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25 September 2012

Crossrail trains first to qualify for UK Guarantees

State of the art trains that will run on the new Crossrail line could be could be the first beneficiaries of the UK Guarantees scheme, the Chief Secretary to the Treasury, Danny Alexander has announced today.

Crossrail is the largest infrastructure project in Europe and will boost capacity on London’s rail network by 10 per cent when it opens from 2018.  A procurement contract for trains, maintenance and depot services will be eligible for UK Guarantees, providing bidders with increased certainty that long-term finance will be available. This will help to ensure that the rolling stock for Crossrail will be delivered on time and at the best value for money.

Four private companies have been invited to tender for contracts worth around £1 billion in a procurement process due to complete in spring 2014.  The Government has invited bidders to apply for guarantees for up to 19 per cent of the capital value to assist in the financing of the new trains, should this accelerate delivery and offer value for money for the taxpayer.  This is in addition to the significant capital contribution agreed by the Crossrail sponsors, Transport for London and the Department for Transport.

UK Guarantees, launched in July 2012, takes advantage of the Government’s fiscal credibility to provide guarantees for major infrastructure projects that may struggle due to adverse credit conditions.  If taken up by a preferred bidder, the offer of guarantees will be subject to legislation and approval processes, and a commercial fee will be charged for any guarantee.

Notes for editors

1. Crossrail is being delivered by Crossrail Ltd, a wholly-owned subsidiary of Transport for London, and is jointly sponsored by the Department for Transport and Transport for London.

2. On 28 February 2012, Crossrail Ltd invited four pre-selected bidders to tender for Crossrail rolling stock and depot facilities:

3. The final decision on the financing structure for the Crossrail rolling stock and depot services procurement remains subject to offering value for money and Crossrail Ltd reserves the right to make changes to the procurement in accordance with the tender documents issued to bidders.

4. The Government launched the UK Guarantees scheme on 18 July 2012 to accelerate major infrastructure investment.  Details of the UK Guarantees scheme and how to apply.

5. The Infrastructure (Financial Assistance) Bill was introduced on 6 September 2012 and saw Second Reading on 17 September 2012.  Guarantees can only be awarded once the Bill reaches Royal Assent.  The Bill authorises HM Treasury or a Secretary of State (with HM Treasury’s consent) to incur expenditure in relation to the provision of guarantees and other suitable forms of financial assistance.  Statutory authority for such expenditure is required in accordance with the Concordat of 1932 between the Government and the Public Accounts Committee.

6. The National Infrastructure Plan 2011 set out a comprehensive strategy for meeting the infrastructure needs of the UK economy, including a clear pipeline of 500 infrastructure projects.  Up to £40bn worth of projects identified in the pipeline will be eligible to apply.

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