us that the project would be delayed, but historically there has been a lack of adequate information shared by the senior Crossrail leadership.49

Speculation emerged that the Mayor knew as early as late July 2018 that Crossrail would not be ready on time,50 though he insisted he did not know of the delay until shortly before the postponement was announced on 31 August 2018.51 On 10 December 2018, TfL released over 100 documents relating to Crossrail including Board minutes dating back to 2013 following the agreement of a funding and financing deal with the Government and the GLA, commenting:

The documents are a serious indictment of Crossrail Ltd’s failed governance, showing that the Mayor and TfL were forced to commission an independent report to learn the true scale of

45 NAO, Crossrail, HC965, Session 2013-14, 24 January 2014, p28-29 46 TfL, Minutes of the Board Meeting, 30 January 2018 47 ‘Sadiq Khan raises 'serious concerns' over Crossrail's transparency and governance in

letter to spending watchdog’, CityAM, 21 November 2018 48 DfT press notice, Crossrail and HS2 Chairman steps down, 5 December 2018 49 ‘Terry Morgan resigns from Crossrail and HS2’, Financial Times, 5 December 2018 50 ‘Crossrail to demand ‘hundreds of millions’ in fresh bailout’, Financial Times, 3

December 2018 51 ibid.

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delays and cost overruns on the project, instead of being able to rely on information provided by the Chairman.52

Sir Terry Morgan said he was in “absolutely no doubt” that the Mayor was told in July 2018 that the project could not be finished this year, saying publicly that “I formally advised the mayor in a meeting on the 26th of July that we’d come to the conclusion that finishing the work in 2018 was no longer possible nor feasible.”53 He later appeared in front of the London Assembly’s Transport Committee reiterating these claims.54

In addition to a review relating to the cost and scheduling pressures that was published on 10 December 2018, two further independent reviews into the project’s cost projections and governance were also commissioned by the joint sponsors. These reviews have been conducted by KPMG and are nearing completion. They will be published in due course.55

The NAO is also conducting an investigation into Crossrail and is scheduled to report in early 2019. It will examine “the causes of the cost increases and schedule delays, the terms of the additional funding, and the governance and oversight of the programme; [and] the steps being taken by Crossrail Ltd, TfL, and the department to minimise the impact of the cost increases and delays.”56

The Mayor and the Secretary of State for Transport confirmed on December 10 2018 that Tony Meggs, previously Chief Executive of the Infrastructure and Projects Authority, will be nominated as the new Chair of CRL, and if ratified by the CRL Board he will replace Sir Terry Morgan who resigned on 5 December. Additionally, former MP Nick Raynsford, who served as Minister for London on two occasions between 1997 and 2003, has been nominated as Deputy Chair to further strengthen the Board.57

52 Mayor of London press notice, TfL releases Crossrail documents following

confirmation of funding, 10 December 2018 53 ‘Crossrail to demand ‘hundreds of millions’ in fresh bailout’, Financial Times, 3

December 2018 54 ‘Sir Terry Morgan launches attack on TfL and claims it altered his reports on Crossrail’s

progress’, Rail Technology Magazine, 9 January 2019 55 op. cit., TfL releases Crossrail documents following confirmation of funding 56 NAO, Investigation into Crossrail [accessed 19 December 2018] 57 DfT press notice, Crossrail update, 10 December 2018

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5. Business cases and costs In September 2003, the DfT and TfL and Cross London Rail Links Ltd produced a business case to inform the decision on whether to invest in Crossrail. In 2004, the Secretary of State commissioned an independent review of the business case including alternative routes. The review confirmed the need for Crossrail but raised concerns about the scheme’s deliverability. The business case has been updated on other occasions, which is standard practice for major infrastructure projects. This included updates in:

• 2005, to reflect changes to the proposed route, and was submitted as part of the Crossrail Bill;

• 2010, to confirm the coalition government’s support for the programme and to form part of the Mayor of London’s 2010 transport strategy; and

• 2011, to reflect changes to the programme costs and schedule following the 2010 Comprehensive Spending Review.58

This section provides a snapshot of the findings of parts of these business cases. It should be noted that the benefits, costs and ratios provided below are not necessarily directly comparable because of changes to scheme scope across the various appraisals and they are not in equivalent real term prices.

5.1 Value for money The 2003 business case estimated that Crossrail would produce £1.99 of benefit for every £1 of cost (a benefit-cost ratio, or BCR of 1.99).59 The 2005 business case estimated that the scheme had a BCR of 1.80,60 including user benefits of over £16 billion delivered through:

• time savings (public transport and road);

• highway vehicle operating cost savings and reduction in accidents;

• improved comfort (i.e. reduction in crowding), ambience and/or quality; and

• benefits to mobility impaired passengers.61

The time savings are the largest single element of the benefits. These accrue “because of faster journey times on rail and road, the reduced need to interchange, and changes in walk and wait times for all transport users.”62

58 NAO, Crossrail, HC965, Session 2013-14, 24 January 2014, p16 59 Cross London Rail Links Ltd, The Crossrail Business Case - Summary, September 2003,

p22 60 With the higher optimism bias allowance the BCR reduced to 1.63. 61 Crossrail Ltd, Economic Appraisal of Crossrail, 2005 62 ibid.

The 2011 business case estimated a BCR of 1.97, with the inclusion of wider economic impacts increasing the BCR to 3.09.

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The 2011 business case estimated a BCR of 1.97,63 with the inclusion of wider economic impacts increasing the BCR to 3.09.64 According to the Government’s guidance on value for money assessments, a BCR of 1.97 would represent ‘medium’ value for money and a BCR of 3.09 would represent ‘high’ value for money.65

5.2 Scheme costs The 2003 business case revealed that the base capital cost for Crossrail was £7 billion (in 2002 prices), which increased to £10 billion when a contingency or optimism bias is included.66 The 2005 appraisal estimated capital costs at £13.9 billion (in 2005 prices), rising to £14.8 billion when the optimism bias is included.

Summary of Crossrail programme costs and benefits67

In October 2010 the Coalition Government announced that this would be reduced to £14.5 billion. According to the NAO, CRL found an additional £1.6 billion of savings from:

• further reducing risks by simplifying integration works, re-sequencing work and reducing scope, saving £800 million; for example, deciding not to create a direct connection

63 NAO, Crossrail, HC965, Session 2013-14, 24 January 2014, p5 64 Railways: Cost Effectiveness: Written question – 41233, 4 July 2016; consequent to

their use in calculating the BCR for the HS2 project, there has been a great deal of debate about how WEIs are calculated and how the Government applies them, for further information see section 5 of HC Library briefing paper RP11/75

65 DfT, Value for Money Assessments [archived 11 August 2016] 66 op. cit., The Crossrail Business Case - Summary, p22 67 NAO analysis of Crossrail business cases: NAO, Crossrail, HC965, Session 2013-14, 24

January 2014, p18

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from Crossrail to the District and Circle Line platforms of the London Underground at Paddington Station;

• lowering the costs of inflation to reflect the impact of recession upon economic forecasts, saving £300 million; and

• agreeing contracts with lower target prices, as a result of the global recession which encouraged construction companies to deliver very competitive bids, saving £500 million.68

Crossrail would still go ahead to the original scope, but the scheme would not begin operation until 2018 with full services beginning in 2019 as the delivery programme for the central tunnel works would be lengthened by around a year.69

In September 2012 the Government announced an additional £240 million of funding to avoid delays, which took the overall budget for the scheme to £14.8 billion.70 Since 2013 the Government has said on several occasions that it does not expect Crossrail to cost more than £14.8 billion, excluding rolling stock costs which are estimated to cost a further £1 billion (see section 2.4 for more detail).71

Cost overruns – 2017 onward Early signs of cost overruns from the £14.8 billion funding envelope to the project came in August 2017 when The Sunday Times published details of an overspend of £1 billion with respect to 43 contracts originally awarded for £1.5 billion. Specifically, the cost of building key sections of eastbound tunnels rose from £479m to £756m. The price of constructing parts of the westbound tunnels rose from £473m to £745m. CRL and the DfT, in response, insisted that the project was running on time and on budget.72

By the beginning of 2018, however, Sir Terry Morgan explained to the TfL board that the project was “very close” to exceeding its budget.73 The minutes from the TfL board meeting stated that:

…there remained some significant cost and schedule pressures… These included issues with the energisation of the tunnel, which had been deferred from November due to technical issues and issues with the testing of the software on the new trains for phase 3.74

68 NAO, Crossrail, HC965, Session 2013-14, 24 January 2014, p22 69 DfT press notice, Transport Spending Review, 20 October 2010; see also: TfL press

notice, Mayor secures vital London transport investment and protects frontline services, 20 October 2010

70 ‘£240m bailout to prevent further Crossrail delays’, London Evening Standard, 25 September 2012 71 e.g. HC Deb 9 July 2013, c12WS 72 ‘Revealed: £1bn of overspending that Crossrail bosses tried to hide’, The Sunday

Times, 6 August 2017 73 ‘Crossrail chiefs warn that £14bn Elizabeth line could blow its budget and open late’,

The Evening Standard, 31 January 2018 74 TfL, Minutes of the Board Meeting - Tuesday 30 January 2018, 20 March 2018

The likely range of additional capital cost due to the delayed opening of the central section is between £1.6 billion and £2 billion.

22 Crossrail (Elizabeth Line)

By July 2018, the Government and TfL formally announced that the £14.8bn budget would be increased by another £650m to £15.4 billion, with increasing cost pressures across the project being blamed for the increase.76

Having formally announced the delayed opening of Crossrail through central London to autumn 2019,77 reports emerged that Crossrail's budget overshoot could surpass £1bn.78 In December 2018, the extent of Crossrail’s financial problems emerged in a report from KPMG commissioned by the Mayor, which indicated that the likely range of additional capital cost due to the delayed opening of the central section could be in the region of between £1.6 billion and £2 billion. That 75 Annual Update on Crossrail 2018: Written statement - HCWS918, 24 July 2018 76 ibid. 77 Crossrail press notice, Elizabeth Line services through central London to start in 2019,

31 August 2018 78 ‘No end in sight for Crossrail fiasco as budget overshoot could surpass £1bn’, CityAM,

2 September 2018

How much has been spent on Crossrail so far?

The Government publishes annual expenditure associated with Crossrail as part of their annual updates to Parliament (presented in the table below). As at the end of the 2017/18 financial year, CRL had spent £12.5 billion (or 71%) of the £17.6 billion funding envelope allocated to cover the capital costs of the scheme. As at July 2018, the Government stated that the project was 93% complete and was “entering the critical testing and commissioning stage.”75

Expenditure and funding for Crossrail (£bn, nominal)

Total funding amounts provided to Crossrail Ltd by the

Department for Transport and TfL in

relation to the construction of

Crossrail

Expenditure incurred by Crossrail Ltd in

relation to the construction of

Crossrail (excluding recoverable VAT on Land and Property

purchases)

Total expenditure incurred by Crossrail Limited in relation to the construction of Crossrail (excluding recoverable VAT on Land and Property

purchases)

2008/09 0.20 0.20

2009/10 0.77 0.96 1.16

2010/11 1.48 0.72 1.88

2011/12 2.75 1.04 2.93

2012/13 4.26 1.51 4.43

2013/14 5.98 1.58 6.01

2014/15 7.95 1.58 7.65

2015/16 10.00 1.60 9.25

2016/17 10.86 1.64 10.89

2017/18 11.71 1.62 12.51

Source: Crossrail Annual Updates to Parliament, 2009 to 2018

23 Commons Library Briefing, 23 January 2019

includes the £300 million already contributed by DfT and TfL in July 2018, leaving between £1.3 billion and £1.7 billion to cover the predicted additional costs of the project.79 This brought the overall funding envelope for the project to £17.6 billion.80

Crossrail capital costs, by funding announcement, £ billion (nominal prices)81

It should be noted that the capital costs associated with the construction of Crossrail have not been finalised. An independent review into Crossrail’s funding requirements is being undertaken by KPMG.82 The NAO is also examining the causes of the cost increases and the terms of the additional funding and is due to publish its findings early 2019.83

How does Crossrail 1 compare with Crossrail 2?

Crossrail 2 is a long-trailed scheme to build a new rail line along the Chelsea-Hackney corridor. It is being jointly funded by the Mayor of London and the Secretary of State for Transport, and subsequently jointly advanced by TfL and Network Rail, with support from the DfT. In terms of value for money, the 2011 business case for Crossrail 1 estimated that the scheme would produce £1.97 of benefit for every £1 of cost (a benefit-cost ratio, or BCR of 1.97). Once wider economic benefits were included, this increased to a BCR of 3.09. The latest publicly available business case for Crossrail 2 estimated that it would produce a BCR of 1.8 and when wider economic benefits are included, this rises to a BCR of 2.0. When comparing the respective value for money estimates of the two schemes, it is important to note that neither of the stated BCRs above reflect the actual value for money of the scheme, as the costs have increased for Crossrail 1 since these estimates were produced and the business case is yet to be finalised for Crossrail 2. In terms of scheme capital costs, the original funding envelope agreed in the 2010 Spending Review for Crossrail 1 was £14.8 billion. In December

79 Rail Update: Written statement - HCWS1165, 10 December 2018 80 ibid. 81 Various funding updates made by Government between 2007 and 2019, which have

been referred to earlier in this paper. 82 Rail Update: Written statement - HCWS1165, 10 December 2018 83 NAO, Investigation into Crossrail [accessed 20 December 2018]

15.9

17.8

14.5 14.8 15.4

17.6

0

2

4

6

8

10

12

14

16

18

20

2007 2009 2010 2012 2018 2019

24 Crossrail (Elizabeth Line)

2018, the Government formally announced Crossrail’s third additional cash injection, bringing the overall funding envelope for the project to £17.6 billion. Crossrail 2 was estimated by TfL in 2016 to be £32.6bn. The Crossrail 2 business case is currently being reviewed and a revised business case is being developed, with reports suggesting that the scheme may add up to more than £45bn. It should be noted that it is difficult to make direct comparisons between the capital costs of the two schemes, mainly because the projects have been costed and will be delivered many years apart from one another. The cost estimates above reflect the total amount of money spent or expected to be spent, in nominal terms, over the construction period for each scheme. If a comparison was to be made, the expenditure for both schemes would have to be converted into equivalent prices. The spending profile of the schemes is not publicly available and as such this comparison cannot be made in this paper. In terms of the construction timelines, Crossrail 1 will have taken over 10 years to complete from when construction started in 2009. Similar timescales are projected for Crossrail 2, with a hybrid bill hoped to be approved by 2021/22 and the project finished in the early 2030s. For more detailed information about the Crossrail 2 scheme, see the House of Commons Library Briefing Paper Crossrail 2.

25 Commons Library Briefing, 23 January 2019

6. Funding & financing Funding and financing are terms that are often used interchangeably. It is important to clarify the distinction between the two terms:

• Funding comprises the sources of income to be used to meet the capital and revenue costs of a project over time (who and what pays for the project); and

• Financing comprises the set of financial arrangements put in place to provide committed capital to meet the costs of a project as they are incurred (where the upfront money comes from), to be repaid from funding sources.84

Crossrail was the first major transport infrastructure scheme that came of age after the devolution settlement drawn up and legislated for by the Labour Government. This meant that instead of a traditional publicly financed project, where the costs would be met by the taxpayers or a traditional private sector project put forward and financed by business and the markets, Crossrail required a funding formula that would reflect a myriad of interests and used several different funding and financing mechanisms. In the end, funding was roughly split three ways between taxpayers, London businesses, and future Crossrail fare payers, with the rolling stock largely financed by TfL.85

The funding settlements The Government’s preferred delivery model was initially a privately financed concession.86 When this proved to be unachievable, the Treasury capped the contribution from the Exchequer at around a third of the overall cost, requiring the remaining funding to be generated from the ‘beneficiaries’ of the project. 87

The basic funding framework for the project was eventually set out in the October 2007 Comprehensive Spending Review and Pre-Budget Report.88 The combined public funding commitment from the DfT, TfL and others, as set out in 2007, is presented in the table below. The total funding package was £15.9 billion, with the DfT funding £5.2 billion of the infrastructure, TfL £2.4 billion, and businesses £6.0 billion. Network Rail also committed to obtain financing of £2.3 billion to pay for works on the existing rail infrastructure.

84 PwC, Crossrail 2 – Funding and financing study, 27 November 2014, p19 85 on a roughly 90-10 split with the DfT; see: HC Deb 6 January 2014, c118W 86 Buck, M., Crossrail project: finance, funding and value capture for London’s Elizabeth

line, ICE Proceedings Paper 1700005, 2017, p15 87 HM Treasury, Pre-Budget Report 2007, Cm 7227, October 2007, p58 88 HM Treasury press notice, ‘2007 Pre-Budget Report… Department for Transport’, 9

October 2007

26 Crossrail (Elizabeth Line)

Funding sources based on the initial 2007 settlement, nominal £bn89

Underwritten by TfL GLA (NNDR Debt) 3.5 TfL - Core contribution 2.7 LU interface savings 0.4 Sales of surplus land and property 0.5 Developer contributions 0.3 London Planning Charge 0.3

7.7 Underwritten by DfT DfT grant contribution 5.1 BAA/City Corporation (guaranteed) 0.5

5.6 Other Network Rail (ONW) 2.3 Depot (operating lease) 0.5 City Corporation (additional) 0.1 Less other residual costs -0.4

2.5 Total Sources 15.9

Following the Comprehensive Spending Review in October 2010, a revised funding envelope of £14.8 billion was agreed.90 The Mayor of London, through TfL and the GLA, was responsible for £7.1 billion of funding, comprising:

• £1.9 billion contribution from TfL;

• £4.1 billion from the Crossrail Business Rate Supplement91 - This vehicle was legislated for under the Business Rate Supplement Act 2009 and gave local authorities and the Greater London Authority a discretionary power to raise a supplement on the business rate and to use those funds to support local economic development projects.92 In January 2010 the then Mayor of London, Boris Johnson, announced that from April 2010 London businesses would pay the maximum allowable business rate supplement of 2p in the pound for the following 25 years to fund Crossrail.93

• £600 million from developer contributions (Mayoral Community Infrastructure Levy and Section 106) – Section 106 agreements were the traditional method of seeking contributions from commercial developers. These are private agreements made between local authorities and developers,

89 DfT/TfL, Crossrail: Heads of Terms, November 2007, section 4.1 90 DfT press notice, Transport spending review 2010, 20 October 2010 91 For more detailed information, see: London Assembly, Paying for Crossrail: business

rate supplement [accessed 3 January 2019] 92 For more information, see section 4.2 of HC Library briefing paper SN6247 93 Mayor of London press notice, Mayor exempts 4,000 businesses from Crossrail

business levy, 29 January 2010

27 Commons Library Briefing, 23 January 2019

attached to planning permissions, based on that section of the Town and Country Planning Act 1990. For Crossrail, the government extended those powers in the form of a community infrastructure levy (CIL), which is a lump sum on each completed development. The CIL provided for the mayor of London to impose an additional levy on both commercial and private residential development, which as with the BRS would be hypothecated to Crossrail.94 The rate applied is between £20/m2 and £50/m2 dependent on the area of the city, and is set at the mayor’s discretion. The levy for each location is set at the time of planning consent but is only payable on completion of the development.95

• Around £500 million from the sale of development opportunities and sites required for the construction of Crossrail, after they are no longer needed for the scheme.

94 op. cit., Crossrail project: finance, funding and value capture for London’s Elizabeth

line, p6 95 For more detailed information, see: Greater London Authority, Crossrail Funding,

March 2016 96 London Assembly Transport Committee, Light at the end of the tunnel: The

construction of Crossrail, February 2010, p8 97 ibid., p17 98 ibid., pp18-19

Is London ‘paying too much’ for Crossrail?

Over 60% of the project’s funding has been provided by Londoners and London businesses. In February 2010 the London Assembly Transport Committee published a report criticising the amount of money London would pay compared to others who would gain from the scheme.96 It quoted a June 2008 Policy Exchange paper to the effect that:

London consistently sends £13 billion net to the Exchequer but when it comes time to build London’s first major piece of transport infrastructure for 18 years central government only wants to contribute roughly a third of the £16 billion even if London has generated the largest part of that every year for 18 years.97

The Committee concluded that London “is making arguably an unfair contribution to the project’s costs. This especially appears to be the case when compared with the contribution made by, and expected benefits accruing to, central government and areas on the route outside London”.98 The Committee subsequently recommended that “should additional funding be required, London is not asked to contribute further to the construction of Crossrail.” In response to this report, the Mayor of London stated that “should there be a cost overrun above the £15.9 billion funding package, the agreements between TfL and DfT provide that London is not required to contribute further.” This has not been the case in practice. London will have to repay a loan of up to £1.3 billion that was made to the GLA in December 2018. This will have to be repaid via a supplement on the business rates.

28 Crossrail (Elizabeth Line)

The DfT was responsible for around £5.3 billion of funding, comprising:

• The UK Government provided a grant of £4.8 billion; and

• There are also additional contributions from Canary Wharf Group,99 Heathrow,100 City of London Corporation101 and Berkeley Homes.

Finally, £2.3 billion was contributed by Network Rail and spent on upgrading the national infrastructure to the east and west of the central tunnelled section.102

Sources of funding, as at October 2010 Spending Review103

Changes to Crossrail funding The DfT negotiated private sector funding agreements worth a total of £480 million. These contributions will only total around £320 million, 67% of the DfT’s expectation. In 2008, the DfT expected Heathrow Airport Limited (HAL) to pay £230 million but this contribution was subject to the approval of the Civil Aviation Authority (CAA), HAL’s regulator. In January 2014 the CAA determined that HAL should contribute £70 million. The contribution was revised as it was determined that with Heathrow operating at or near to capacity, Crossrail would bring no net benefit to the airport.104

99 TfL press notice, Canary Wharf Group contributes £150m to Crossrail and will design

and build Isle of Dogs station, 24 December 2008 100 DfT press notice, Major boost for Crossrail as BAA agree £230m funding, 4

November 2008 101 DfT press notice, Full speed ahead for Crossrail, 4 December 2008 102 Crossrail, Funding [accessed 21 December 2018] 103 op. cit., Crossrail project: finance, funding and value capture for London’s Elizabeth

line, p5 104 CAA, Economic regulation at Heathrow from April 2014: notice of the proposed

licence, CAP1138, January 2014

29 Commons Library Briefing, 23 January 2019

After a slow start, the CIL was generating £100 million a year by 2015–2016. The financial position at February 2016, in respect of Crossrail developer contributions, is that almost £300m of the target £600m had been collected with the MCIL having contributed about three pounds for every pound provided by planning obligations/section 106.105 Reports suggest that more than £500m has been raised since the levy was imposed in 2012.106

Additional funding has been required by both CRL and Network Rail to complete this project:

• in July 2018, £300m was made available to CRL, with the DfT and TfL contributing £150m each. Around £290m was provided for completion of the programme of works on the national rail network and was funded by the DfT and Network Rail.107

• in October 2018, a £350m loan to the Greater London Authority (GLA) was made available by the Government and would “go towards Crossrail Ltd completing the final fit out of the tunnels, work on stations and the extensive safety and reliability testing needed for the new systems.”108

• in December 2018, the Government formally announced Crossrail’s third additional cash injection in the form of a loan of up to £1.3 billion to the GLA, which will have to be repaid via a supplement on the business rates.109 The GLA also provided a £100 million cash contribution, taking its total contribution for this package to £1.4 billion.110 As the final costs of the Crossrail project are yet to be confirmed, a contingency arrangement has also been agreed between TfL and the DfT. The DfT will loan TfL up to £750 million in the event that further finance is required for the project. This combined financing deal replaced the need for the £350 million interim financing package announced in October 2018.

The combined total of the financing arrangements outlined above, means that the overall funding envelope for the project is now £17.6 billion, £3.1 billion more than was agreed in the 2010 Comprehensive Spending Review.111 Independent reviews into Crossrail Ltd’s assessment of ongoing funding requirements and governance arrangements are being undertaken by KPMG to ensure the right scrutiny and oversight are in place as the project enters its final phase.

105 Greater London Authority, Crossrail funding – Use of planning obligations and the

Mayoral Community Infrastructure Levy, Supplementary Planning Guidance, March 2016

106 ‘Crossrail scheme given £1bn bailout - paid for by London businesses’, London Evening Standard, 10 December 2018

107 Annual Update on Crossrail 2018: Written statement - HCWS918, 24 July 2018 108 ‘Crossrail delay: £350m loan for London route announced by government’, BBC

News, 26 October 2018 109 ‘Crossrail scheme given £1bn bailout - paid for by London businesses’, London

Evening Standard, 10 December 2018 110 Rail Update: Written statement - HCWS1165, 10 December 2018 111 ibid.

30 Crossrail (Elizabeth Line)

7. Construction Who was responsible for delivering Crossrail? Crossrail involved varying levels of construction stretching across 118 km of railway from London and its environs from Reading in Berkshire and Heathrow airport in the London Borough of Hillingdon in the west, to Shenfield in Essex in the north-east and Abbey Wood in the London Borough of Greenwich in the south-east. The project is being sponsored jointly by the DfT and TfL, with CRL the wholly-owned subsidiary of TfL, delivering the Crossrail programme. A programme director was appointed by CRL to lead an integrated delivery team made up of Crossrail, programme and project staff and supply chain partners for design, construction and implementation.112

The central section, which comprises 21 km of twin-bore tunnels, will include nine new stations in the tunnelled section of the route, five portals and five intermediate shafts in addition to a tenth new station at Abbey Wood. New depot and maintenance facilities are being constructed at Ilford, Plumstead and Old Oak Common. Bechtel is the project delivery partner, working with CRL to oversee construction of the central, tunnelled section.

Transcend (a joint venture between AECOM, CH2M Hill and Nichols Group) is the project management contractor, working with CRL to oversee the overall Crossrail programme. It was contracted in 2009 to provide the client team with professional programme, project and engineering management services and to support the oversight and management of the project at the programme level.

Network Rail is also a contractor to CRL for the construction of the eastern and western surface sections in addition to its wider responsibility for the national rail network

Agreements were put in place with other bodies for the upgrades to the existing London Underground assets (London Underground), Canary Wharf station (Canary Wharf Group) and Woolwich station (Berkeley Homes). Agreements were also put in place with the statutory utilities (Thames Water, British Telecommunications, National Grid, British Gas, etc.) to administer all asset protection and modification works required for existing infrastructure to make way for the new railway.

A more detailed description of the delivery and contractors involved, can be found in this 2017 ICE proceedings paper.

112 Crossrail press notice, Jacobs announced as Crossrail project representative, 15 April

2009

31 Commons Library Briefing, 23 January 2019

Scope of delivery responsibility 113

113 op. cit., Crossrail programme organisation and management for delivering London’s Elizabeth line, p2

32 Crossrail (Elizabeth Line)

Construction timeline The programme for design, procurement, construction and commissioning of the various stages was set in 2009. The figure below provides a snapshot of the initial project programme, though it should be noted that this is no longer accurate given recent delays. The subsequent table providing a more detailed construction and delivery timeline.

The project’s initial construction programme114

Construction and delivery timeline

Date Details

July 2008

Crossrail Bill obtained Royal Assent and the Secretary of State for Transport made an order under the Crossrail Act appointing CRL as the principal Nominated Undertaker of the Crossrail Project.

October 2008

Preliminary notices were served on owners and occupiers of properties in the Tottenham Court Road area, marking the beginning of the compulsory purchase (property acquisition) process.

December 2008

CRL entered into a Project Development Agreement with the DfT and TfL and a Shareholder Agreement with TfL, which sets out how CRL is to deliver the project.

March 2009 Transcend, a joint venture between AECOM, CH2M Hill and Nichols Group, announced as CRL’s Programme Partner for the Crossrail project.

April 2009 Bechtel Limited appointed as the Project Delivery Partner for the Crossrail project and is responsible for overseeing delivery of the core central tunnelled

114 Tucker, W., Crossrail project: the execution strategy for delivering London’s Elizabeth

line, ICE Proceedings Paper, Civil Engineering Volume 170 Issue CE5, May 2017, p6

33 Commons Library Briefing, 23 January 2019

section of the Crossrail route and will also manage the design process.

May 2009 Construction began when works got underway at Canary Wharf station.

January 2010

Preparatory work on the tunnel entrance at Royal Oak in West London started and, by the end of 2010, construction at all new central section stations started, as did work on other tunnel portals and shafts.

December 2010

The main tunnelling contracts, worth around £1.25 billion, were awarded to deliver the construction of 18km of twin-bore tunnels underneath central London.

March 2011

The Sponsors and HM Treasury Major Project Review Group conducted their final planned review of the project meaning that the Crossrail Board had the authority to deliver the project tin accordance with its approved deliver strategy and to award contract without recourse to the governance arrangements of either Sponsor.

March 2012 Canary Wharf Group plc completes construction of Canary Wharf Crossrail station’s platform level five months ahead of schedule.

May 2012

Tunnelling began when the first two tunnel boring machines started out on their journey from Royal Oak to Farringdon station, followed by two further tunnel boring machines in the Docklands heading under central London towards the east of Farringdon.

November 2012

The signalling system contract for the railway’s central section was awarded to a consortium comprising Siemens PLC and Invensys Rail Limited. The contract covered the design, manufacture, supply, installation, testing and commissioning of a train control system for Crossrail’s central section.

May 2013

Tunnelling machine Elizabeth breaks through into station box at Canary Wharf station, marking the completion of one-third of the entire Crossrail project.

October 2013

Crossrail completed the construction of the first of its new train tunnels under London. It came as the tunnelling machines reached the 13-mile point in their 26 mile marathon tunnel build.

January 2014 Crossrail reached the halfway point of its construction.

34 Crossrail (Elizabeth Line)

February 2014 A contract to deliver rolling stock and a new depot for Crossrail with a capital value of around £1bn was awarded to Bombardier.

July 2014

TfL awarded the contract to operate Crossrail services to MTR Corporation (Crossrail) Limited (MTR). The £1.4 billion contract will be for eight years with an option to extend to ten years.

October 2014 Crossrail’s train tunnels in Docklands and southeast London structurally completed.

January 2015 Tunnel machine Elizabeth, named after HM The Queen, successfully broke in to the eastern end of Liverpool Street Crossrail station.

June 2015 26 miles of tunnelling complete. Crossrail over 65 per cent complete, with the remaining work focussed on fitting out new tunnels and stations.

February 2016

Mayor of London, Boris Johnson MP, announced that the new railway will be known as the Elizabeth line in Her Majesty the Queen’s honour.

Construction for the new railway was reported to be over 70 per cent complete and was being delivered “on time and within budget.”

July 2016 The first of the Elizabeth line trains was unveiled by TfL as it took to the test track at Bombardier Transportation in Derby.

April 2017 Over two-thirds of the permanent track on the line has been laid, and nearly all of the platform structures have also been built.

September 2017

The official completion of the permanent track for the Elizabeth line.

March 2018 Network Rail completes railway upgrades along the Elizabeth line route.

March 2018 Chief Executive Andrew Wolstenholme OBE steps down after seven years in the position.

July 2018 The Government announces that the programme is 93 per cent complete and is entering the critical testing and commissioning stage.

December 2018 Chair Sir Terry Morgan resigns as Chair of CRL.

December 2018 Government announces that the project is delayed, with a final timetable for opening yet to be confirmed.

Sources: various Crossrail Annual Reports; Quarterly Updates; and press notices.

35 Commons Library Briefing, 23 January 2019

Delays to delivery The Crossrail scheme appeared to be progressing reasonably well over the early to mid-life of its construction. Between September 2011 and September 2013, the NAO found that CRL achieved most or all milestones set for each six-month period on time and that over the period it examined, progress against completion dates was improving.115

Programme milestones planned compared to milestones completed116

But as is the case with many infrastructure projects, bringing together all the components on time to complete a big project like Crossrail – including multiple infrastructure contracts, new trains and three different signalling systems – is, according to infrastructure expert Martin Blaiklock, “often subject to uncertainty and risk, particularly as it nears its completion.”117

The first sign that the Elizabeth Line would not be opening on schedule came with the electrical failure at Pudding Mill Lane substation in November 2017. According to a Financial Times article, this failure had “far-reaching consequences” and “the explosion set off a chain reaction of glitches — delaying power to the central tunnels and thus all the extensive testing that needed to be done.”118

Following concerns raised about cost and scheduling pressures at the TfL Board meeting on 25 July, the Mayor asked TfL to commission independent reviews of the project’s construction and testing schedule as he had significant concerns over transparency on the project and the

115 NAO, Crossrail, HC965, Session 2013-14, 24 January 2014, p32 116 ibid. 117 Crossrail: how Europe’s largest transport project stalled’, Financial Times, 20

December 2018 118 ibid.

36 Crossrail (Elizabeth Line)

effectiveness of Crossrail Ltd’s governance.119 These reviews were carried out and have been published by TfL.120

The extent of the delays became public knowledge when Crossrail announced at the end of August 2018 that the Elizabeth Line would open through central London in autumn 2019, several months later than originally anticipated.121 CRL said that “the revised schedule is needed to complete the final infrastructure and extensive testing required to ensure the Elizabeth Line opens as a safe and reliable railway.” It added:

The original programme for testing has been compressed by more time being needed by contractors to complete fit-out activity in the central tunnels and the development of railway systems software. Testing has started but further time is required to complete the full range of integrated tests.122

It became apparent in early December 2018 that the revised Autumn 2019 opening date was also unrealistic. It remains unclear precisely when the project will be completed. The latest reports suggest that it could be delayed for another two years.123

Most of the unfinished stations are expected to open in the new year, although Bond Street and Paddington are unlikely to be complete until the second quarter. The major challenge in achieving a competition date in late 2020 is integrating the different signalling systems, split between TfL, Crossrail and Network Rail. In other words, “at some point the stations will be finished and the trains will be ready but the signalling and software won’t be ready so the trains won’t run.”124

Crossrail Ltd appointed Mark Wild as CEO on 19 November 2018, who was asked to conduct an extensive review of the remainder of the programme and to provide clarity in the new year on the opening date of future phases. This will also provide greater clarity on the level of additional funding required.125

119 Mayor of London press notice, TfL releases Crossrail documents following

confirmation of funding, 10 December 2018 120 Boss, J., Independent Crossrail Schedule Assurance Review, 21 November 2018 121 Crossrail press notice, Elizabeth Line services through central London to start in 2019,

31 August 2018 122 ibid. 123 ‘Crossrail scheme given £1bn bailout - paid for by London businesses’, London

Evening Standard, 10 December 2018 124 ‘Crossrail: how Europe’s largest transport project stalled’, Financial Times, 20

December 2018 125 DfT press notice, Crossrail update, 10 December 2018

37 Commons Library Briefing, 23 January 2019

8. Rolling stock In March 2011 CRL announced its intention to put out an Invitation to Tender (ITT) by the end of 2011, to award the contract to build the Crossrail fleet in late 2013. The shortlist of organisations invited to tender was: Alstom Transport; Bombardier Transportation (UK) Ltd.; Construcciones y Auxiliar de Ferrocarriles SA (CAF); Hitachi Rail Europe Limited; and Siemens plc.126

However, following the political fallout of the decision to award the Thameslink contract to Siemens,127 the Government announced a review of its public procurement practices and in August 2011, CRL announced a delay to the procurement programme.128 The then Railways Minister Theresa Villiers stated that this delay would enable CRL to take account of the results of the Government’s procurement review.129

In September 2012, the then Chief Secretary to the Treasury, Danny Alexander, announced that the Crossrail rolling stock project could be the first beneficiary of the UK Guarantees scheme. UK Guarantees, launched in July 2012, takes advantage of the Government’s fiscal credibility to provide guarantees for major infrastructure projects that may struggle due to adverse credit conditions.130

In November 2012 the then Transport Minister, Norman Baker, said that four bidders had submitted first-round bids for the £1 billion contract – Bombardier, CAF of Spain, Hitachi and Siemens.131 In August 2013 the Government received revised bids from Bombardier, CAF, and Hitachi.

In terms of the financing model, the DfT and TfL had originally agreed that the trains and maintenance depot for Crossrail should be funded through a Private Finance Initiative (PFI) deal, although TfL later proposed that it would be better to buy the trains and depot directly. The DfT and TfL conducted their own assessments of the respective proposals, with the former finding in favour of a PFI deal.132 In March 2013, the then Transport Minister Stephen Hammond announced “a change in the financing approach for the Crossrail rolling stock and associated depot facilities contract”.133 In effect, the Government agreed to the then Mayor of London Boris Johnson’s proposal to move from a financing model involving a substantial element of private sector

126 Crossrail press notice, Crossrail confirms shortlist for rolling stock and depot facilities, 30 March 2011 127 for information on this, see HC Library briefing paper SN3146 128 Crossrail press notice, Update on Crossrail rolling stock and depot procurement, 30 August 2011 129 HC Deb 21 October 2011, c1198W; for more information on public procurement

and the outcome of the review, see HC Library note SN6029 130 HM Treasury press notice, Crossrail trains first to qualify for UK Guarantees, 27

September 2012 131 HC Deb 20 November 2012, c132WH 132 NAO, Crossrail, HC965, Session 2013-14, 24 January 2014 133 HC Deb 1 March 2013, cc49-50WS

38 Crossrail (Elizabeth Line)

funding, to one that would be entirely funded by the public sector.134 With respect to this funding deal, CRL commented:

Crossrail’s unique situation means there is no existing fleet of trains to operate through the tunnels when the works are complete. In light of these circumstances, this decision to simplify the procurement process helps to ensure the timely delivery of the new trains ahead of services commencing.135

In February 2014 the Government and TfL announced that the £1 billion contract to supply, deliver and maintain 65 new trains and a depot at Old Oak Common had been awarded to Bombardier. The new trains would be manufactured and assembled at the Bombardier plant in Derby, “supporting 760 UK manufacturing jobs and 80 apprenticeships.”136

The contract as formally signed on 19 February.137 TfL later awarded Bombardier a contract to supply a further five trains for use on the Elizabeth Line, taking its total order to 70 trains.138 Featuring nine fully-interconnected walk-through carriages, air conditioning, CCTV and real-time travel information, each train will be able to carry up to 1,500 people.139 Through central London, the trains would be powered via an overhead electrification system similar to the Heathrow Express services. They would also have the capability to operate over the third rail electrified routes.140

The signalling software must link signalling on the new underground section with separate systems for the eastern and western overground sections. As explained in Rail Engineer:141

At the western end, Crossrail trains join the Great Western main line (GWML) and operate under the supervision of ETCS level 2 as an overlay to existing lineside signalling to Airport Jn and Heathrow terminals. For trains continuing along the GWML to Maidenhead/Reading, conventional signalling with Automatic Warning System (AWS) / Train Protection Warning System (TPWS) will be used west of Airport Jn. In the east, Crossrail meets the Great Eastern Main line, joining into the ‘electric’ lines shared to Shenfield, also using lineside signalling fitted with AWS/TPWS.

In September 2015 the first test train carriage rolled off the Bombardier assembly line in Derby.142 The first train was put on the test track at Derby in August 2016.143 The first of 66 new Crossrail trains were due to start carrying passengers between Liverpool St and Shenfield, Essex,

134 HC Deb 1 March 2013, cc49-50WS 135 Crossrail press notice, Crossrail train funding announced, 1 March 2013 136 DfT press notice, Crossrail rolling stock and depot contract to be awarded to

Bombardier, 6 February 2014 137 TfL press notice, Contract signed for Bombardier to deliver Crossrail rolling stock and

depot, 19 February 2014 138 ‘TfL to order more Elizabeth line trains’, Global Rail News, 13 July 2017 139 Crossrail, Over 200 metres long, providing space for up to 1,500 passengers

[accessed 3 January 2019] 140 Crossrail, Rolling stock information pack, 2017 141 ‘Signalling Crossrail’, RailEngineer, 8 January 2016 142 TfL press notice, Crossrail trains take shape, 11 September 2015 143 TfL press notice, First Elizabeth line train takes to the test track, 1 August 2016

39 Commons Library Briefing, 23 January 2019

in May 2017 as part of a phased introduction, but TfL pushed the introduction of the rolling stock back to the end of June.144

As previously mentioned, there have been delays to the full opening of Crossrail services through central London. A large part of this delay has been down to delays in testing the trains and integrating the signalling systems. Train testing had been delayed five months until February 2018 because of the explosion of a premanufactured electricity substation at Pudding Mill Lane in Stratford. Reports as of December 2018 claim that no trains have been tested through the tunnels under central London due to problems getting their on-board computers to recognise three signalling systems. Testing was due to start in “mid-January” in 2019.145

Former Chief Executive Rob Holden stated that some of the delay to opening stemmed from the decision in summer 2013 to award German firm Siemens the £1.6bn contract to supply trains for the Thameslink line ahead of Derby-based Bombardier. He said this meant crucial delays occurred to testing and the eventual integration of the Crossrail trains into the signalling system. TfL said that the procurement of the trains had no impact on the delayed opening of the central section.146

144 Crossrail press notice, TfL to enhance frequency on the Elizabeth Line, 13 July 2017 145‘Crossrail scheme given £1bn bailout - paid for by London businesses’, London

Evening Standard, 10 December 2018 146 ‘Former Crossrail boss blames delay on rolling stock decision’, Building, 13

September 2018

40 Crossrail (Elizabeth Line)

9. Operation Once the railway is complete it will be handed over to TfL and run as part of London’s integrated transport network. Crossrail services were originally intended to be introduced as follows:

• Heathrow to Paddington (mainline platforms) – May 2018 (when the Crossrail concession takes over the Heathrow Connect service);

• Paddington (Crossrail platforms) to Abbey Wood – December 2018;

• Paddington (Crossrail platforms) to Shenfield – May 2019; and

• Full through service (including services to Reading) – December 2019.147

Because of the delays, the operational schedule above will no longer be realised. A revised schedule is yet to be confirmed. Once operational it will be called the Elizabeth Line. The line was re-named in February 2016 in honour of Her Majesty the Queen.148

Concession agreement with MTR Although the Elizabeth Line will be part of the TfL transport network, like other parts of that network, it will not be operated directly by TfL but will be let as a concession, similar to the concession let for the London Overground (see box below).

TfL will stipulate the level of services to be provided including hours of operation and staffing levels. The private operator will run the train services and many of the stations along the Crossrail route, providing customer service and operations staff.149

What is a concession agreement?

There are a few rail services which are exempt from the franchising provisions of the Railways Act 1993 and are operated by the private sector on behalf of a public-sector body. Most (though not all) of these services are in London and are let as concession agreements by TfL.150 Each service is exempted from the 1993 Act by a specific exemption order. A terms of transfer agreement is made between the DfT and the devolved body taking over responsibility for the let of the rail services on those lines. See: Railways (Crossrail Services) Exemption Order 2015 (SI 2015/239).

In March 2013, TfL formally launched the competition to find the operator to run the services and in August 2013, it invited four pre-qualified bidders to respond to the Invitation to Tender (ITT) to run

147 Crossrail press notice, TfL announced MTR to run Crossrail services, 18 July 2004 148 TfL press notice, Crossrail to become the Elizabeth line in honour of Her Majesty the

Queen, 24 February 2016 149 Crossrail press notice, TfL launches competition to find operator to run Crossrail

services, 12 March 2013 150 The current London Overground concessionaire is Hong Kong’s MTR Corporation

and Laing Rail; MerseyRail services in Merseyside, let as a concession by MerseyTravel, are run by Serco and Abellio.

The redacted Concession Agreement between TfL and MTR is available on the TfL website.

41 Commons Library Briefing, 23 January 2019

Crossrail services: Arriva, MTR, National Express, and Keolis/Go Ahead.151

In July 2014, it announced its intention to award the contract to operate Crossrail services to Hong Kong-based MTR Corporation (Crossrail) Limited (MTR).152 The contract is for eight years with an option to extend to ten years. The nominal value of concession payments payable to MTR over the base eight-year term is £1.4bn before performance adjustments (bonuses and penalties).153 MTR is expected to employ around 1,100 staff with up to 850 new posts and will include almost 400 drivers and over 50 apprenticeships for people from communities along the route.154

MTR started running services between Liverpool Street and Shenfield on 31 May 2015, when TfL took over the stopping services previously operated by Abellio Greater Anglia.155

Track access agreements and charges Train operators who wish to use the Crossrail Central Operating Section (CCOS) will be required to enter into a track access contract with Rail for London (Infrastructure) Limited (RfL(I)), a wholly-owned subsidiary of TfL. This sets out the terms on which that train operator will be allowed to access the track.156

In 2016-17, TfL published consultations on:

• the proposed CCOS Network Statement (which provides prospective users of the CCOS with information about the infrastructure and how they would be able to gain access to the CCOS to operate trains);157

• designating the CCOS as ‘specialised infrastructure’ (so that when RfL(I) seeks to allocate capacity for train services on the CCOS, it can give priority to high capacity metro passenger rail services, so that the purpose of the Crossrail project can be best achieved); and158

• CCOS access arrangements.159

Separately, Heathrow Airport (HAL) owns and operates the Heathrow Spur, which is a stretch of railway infrastructure linking Heathrow Airport to the Great Western Main Line to Paddington. When Crossrail services begin in 2018, Crossrail trains will access the Heathrow Spur to

151 Crossrail press notice, TfL announces shortlist of bidders to run Crossrail services, 25

June 2013 152 op cit., TfL announces MTR to run Crossrail services 153 TfL, Contracts – Crossrail [accessed 12 April 2017] 154 op cit., TfL announces MTR to run Crossrail services 155 ibid. 156 This mirrors what happens on the rest of the rail network, where Network Rail is the

relevant infrastructure manager; for more details see section 1.4 of HC Library briefing paper SN6521

157 TfL, CCOS Draft Network Statement - Request for views, 25 October 2016 158 TfL, Consultation on proposals to designate the Crossrail Central Operating Section

(CCOS) as Specialised Infrastructure, 15 August 2016 159 TfL, Consultation on the Crossrail Central Operating Section (CCOS) Access

Arrangements, 31 March 2017 [closed 26 May]

42 Crossrail (Elizabeth Line)

take passengers to and from Heathrow Airport. At the end of 2015 there were reports that HAL intended to charge the Crossrail train operator for that access.160

In February 2016 the rail regulator, the Office of Rail and Road (ORR), published a consultation paper on whether HAL could charge Crossrail trains for one specific type of cost – the historical costs of constructing the Heathrow Spur itself. It explained:

This decision hinges on the interpretation of a piece of EU-derived law which says that charges for such construction costs can only be levied on train operators if the project could not have gone ahead without them. It is the interpretation of “could not have gone ahead” which is crucial in this case.

What makes this case unusual is that it is being applied to a project that is already built and was indeed built before the relevant law came into force. This has resulted in evidential issues caused by the fact that there is no explicit evidence setting out the basis for the investment from the time when the investment decision was made. In the absence of explicit evidence, we have had to decide what inferences can be drawn from the available evidence considered in the round.161

The ORR stated that, in its view, HAL had “not provided sufficient evidence to show that it should be able to levy charges relating to the historical costs of constructing the Heathrow Spur”.162 ORR published its conclusions in May 2016. It stated that it was “not satisfied” that HAL had “provided sufficient evidence to demonstrate that the Heathrow Spur project could not have gone ahead without the prospect of higher charges to rail users”.163 However, it also concluded that “taking steps to recover revenue from users of the Heathrow Spur [is] rational commercial behaviour by [HAL] to protect (and maximise) monopoly profits and/or the contribution to the airport single till”.164 The High Court eventually dismissed claims that the new east-west rail service through the capital should pay excess charges to Heathrow Airport.165

160 e.g. “Heathrow starts fight over bill for Crossrail link”, Sunday Times, 27 December

2015 161 ORR, Charging framework for the Heathrow Spur: Consultation on proposals and

invitation to comment, 11 February 2016, p3 162 ibid., p3 163 ORR, Charging framework for the Heathrow Spur, 27 May 2016, para 81 164 ibid., para 82 165 High Court rejects Heathrow's bid for Crossrail station charges, Construction News,

26 May 2017

BRIEFING PAPER Number CBP00876 23 January 2019

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