Source · Select Committees · Public Accounts Committee
Recommendation 2
2
The collapse in passenger numbers owing to the pandemic, and subsequent bailout to TfL, has...
Conclusion
The collapse in passenger numbers owing to the pandemic, and subsequent bailout to TfL, has complicated how and when TfL and the Greater London Authority will be able to repay the taxpayer loans for Crossrail. To date, the taxpayer has provided nearly £2.9 billion in loans to TfL and the Greater London Authority (GLA) to fund Crossrail Ltd’s costs on the programme: £750 million to TfL in December 2018; £1,300 million to the GLA in December 2018; and an additional £825 million to the GLA in December 2020. However, this funding may still not be enough, with Crossrail Ltd’s middle estimate cost of the programme in July 2021 (£15,940) coming in £150 million above its current available funding, thus potentially creating a shortfall. The Department expects the £750 million loan to TfL for Crossrail to be financed and repaid from TfL’s own revenues. This loan is separate from over £4 billion of loans from government to support TfL during COVID. Fare revenue is critical to TfL’s finances. Prior to the pandemic, TfL said it received 72% of its income from fares however passenger numbers were plateauing before the pandemic, and have since collapsed. There may be long-term changes to travel patterns, with TfL estimating an 18% drop in demand for rail by 2031 compared with what was expected before the pandemic. Government lending to TfL during the pandemic includes a target to become financially self-sufficient within two years, meaning TfL must identify new revenue streams. The GLA loans are expected to be paid back via London’s Business Rate Supplement (BRS) and Mayoral Community Infrastructure Levy (MCIL), with the Commissioner telling us it could take up to 2043 for full repayment. 6 Crossrail: A progress update Recommendation: The Department and TfL should write to the Committee by the end of November setting out TfL’s revenue forecast scenarios, and what they mean for whether the loans for Crossrail will be fully repaid and when.
Government Response
Acknowledged
HM Government
Acknowledged
agree with the Committee’s conclusion. The department assesses the value for money of all its investments. Value for money is evidenced and scrutinised at key approvals and assurance milestones and all programmes in the Government Major Programmes Portfolio must comply with HM Treasury’s Accounting Officer Assessments: guidance (2021). Programmes are also considered against the accounting officer tests where the programme is in breach, or potential breach, of the agreed performance, cost, and time envelope. 2.3 The department has a well-documented and embedded accounting officer assessment process, whereby assessments and their accompanying letters are generated by the relevant SRO, before being considered by the Director General Finance and finally decided on by the Permanent Secretary. All four standards - regularity, propriety, value for money, and feasibility - are carefully considered as part of this process. In considering value for money, all assessments are based on evidence and in line with HM Treasury guidance “…make the most plausible projection available”.1 2.4 To ensure continuous review and improvement of activities to drive value for money, the department will ensure that in the future, letters to the Committee contain more of the detailed evidence provided to the Permanent Secretary on which value for money is assessed. The Permanent Secretary writes annually to all SROs as a reminder of this obligation to the Accounting Officer and to ensure the transparency of this process and will do so again by 31 January 2022.