Whether by accident or design, there was a grim irony in the timing of Crossrail’s latest admission of overspend and delay: it was declared just minutes after the transport secretary, Grant Shapps, had taken to the Friday morning airwaves to herald a new “acceleration unit”, designed to get infrastructure projects more quickly to fruition.
Crossrail was for years billed as Europe’s biggest infrastructure project, in the days when executives would boast that it was being delivered on time and on budget – until, just before the finishing line, they conceded that it absolutely wasn’t. The additional requirements have now reached an extra £4bn and four years to get London’s east-west Elizabeth line up and running, hopefully at some point in 2022.
The sums compound the problems for the capital, in a year when fare income has all but disappeared thanks to Covid-19, and the mayor and Transport for London (TfL) have had to rely on an antagonistic central government to provide emergency funding.
At least the pandemic provides some cover for the Crossrail board: Covid-19 restrictions have masked failings in construction and management, and the business plan that relied on anticipated Crossrail revenues to fund a fares freeze was already obliterated. And as Crossrail remains the joint responsibility of both the Department for Transport and City Hall, ministers can hardly seek to use it to further tighten the screws on TfL.
Indeed, even the £1.6bn TfL bailout and the Crossrail overspend combined will soon be surpassed by the extra money the Treasury has found to subsidise train companies in order to keep the national railway running in this extraordinary year. The bill to run the railway could rise further: many are urging a fares freeze after an unexpectedly high RPI inflation rate last week signalled a 1.6% rise in ticket prices in January. Annual rail fare increases have outstripped wage rises in normal times; now, with cuts the order of the day at many employers, another increase looks politically toxic.
More importantly, the railway urgently needs to get people back on the trains, lest the current trend for avoidance – passenger numbers are less than a quarter of pre-pandemic levels – becomes entrenched. Serious questions would then have to be asked about rail investment: both the operating subsidy and the schemes now in the planning.
What comes of Shapps’s latest wheeze, the DfT acceleration unit, remains to be seen. But its mandate is said to cover both road and rail, and it was launched on the day that Highways England published its plans to spend £27bn on roads. Given the long gestation of some of those designs – the Thames Crossing, the trans-Pennine upgrade and the Stonehenge tunnel – it could well be road building that a minister might wish to accelerate.
With Treasury purse strings loosened as never before, both rail and road projects are currently in favour, but sooner or later, hard choices are likely to be made. HS2 has the formal go-ahead, but its north-east branch is far from nailed on. The Stonehaven rail tragedy earlier this month could lead to fresh costs to guarantee existing lines’ safety in the face of more extreme weather. Network Rail’s debt, in a sign of the true expense of rail engineering, has quietly ballooned.
Crossrail is too far advanced to be shelved. But until it is operational, it will be a potent symbol of profligacy and broken promises – and at a time when people are taking to their cars rather than trains and London’s offices lie empty. Those who champion public transport over road building and wish for a green recovery dearly need the Elizabeth line to be completed without further delay.
Can the blockbuster strike back?
Christopher Nolan’s films are known for their plot twists but his latest, Tenet, will reveal the answer to the biggest unknown question of all – whether film fans are ready to flood back to cinemas.
Nolan’s film, which opens nationally on Wednesday, is the first Hollywood blockbuster to be released since March, making it the litmus test for the popularity of socially distanced, mask-wearing cinemagoing.
Cinema owners say pre-sales suggest it is going to be a hit, and they need it to be. Last week’s top 10 films in cinemas in the UK and Ireland – which, devoid of major new releases, included Jurassic Park and Nolan’s decade-old Inception – made just over £800,000. A typical week last year would have seen a box-office take of about £24m.
However, even if attendance levels return to normal, the pandemic has introduced a much greater threat to traditional moviegoing than the closure of theatres for a few months. The shutdown has given studios the unique opportunity to test the future by making films immediately available to streaming services –a direct threat to the sacrosanct model which has allowed cinemas to enjoy exclusivity for up to 90 days.
The most seismic move has been made by Disney – beloved of cinema owners for its solid-gold pipeline of billion-dollar hits year after year – which is making Mulan available on its Disney+ service.
At $42bn annually, the global box office is too valuable for this digital-first toe-in-the-water strategy to mark the end of the big-screen blockbuster. Studios are still keeping their biggest releases for cinema premiere. But for some smaller films, digital-first may prove more profitable for studios. The balance of power has shifted and the iron grip cinema owners have enjoyed over movie content for generations has been broken in the Netflix era.
Trump could yet hold key to developing-world debt crisis
In 2005, when the wealthy nations of the world descended on Gleneagles to agree a £30bn debt write-off for developing-world countries, the global economy was on a high. The G8 nations were growing and they felt flush.
When trouble hit in 2008, it was the Chinese who came to the rescue, focusing on Africa with massive infrastructure loans that allowed the continent’s governments to devote scarce resources to education, health and food security. When funds ran short, the same governments were encouraged to tap global financial markets to keep them solvent, adding to their already growing debt piles.
Now the reductions in poverty seen over the last 15 years are about to be lost, says the World Bank’s boss, David Malpass, as the pandemic wreaks havoc on the public finances of poorer countries. Figures due out next month are expected to show an extra 100 million people have been pushed into poverty by the crisis.
Malpass praised some richer governments for extending debt repayment deadlines, but said he was dismayed at the attitude of private lenders and the Chinese, whom he accused of “free riding” on this taxpayer-funded debt forgiveness.
“That’s not fair to the taxpayers of the countries providing development assistance and means poor countries don’t have the resources to deal with the humanitarian crisis,” he said.
The World Bank warned last year that many governments, especially in sub-Saharan Africa, had borrowed too much and that their finances were dangerously unstable as a result. Now it says that central American and south American countries have also suffered so badly during the pandemic that their poverty levels are increasing.
Malpass is right to criticise the private-sector and Chinese banks that hold so much of that debt. But he needs his friend Donald Trump to be more constructive in talks with Beijing and take a harder line on private lenders. Only then will we see meaningful action to cut debt levels.
