Business rate hitch as ministers hold talks on £15bn bill for Crossrail
Senior ministers are to hold a crunch meeting next week in an attempt to hammer out a funding deal for Crossrail.
The meeting, pencilled in for Tuesday, will be attended by Andy Burnham, Chief Secretary to the Treasury, Transport Secretary Ruth Kelly and Communities and Local Government Secretary Hazel Blears.
It is hoped that if an agreement can be reached, Gordon Brown will be able to make a definitive announcement at the Labour Party conference the following week.
Ministers are rumoured to be unwilling to pay both the debts for the collapsed Tube maintenance firm Metronet and contribute around £3 billion to Crossrail, the long-delayed high-speed line that would link Heathrow with the City and Canary Wharf.
It comes as Mayor Ken Livingstone is insisting that the millions needed to take over Metronet's work will not come from the Crossrail project.
The Evening Standard has learned that the major stumbling block is persuading businesses to contribute to the final cost. While the Government is committed to paying part of the bill - now estimated at £15billion - it wants the City to make a hefty contribution through a rise in business rates.
A report by Sir Michael Lyons in March said an extra 4p on business rates would raise £438million a year for major infrastructure projects.
But business leaders have made clear they are unwilling to pay more than a three per cent increase. In addition, ministers have yet to resolve who would be responsible for collecting a supplementary charge.
Outside the capital, responsibility would fall to councils, while inside both the Mayor and the boroughs are lobbying for the rights. Nick Bell, Westminster's director for finance, said his council approved of the extra tax in principle but was opposed to the proceeds being spent outside the borough. "Local businesses can only be expected to support the change if they can see benefits to their area," he said.
There are fears that unless a decision is reached quickly, a funding formula will not be in place for work to begin on Crossrail by its scheduled start date of autumn next year, meaning trains may not start running until after 2015.
The potential cost of this to London is £1.5billion a year through lost investment and business activity and congestion. A Treasury source said there was no guarantee an agreement would be reached next week, adding: "This is still very much up in the air. We want to see the colour of their cheques."
Meanwhile, Mr Livingstone has tried to quash fears that the collapse of Metronet would blight the chances of winning government support for Crossrail. Transport for London has been forced to provide £897million in loans to Metronet's administrator to keep the Underground running. It fears never being able to recoup this and so is to ask the Government to replenish its reserves.
The Mayor said: "In my discussions with the Prime Minister and Ruth Kelly, there has not been the slightest suggestion that because of the Olympics or Metronet we can't have Crossrail.
"As much of the cost of this should be borne by the Government and not Londoners, these discussions are taking place against the background of the Government spending review.
"We are talking about the Department for Transport budget for the next three years. In total, we will have more money than anyone would have expected by the time we are able to announce where we are with Crossrail and Metronet."
