Wednesday 28 November 2018 4:32 pm

Worst yet to come with Crossrail delay as TfL faces £400m 2021 revenue shortfall, warns Moody's

The delay to the launch of Crossrail will hit Transport for London (TfL) with a £400m funding shortfall in 2021, financial services giant Moody's has found.

The £15.4bn Elizabeth Line was supposed to open this December but has been delayed until autumn next year because of issues around signalling testing.

Moody's found that while TfL will manage the financial impact of the delay, it will continue to place "significant financial strain" on TfL until 2023, a burden that is likely to be picked up by the London Assembly. 

Zoe Jankel, vice president at the credit rating agency, said: "Crossrail's delayed opening is one of a number of budgetary challenges that TfL is facing. We expect that the most significant impact of the Crossrail delay will be in the 2021 fiscal year, with a revenue shortfall of around £400m and a loss of operating surplus.

"Overall, we expect that TfL will be able to manage the impact of the delay using its available resources and spending flexibility. However, this will weaken its ability to cope with any other unforeseen costs or revenue shortfalls."

The analysis will make for unwelcome reading for TfL, which is already set to lose £200m next year because of the railway's failure to open on time. 

Moody's report also warns against TfL stalling on investment elsewhere on the Underground network to save money, warning that doing so would weaken its revenue base in the future.

"TfL expects a significant proportion of the £1.7bn projected increase in passenger income from fiscal 2017 to fiscal 2023 to come from increased capacity and services on London Underground lines, London Overground and the DLR. Therefore, it is unlikely that TfL would want to re-profile or postpone these projects as they will be important in delivering the surplus uplift it requires to balance its budget in the long term," it said.

A spokesperson for TfL said: “Everyone involved in this project is fully focused on bringing the Elizabeth Line into service for passengers as soon as possible. Work is continuing between the government, mayor and TfL on finalising a financing package to deliver this.”​​​

Despite the delay, the project remain crucial to TfL's long-term viability and its plan to reach an operating surplus by 2021. It is expected to contribute 14 per cent of TfL's passenger income by 2023, and 12 per cent of its total operating income.

Chair of the London Assembly's transport committee, Caroline Pidgeon, said: “The Moody’s report makes for grim reading over the financial crisis now facing TfL. Their report draws upon and reflects what the London Assembly has been saying for months regarding the huge loss in income that TfL will now face due to the delayed opening of Crossrail.

“The report also provides a powerful reminder that if TfL tries to solve its dire financial problems by postponing investment in improving the London Underground, the London Overground or the DLR it is merely creating a whole new set of financial challenges in future years. Postponing such investment will simply kick the can down the road. It will create even greater financial and transport challenges in the years ahead."