3.19 Based on the high-level assessment of the funding required to complete the programme in KPMG's Finance and Commercial Review, the Department, TfL, the Greater London Authority (GLA) and HM Treasury agreed a funding package for the programme's completion. The guiding principle of this funding package was that London should pay for the cost increases, as it will be the primary beneficiary of the Elizabeth line.
3.20 The funding package comprises two loans from the Department: one of £1.3 billion to the GLA, and a further contingency loan of £750 million to TfL. The GLA also agreed to make a further cash contribution of £100 million, subject to enhanced powers to extend the use of the Mayoral Community Infrastructure Levy (MCIL) being granted. The interest rate for the GLA loan is 0.8% above that of government bonds. The TfL loan is structured in tranches which have interest rates above that of government bonds of 0.8%, 0.9% and 1% respectively. The funds can be drawn down gradually, as required, up to February 2021. The GLA and TfL must repay their loans by 2031 and 2033 respectively, although it could be earlier should the loans be fully used or the balance no longer be required.
3.21 The GLA plans to pay back its loan using its existing arrangements for retaining business rates, as well as receipts from the MCIL.6 Given that the current funding package was based on a high-level assessment, until Crossrail Ltd completes its new schedule for the remainder of the programme, it is unclear whether the programme will need further funding, which would make TfL's financial position more challenging still.
3.22 The loan packages also carry conditions for the sponsors and Crossrail Ltd to determine which recommendations of the KPMG governance review they will implement and require Crossrail Ltd to provide cash and funding forecasts each month to the sponsors. HM Treasury has agreed to reprofile the Department's budget to cover the short-term impact of issuing the loans.
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6 For information on the MCIL, go to: www.london.gov.uk/what-we-do/planning/implementing-london-plan/mayoral-community-infrastructure-levy