Wrong side of the tracks

With the Prime Minister's recent funding confirmation and with Royal Assent of the Crossrail Bill expected in summer 2008, the Crossrail project appears finally to be on track for delivery.

Crossrail - what is it?

Cross London Rail Links (Crossrail) is a 50-50 joint venture company between Transport for London and the Department for Transport. Crossrail proposes to lay 118km of new track across London, joining Maidenhead and Heathrow in the West to Abbey Wood and Shenfield in the East.

There will be 38 stations, including new below-ground stations at Paddington, Bond Street, Tottenham Court Road, Farringdon, Liverpool Street, Whitechapel and the Isle of Dogs. A pair of tunnels will be constructed under Central London, connecting the Great Western Main Line near Paddington to the Great Eastern Main Line near Stratford. A new pair of tunnels will also run under the Thames to Woolwich.

Implications for businesses

The Crossrail project will have major implications for businesses in and around London. It could be hugely beneficial for those who live or work in London. However, as with any major project, there will be potential adverse effects for some: land interests are being compulsorily acquired for the works and to provide necessary work sites; other land interests will be blighted; and there will be noise and vibration from the construction process and the operation of the railway itself.

London businesses are likely to pay part of the costs through a supplementary business rate. Development in the vicinity of Crossrail stations is likely to attract the need for contributions by way of planning obligations under section 106 of the Town and Country Planning Act 1990.

Crossrail timeframes

Only months ago, Crossrail was at risk of being cancelled due to a major funding gap, costs having risen over the past two years from £10bn to £16bn. A previous scheme had foundered in 1994. But on 5 October 2007, the Prime Minister confirmed that the necessary funding would be made available.

Since the hybrid Crossrail Bill was deposited in Parliament in 2005, affected businesses and individuals have been making representations as part of the parliamentary process through formal petitions, leading to a series of assurances and undertakings from the promoter and detailed amendments to the proposals.

The Crossrail Bill House of Commons Select Committee has considered 205 petitions and published a report on its recommendations in October 2007. The bill is now being considered by a public bill committee prior to its third reading in the Commons. Following the third reading, the bill will pass to the House of Lords and a fresh petitioning period will commence.

If Royal Assent is won in 2008, enabling works should commence in 2009 and construction in 2010. Based on current projections, the first services are expected to operate in 2017.

Crossrail benefits

Crossrail will bring an additional 1.5 million people within 60 minutes' commuting distance of London's key business districts. Crossrail will increase rail capacity to Canary Wharf by 54 per cent and increase rail capacity to the City by 21 per cent. Crossrail will also add to 10 per cent of London's overall transport capacity and will carry around 200 million passengers per year.

The project is expected to bring major economic benefits to London and the Thames Gateway. According to Mayor of London Ken Livingstone the new rail line will be "the key to the next 20 years of economic development of London". The project is expected to contribute an extra £20bn to the national economy and will support 30,000 high-value jobs by 2026.

Impact from the developmentAs the project will involve major sub-surface excavations in densely populated Central London, businesses in or near the construction zone can expect a range of impacts, including compulsory acquisition, structural damage to buildings, prolonged noise and vibration disturbance, loss of amenities and prolonged revenue impact. In addition, the bill proposes the demolition of a number of Central London buildings, including some listed buildings.

The bill contains powers for both compulsory and temporary acquisition. Compensation will be at market value plus additional payments for home loss or occupation loss. In line with the general compensation code and Crichel Down Rules, land will be permanently acquired if it will undergo a 'material change' in character (for example, through demolition or erection of buildings on it). Owners will have an option to buy back land taken for temporary purposes (for example, for construction work sites). A hardship policy will allow qualifying land owners to seek acquisition if their land will be 'seriously affected' by the development.

Free noise insulation will be available for qualifying properties, and temporary housing if noise is acute and above a trigger level. Commercial businesses that anticipate being significantly impacted by noise can request an individual noise impact assessment.

Funding arrangements

The £16bn project will be funded by the Government, the business sector and fare-payers. The Government will contribute by way of a £5bn grant from the Department for Transport.

According to the Government's 2007 Comprehensive Spending Review, around one-third of the funding will come from the business sector. Major contributions will be made, for example, by the Canary Wharf Group and BAA.

Additional financial contributions will come from the proposed supplementary business rate. A white paper, 'Business Rate Supplements', was published in October 2007. It proposes the introduction of locally levied taxes (in England only) which could be retained by councils to spend on economic development. The levy will be capped at a maximum 2 pence in the pound. Businesses with rateable values under £50,000 will be exempt. In London, the supplementary business rate will be levied by the Greater London Authority. The levy will be used to service the £3.5bn debt raised by the Mayor during construction. The Mayor intends to start collecting the levy in April 2010. The proposal will require primary legislation.

The Mayor also intends to ensure that financial contributions are secured from property developers by way of Section 106 agreements in relation to development proposals close to proposed Crossrail stations.

Simon Ricketts is head of planning and environment and Nikolina Babic is a paralegal at SJ Berwin