Mayor to ask firms for Crossrail cash
Businesses are facing a three per cent tax rise to help pay for the Crossrail project.
Mayor Ken Livingstone is to ask the business community to boost its contribution to the scheme in an effort to drive it forward.
It is feared plans for the East-West link will founder because of the soaring cost unless the private sector helps out.
Today it emerged that a document drawn up by the Greater London Authority could be underpinned by a three per cent rise in business rates, bringing in ?2.3 billion after exemptions for small businesses, and a ?400 million contribution from developers who stand to benefit most from the project. The Government is expected to deliver a verdict on Mr Livingstone's scheme next week but is unlikely to say how much money would come from the Treasury.
The project is backed by Tony Blair but regarded by the Chancellor as a huge expense.
GLA insiders believe the three per cent rise in business rates would be supported and had already been discussed with leading business figures. One told the Financial Times: "We believe the proposals would win majority support provided the remaining issues such as the level of exemption for small businesses can be agreed in detail."
It is understood that the CBI is open to the idea of a rise in business rate and the Corporation of London has already said the City is prepared to pay its share.
Mr Livingstone is keen to persuade the Government that he can provide a credible source of funds to back up any Treasury funding. It is hoped by sources close to the Mayor that Mr Darling will come up with about ?3 billion to make the scheme viable.
Fears of smaller businesses being hit by a rate rise are bound to lead to their being let off. The London Chambers of Commerce and London First, the leading business organisation for the capital, are likely to want assurances that the funding deal will not harm smaller companies.
The Mayor's plans are almost certain to have been agreed in private by the Department for Transport after months of negotiations.
A 50-year finance period would require a Treasury contribution of ?113 million a year, rising to ?190 million. The Treasury stands to gain a ?7.6 billion tax windfall from the expected ?19 billion boost to the economy from the project, a high-speed link between Heathrow and Canary Wharf and the City.
