Added Pressure Nets £ 1bn Investment in London Rail Link

source: http://www.ft.com/, City gives extra £ 1bn to London rail link

After heated negations with senior government officials, several London business leaders, including the City of London Corporation, BAA, and Canary Wharf, pledged an estimated £1bn this week to the capital’s proposed east-west rail link project. The Crossrail project, described by one supporter as “vital”, will link Heathrow with the economic powerhouses of the West End, the City and Canary Wharf. Incidentally, Canary Wharf, is one of the project’s most obvious beneficiaries, as the increase in capacity for commuters, may potentially increase employment forecasts from 125,000 jobs to as many as 225,000 jobs after completion of the project.

Initially, supporters of the Crossrail project thought the Treasury would pay for a third of the projected £16bn cost, with another third coming from the fare box and the final third coming from the private sector. However, Gordon Brown was determined to solicit a larger contribution from the key beneficiaries of the project—the private sector.

Estimates by the business-backed campaign in favor of the Crossrail estimates that the railway will add £30bn to the UK gross domestic product over sixty years, while saving business time valued at nearly £5bn. Without the Crossrail, however, the limitations of London’s transport system would seriously thwart the most productive parts of the UK economy.

Baroness Jo Valentine, chief executive of the business group London First, noted that “London business leaders know that without a contribution, the government would struggle politically to deliver this vital project. They also know that if their people can’t get to work, their businesses will be damaged.” Furthermore, she cautions that without the Crossrail, “London’s attractiveness to overseas investors looking to [establish] Eurpoean headquarters will be put in the balance.”

Francis Salway, chief executive of Land Securities, echoed Baroness Valentine’s sentiments, adding that, “London has the ingredients to sustain its status as a world city and to make a massive contribution to the UK economy.” However, he points out, this potential is “at risk” from a “creaking” and “overloaded” infrastructure.

Questions for Discussion
1. Does it make sense to rely on larger financial contributions from the private sector?