A construction worker walks past a sign at Farringdon Crossrail station in central London in February © Leon Neal/Getty Images

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The UK government has agreed to provide up to £825m in new funding to help complete London’s long-delayed and overbudget east-west Crossrail rail line.

The money will allow work on the 118km rail service to “continue at pace” and open in the first half of 2022, Transport for London, the capital’s public transport authority, said.

Crossrail managers warned in August that the project was set to cost as much as £18.7bn, or £1.1bn more than the then budget, and the new money helps to address the majority of that shortfall. 

The Department for Transport will provide the £825m through a loan to the Greater London Authority, the city’s local authority, which will have to repay the money from business rates and an infrastructure levy on developers. The loan’s terms were not disclosed.

Andy Byford, the UK capital’s transport commissioner, wrote to the DfT last week warning that the project risked being “mothballed” without further financial support.

The railway linking Berkshire and Essex via tunnels bored under the centre of London is Europe’s largest infrastructure project and should have opened in late 2018.

But problems integrating its complex signalling systems and fitting out cavernous stations have left it more than three years behind schedule and almost £4bn over its original budget of £14.8bn. The coronavirus lockdown brought a halt to all work for almost two months, further compounding the delays.

TfL assumed overall control of Crossrail in October and hopes to finish it without having to find more than the £825m put up by the government on Tuesday. The transport body has commissioned advisory firm KPMG to conduct an independent analysis of the cost of the remaining work.

The settlement has reopened an acrimonious row over how to fund London’s public transport network during the pandemic following a collapse in passenger revenue.

Sadiq Khan, the Labour mayor of London, said the Conservative government had not offered the capital enough support during the crisis.

“The government have insisted London must pay the shortfall — despite the overwhelming majority of the tax income that will result from Crossrail going to the Treasury. This is another example of London supporting the country way over and above the help we get from this government,” he said.

Grant Shapps, the transport secretary, said the new money “is a fair deal for taxpayers across the UK”.

“London, as the primary beneficiary, must ultimately bear any additional costs,” he said.

The government has pulled funding for the project’s successor, dubbed Crossrail 2, which would have run north to south under the city. Instead, the Treasury last week said the money will be used to “raise the performance of public transport networks in the regional cities towards London’s gold standard”.

DfT has supported TfL with two bailouts this year, but the transport network’s current funding will run out at the end of March.

TfL has said it will need another £3bn in its next financial year, while in last week’s spending review the government did not set aside any cash for the transport body, setting the stage for a new row ahead of May’s mayoral election.

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