Crossrail: On time and on budget, or delayed and descoped?

December 6, 2014

construction cranesMinisters and rail industry bosses frequently claim that Crossrail is being delivered ‘on time and on budget’, but is that really the case? A 2014 National Audit Office report suggests that, at best, these spokespeople may have been misinformed by their advisers.

The NAO analysis reveals that in 2009 ‘the anticipated cost of the programme had escalated to £17.8 billion’, taking the likely budget to about £19 billion once the rolling stock is included.

The report states that to reduce costs to an acceptable level, ‘the schedule for opening the railway has been extended’, with sponsors agreeing ‘to extend the timetable for full opening from May 2018 to December 2019’ (p. 22). Further economies were achieved by ‘simplifying integration works, re-sequencing work and reducing scope, saving £800 million’ (ibid.). In other words, the project seems to have been delayed and descoped and apparently will not be built to the specifications originally envisaged.

If an infrastructure project is already underway but heading over-budget, there are of course two main options to address this: increasing the budget by obtaining more money from funders, or building less infrastructure for the same money. In the case of Crossrail, the NAO analysis implies that if it had been built on time and to the original specification, the cost may have been approximately £20 billion (and it may have been far higher if the prolonged slump had not put downward pressure on construction rates).

It remains to be seen whether the scheme will actually meet the revised schedule and budget, since much of the construction work is yet to be completed. Whatever the outcome in five years’ time, claims that Crossrail is ‘on time and on budget’ risk misleading the public.

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The government should ditch Crossrail to help balance the books

February 17, 2013

The British government unwisely entered the current slowdown with a sizeable budget deficit. Recent bank bailouts are likely to push the national accounts further into the red and increased borrowing may put upward pressure on interest rates. Yet the obvious solution, increasing taxes, would harm businesses and hinder economic recovery. Cutting public spending should therefore be the preferred policy option when the Treasury takes action to balance the books.

Crossrail, a project to improve links between East and West London, should be one of the first casualities of tighter fiscal conditions. The cost has been estimated at £16 billion. But given the disastrous history of big government projects it’s possible this could rise to £20 billion or even £30 billion – mostly paid for by taxpayers.

Despite the huge sums involved, and even if its very ambitious service targets are met, the scheme will deliver only a relatively small enhancement to the capital’s transport capacity. The time savings are limited in most instances and the project will drain resources from more cost effective incremental measures, such as speeding up existing tube lines by closing under-used stations.

The most efficient way of tackling congestion on London’s public transport network is to use the price mechanism. Peak-time fares, including season tickets, should be raised where overcrowding is a problem. This would encourage economic activity to disperse to quieter times and less congested locations, making better use of the existing network. Passengers rather than general taxpayers should also pay maintenance and improvement costs.
 
Having dispensed with Crossrail, the government might also consider whether the 2012 Olympic Games should be run on a wholly commercial basis.

9 October 2008, IEA Blog

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