3.14 Sponsors' main objectives for Crossrail were to increase rail capacity in London and the South East of England and improve connectivity. The main benefits identified in the 2011 business case3 are:
• Passenger travel time savings - forecast as a £6.6 billion benefit. Shorter journey times are a significant benefit of Crossrail. The value is highly dependent on assumptions and forecasts about journey times, consumer behaviour, passenger income, journey purpose, and use of and demand for the service. Crossrail is also expected to significantly improve connections across London and the South East.
• Congestion relief - forecast as a £5.3 billion benefit. Congestion relief refers to the benefits from relieving crowding on trains and platforms, and reducing train delays caused by platform congestion and the impact on station crowding relief. This benefit also includes time savings for motorists arising from fewer vehicles on the roads. As with passenger travel time savings, this benefit depends on the use of and demand for the service, and the value of time used to monetise this benefit.
• Net additional revenue for TfL - forecast as a £7.4 billion benefit. Forecast revenue is highly dependent on consumer behaviour, demand for the service, the fares that are charged to passengers and how these fares are predicted to grow over time.
• New trains and stations will also improve accessibility and service quality.
3.15 It is likely that Crossrail will still deliver substantial benefits for passengers. However, since 2011, there have been changes to some of the assumptions underpinning the economic case as set out above:
• The delay to opening the railway means that passengers will not experience the benefits of reduced journey times, increased connectivity or reduced congestion, for longer than they expected.
• The cost to build the railway has increased by around 19%. In 2011, sponsors and Crossrail Ltd expected Crossrail to produce £1.97 of benefits for every pound spent on building, maintaining and operating the railway, or £3.10 including wider benefits from increased economic activity following completion of Crossrail. In April 2019, the Sponsor Board examined indicative analysis of the potential impacts of the cost increases and delays on the benefit-cost ratio for the programme. The analysis showed that Crossrail could produce around £1.50 of benefits for every pound spent or around £2 including wider benefits. The analysis carried out was not a full economic appraisal. We have not audited this analysis for this report.
• Demand for and revenues from public transport in London, and on the national rail network, have been lower than TfL and the Department expected in recent years. This suggests that assumptions about the benefits from journey time savings, congestion relief and revenue generation could be lower than expected in 2011.
3.16 In addition, the delay means that it will take longer for TfL to receive revenue from Crossrail. TfL's assumption in its 2018 business plan was that the delay to opening would cost it up to £600 million in lost revenue from 2019-20 to 2023-24, on the basis of a central section opening as late as mid-2020.4 Should the programme take longer than this to complete, as Crossrail Ltd currently expects, the impact on TfL's finances will be greater.
3.17 Overall, TfL's operating revenue growth has slowed from an average of 6% a year between 2012-13 and 2015-16, to nil between 2016-17 and 2017-18.5 The wider rail network has also seen a slowdown in revenue growth. The Government also decided to discontinue its general grant funding to TfL from 2018. In 2013, TfL's grant was more than £1 billion, and in the last year of funding, 2017-18, it was £255 million.
3.18 TfL has been trying to reduce costs since 2016 to address its slowing revenues. The revenue shortfall from Crossrail's delay, as well as the potential need to service the contingency loan discussed below, has meant that it has had to go further and cancel planned investment in the transport network. This includes station enhancements at Camden Town station, as well as a new signalling system to increase capacity on the Piccadilly line.
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2 KPMG's reviews were: a finance and commercial review, to establish the extent to which Crossrail Ltd's financial modelling reflects the true state of the finances of the programme; a governance review, to assess how governance and oversight of the programme had been working, and to make recommendations for improvement; and to validate the Department's timeline of events between November 2017 and October 2018, to help the Department to learn lessons for future major programmes. The KPMG reviews can be found at: https://tfl.gov.uk/corporate/publications-and-reports/crossrail-project-updates
4 The mid-2020 opening scenario was a financial planning assumption stated by TfL's Chief Finance Officer in January 2019 Greater London Authority Budget and Performance Committee. Minutes can be found here: https://www.london.gov.uk/moderngov/ieListDocuments.aspx?Cld=129&Mld=6576&Ver=4
5 Information TfL's on historic revenue growth is taken from TfL's annual reports for the years 2012-13 to 2017-18. Quoted revenue figures include revenue from operations and commercial development, but excludes grant income. The annual reports are available at: https://tfl.gov.uk/corporate/publications-and-reports/annual-reports-past-years and https://tfl.gov.uk/corporate/publications-and-reports/annual-report