Government will guarantee private finance for Crossrail trains
By Richard Johnstone in Brighton | 25 September 2012
The government will provide further financial backing to the £14.5bn London Crossrail rail project by guaranteeing the private funding used to purchase trains for the new line, Chief Secretary to the Treasury Danny Alexander has revealed.
He told the Liberal Democrat party conference today that the contract for the trains will be the first to qualify for the UK Guarantees scheme for infrastructure investment to ensure they are delivered on time. The government announced in July that up to £40bn of guarantees will be provided to infrastructure projects that have stalled because of difficulty in getting credit.
Trains for the Crossrail project are being procured as a public-private partnership by Transport for London. The winning bidder will required to finance the purchase of around 60 new trains, as well as design, manufacture and service them, and also build a depot at Old Oak Common in West London.
Four firms – Bombardier Transportation, CAF, Hitachi and Siemens – were shortlisted for the £1bn contract earlier this year, which will be awarded in 2014.
However, Alexander told delegates that difficulties raising private finance to pay for the new trains ‘could delay their delivery’.
Crossrail services will commence through the tunnelled central London section in late 2018, and government support is needed ‘to ensure the rolling stock is delivered on time’, Alexander said.
‘Right now, difficulties raising the necessary private funding in the market could delay their delivery. So I can announce to you today that the train contract for Crossrail will be the very first project to be offered a new government guarantee.’
The chief secretary said the coalition government is able to guarantee funding as it has ‘rebuilt the confidence in this nation’s ability to pay its way in the world’ by implementing the deficit reduction plan.
This credibility is now being used ‘to create jobs, to help build homes, to get more money to business’. As well as providing backing for infrastructure, the government is providing mortgage guarantees and the 'funding for lending' programme, he added.
Yesterday, the LibDem conference rejected a motion criticising the government’s economic plan and called for the coalition to abandon its deficit reduction target. Alexander today insisted ‘there could not be a worse time to argue that we should abandon our plan’.
He added: ‘We won’t do it. It is the foundation for everything else. It is the foundation for jobs and prosperity in the future.
‘Last autumn, we were faced with a worsening forecast from the independent Office for Budget Responsibility. Rather than add more cuts now, we decided to take another two years to do the job. That was the right, pragmatic response to things getting worse.’
Alexander also confirmed that clamping down on tax evasion will raise an additional £4bn in government revenue this financial year.
This follows his announcement at the Liberal Democrat conference two years ago of £900m of funding for Revenue & Customs to tackle tax avoidance. This investment remains on track to lead to an additional £7bn in revenue by the end of this Parliament in 2015, he said.
He also revealed that the government is doubling the size of the team at R&C recovering tax from the tax haven of Liechtenstein, which would bring in an additional £3bn.
‘We have this message to the small minority of wealthy people who don’t play by the rules: we are coming to get you and you will pay your fair share.’