Stephen Hammond – 2013 Speech on Crossrail

Below is the text of the speech made by the Parliamentary Under-Secretary of State for Transport, Stephen Hammond, in the House of Commons on 1st March 2013.

I would like to inform the House about a change in the financing approach for the Crossrail rolling stock and associated depot facilities contract.

The Mayor of London and Transport for London have proposed using the flexibility in the original procurement to move from the current financing model, involving a substantial element of private sector funding, to one that is entirely funded by the public sector.

I can inform the House that the government has agreed to this change. The decision reflects the unique circumstances that apply to Crossrail. As a new route that is currently under construction it has no inherited train fleet and without new trains the service cannot open.

Transport for London and the government believe this decision is an appropriate course of action to deliver a very complex and unique infrastructure project within the delivery timetable. Trains need to be ordered by the middle of 2014, so that testing and delivery of the fleet can start in spring 2017, well ahead of the opening of Crossrail’s Central Tunnel Section in late 2018.

Any delay in the rolling stock order would place this delivery timetable in jeopardy. By removing the private financing requirement and moving to a wholly publicly funded procurement the contract negotiations will be simplified and as a result Transport for London believes this will provide greater certainty that the contract can be awarded in time.

In considering these concerns and the importance of the Crossrail Project to the country, the government has been convinced that – in this specific case – a change in the financing strategy is an appropriate course to pursue.

Within the current Spending Review period this will involve the use of existing TfL budgets. The remaining costs that fall beyond 2014 to 2015 will be factored into future capital spending plans.

The Department for Transport remains committed to the use of private finance in transport projects where it provides value for money and fits with our timetables for planned investment.

The financing of the contract is the only key element of the contract that will change. The responsible procurement requirements set out by my predecessor last February will remain as will the requirements for bidders to set out an estimate of the contract value that will be spent in the UK. While this is not an assessment criterion in the decision process, the successful bidder will be required to report against it following contract award.

Following this decision, Crossrail Limited intends to issue a revised invitation to negotiate in due course. I will ensure that a copy of this is available in the House library as soon as it is available. Bidders will then be asked to resubmit their bids based on this revised financing structure later this year.

I will keep the House updated with progress on this issue.