"No Fare Rises To Pay For Crossrail"

Costs will be met through supplementary business rates according to Mayor

The Mayor of London has sought to quash rumours of fare rises this week by announcing that there would be no increases to pay for Crossrail.

He said, "The financing model for Crossrail, as already announced, relies on £5.2 billion from government, a supplementary business rate of 2p applied for 25 years to properties with a rateable value of more than £50,000 and the fare income from passengers on the route itself at standard Transport for London zonal fares - with a premium fare applying only to Heathrow airport. No fares increase in London is required.

"The story that fares may rise due to ‘interest rate risk’ is false. The interest rate assumption in Crossrail financing is of a 6 per cent – currently relevant rates are below this at 5.2 per cent. At present Transport for London, in common with other local government bodies does not have the legal right to hedge the interest rates at which it borrows while private sector companies do have this right. As part of negotiations with government Transport for London will seek that right - in which case future interest rate risk is removed.

"Second even if Transport for London were refused this right, any interest rate increase would not lead to fares increase but to extension of period of the supplementary business rate beyond 2035. Therefore it is clear that there is no 'interest rate risk' which would require fares increases for Crossrail."

October 19, 2007