Wrangling at Woolwich: Woolwich Crossrail Station Finally Proceeds

With tunnelling and construction underway across London. Crossrail has seemed in full swing now for some time. In truth though, an air of uncertainty has continued to hover over one station on the new line – Woolwich, for which funding arrangements were finally confirmed yesterday by Crossrail’s sponsors, the DfT and TfL.

Woolwich Crossrail station did not feature in the original Crossrail bill, and it is this which has resulted in a more torturous path to funding and prospective completion.

Momentum for a station at the site first really began to gather pace back in 2005, when objections were raised to its omission from the original Crossrail bill. Supporters, which included the Royal Borough of Greenwich and local developers, claimed that the Benefit Cost Ratio (BCR) of a station in Woolwich was high – more than high enough to justify its inclusion within the project. The railplan estimates, they claimed, suggested that 14,500 passengers would use such a station in the morning peak, that an additional station in Woolwich would reduce pressure on London Bridge and that it would bring a sorely needed economic boost to an area where unemployment ran higher than 12%. In March 2006 an early day motion was tabled in Parliament calling upon Crossrail’s sponsors and the Government to add Woolwich to Crossrail’s plans, but they resisted – not least, they pointed out, because realistically speaking there was simply no funding in place for such a station.

The pressure, however, continued and later that year a House of Commons Select Committee aligned itself with the station’s supporters:

We are making a Special Report to the House to highlight our dissatisfaction with recent proceedings in Committee, regarding Crossrail and Woolwich. We strongly agree with the arguments presented to us regarding the addition of a station at Woolwich. We heard three days of legal argument from both the Local Authority and from Counsel for the Promoters [the Government]. We have also undertaken a visit to the proposed site with representatives from each party. We noted that the Petitioners’ calculations of cost for this station showed that it would provide exceptional value for money and we called upon the Promoters to bring forward the necessary additional provision to add this to the bill.

Still the addition of the station was resisted. The cold hard truth was that whatever the potential positives, as long as no funding solution was in place there could be no station. Time here was not on the side of those arguing for the station. As long as an impasse remained the chances of a station being built as part of the main Crossrail build stage decreased, and the prospective cost of adding the station after this was significantly higher.

Enter Berkeley

There was, however, one chink of light in the darkness – the possibility of private funding. Elsewhere on Crossrail Canary Wharf were leading on the development of their new station-come-shopping-centre, and on the Overground developer funding was being put behind new stations such as Imperial Wharf. With burgeoning development around the proposed Woolwich site, a similar solution seemed a no-brainer here as well. Berkeley Homes soon emerged as a possible financial suitor, thanks to their planned development at Royal Arsenal, but they insisted that they could only provide the significant investment needed if certain changes were made to allow them to carry out greater development in the area than they had initially intended. Greenwich Council agreed and modified their special development plan for the area, quite significantly, in order to accommodate Berkeley’s request.

In March 2007 the Government finally announced that a station at Woolwich would go ahead. There was though a crucial caveat:- Berkeley must carry the cost.

A provisional agreement, it was confirmed, had been agreed with the developer to this effect. A station box would be constructed, by Berkeley, to Crossrail’s specifications during the main build phase. The developer would cover both the base cost and any risk, although if it was assessed that this construction had resulted in savings for Crossrail here or elsewhere then that money would be remitted back to the developer. Berkeley and Greenwich Council would then be responsible for finding the funds – whether solely themselves or through additional contributions from other developers – needed to turn that station box into a fully-fledged station. Berkeley would also receive the rights for over-station development.

In principle, as with arrangements across town at Canary Wharf, a deal seemed to have been brokered that worked well for all parties. Crossrail’s sponsors and the government had their explicit guarantee that there would be no public funding, and Greenwich and Berkeley would get their station.

Devils and Details

By 2009, however, things were looking decidedly less certain. Despite lengthy negotiations between Crossrail and Berkeley, the provisional agreement had still not yet formalised into a concrete, legally binding, arrangement. With additional contributions from other developers and Greenwich Council looking thin on the ground, Berkeley found themselves facing a situation where they might be required to fully fund both the station box and its fit-out at a potential total cost of £162m. This, they insisted, was something they were not prepared to do.

This left plans for Woolwich station in a precarious position. TfL and DfT’s provisional acceptance of the station deal had been based on agreement being reached on both the construction of the station box and its fit out. They were still insistent that they would – and indeed could – contribute no funding to that latter stage, a point on which the Government agreed. Whilst plans and work on Canary Wharf marched forward, therefore, on Woolwich they stalled – and with any box needing to be completed by 2013 in order for the station plan to be viable this was a very dangerous situation to be in.

Building a Box

Finally, in 2011, with the deadline for action now imminent, a partial deal was reached. In effect, it was recognised that the need for the box development was now critical and thus this work needed to be signed off, even if dispute over the fit-out remained. The result, then Transport Secretary Phil Hammond announced, was a binding agreement for Berkeley to carry out the box works, with the future of the station itself still to be determined:

The Department for Transport, Crossrail Limited, Transport for London, and Berkeley Homes, have in recent months been working urgently to turn this initial agreement into a final, legally binding, agreement.

I am therefore pleased to inform the House today that a final agreement has now been reached by all parties. This means that engineering work on Woolwich Station Box can now proceed and the benefit of Crossrail investment can be secured for the residents of Woolwich.

In due course, fit-out of the Woolwich Station Box would be required to bring it to operational status. Government is clear that, in line with the 2007 agreement, no additional public sector contribution can be made available to fund the fit-out of the station box. Instead, the fit-out is conditional on receiving sufficient funding contributions from developers and businesses operating in the area. Berkeley Homes has an obligation to enter into discussions with Department for Transport, Transport for London, Crossrail Ltd and Greenwich Council, in order to provide for the subsequent fitting-out of the station box. All parties, including Berkeley Homes, have made clear that they understand and support this position.

The future of Woolwich Crossrail station was thus still uncertain, but at least now it was no longer in complete jeopardy as the work to build the 256m long, 26m wide station box could now at least proceed. This it did, ultimately being completed ahead of schedule in February 2013.

A Battle Half-Won

Meanwhile debate on the final fit-out continued, with Berkeley remained adamant that they would not contribute more to the fit-out. In February 2012 John Anderson, chairman of Berkley Homes Urban Renaissance insisted that Crossrail’s sponsors, and Greenwich Council, needed to look elsewhere for funds if the station was to have any hope of being completed by 2018, when the rest of the Abbey Wood branch was scheduled to open. Greenwich themselves refused to comment publically on Anderson’s remarks, but Crossrail’s sponsors remained firm – in line with their original agreement, there would be no more money from either Crossrail, TfL or the DfT for the station.

Whilst negotiations continued behind the scenes throughout 2012, the box work neared completion and once again the question of funding began to get urgent. Although there was some flexibility in the work timetable for fit-out if the 2018 deadline was to be met, any delay between completing the box and beginning the final station works would inevitably increase the cost and increased the risk of disruption to the Crossrail work timetable elsewhere. Initially, Crosssrail – who would be the party completing the fit-out regardless of who footed the actual bill – had thus hoped that final construction could begin in summer 2013, but in order to do that plans and procurement work realistically needed to begin by the end of 2012. As 2012 advanced and no agreement was reached it soon became clear that this was unlikely to be the case.

The completion of the box in February 2013 thus marked an important milestone, but it also highlighted a dangerous situation that still needed to be addressed – there was still no agreement on who would pay for the station’s fit-out. The chance of realistically moving straight into final works at the station, as was happening across town at Canary Wharf, had long since passed and now the danger was looming once again that the station wouldn’t be completed in time for 2018 at all.

Making Concessions

Finally in July this year a final agreement was reached. Yesterday on 25th July, Lord Attlee announced to Parliament that a compromise between all parties had been agreed. A legally binding agreement was now in place and Crossrail had been instructed to complete the station works.

The full breakdown of that compromise has yet to emerge. Based on the details available, however, it seems that Crossrail will receive fixed additional funding of £54m to cover the cost of completing the station works. This £54m is made up of contributions from Greenwich Council, additional local developer contributions, funding from Berkeley Homes and contributions from both the Greater London Authority (GLA) and TfL. Again, any savings that Crossrail themselves are calculated to have made by having a station, not a box, in place by 2018 will also be contributed to the pot.

Without more information on the breakdown of that £54m though some questions still remain. For with the exception of TfL and Crossrail, just who is contributing what is unclear.

On TfL’s part, although we don’t know the total sum they’re contributing we do know where the money is coming from. They’re using a similar financial arrangement to that which they agreed with Herts County Council for the Croxley Rail Link and will be remitting the additional farebox revenue generated by the station back as a contribution for a – currently unspecified – period of time. As with Croxley, it’s a clever arrangement and the fact that they’re using it here as well suggests that we may well see it again elsewhere on even more future projects.

Meanwhile Crossrail’s contribution seems, theoretically at least, to be no different to what it was before – its projected savings from not doing the work. The wording within the announcement (i.e. that the £54m is a “fixed” sum) does, however, suggest that Crossrail may have agreed to something else – that they should carry at least some of the risk of any cost overruns. If this is the case, then it’s likely a concession that they consider was of low risk to themselves – thus far they have demonstrated an impressive ability across the whole project to accurately plan, cost, and execute the work.

The final totals being contributed by the other player though remain unclear. To a certain extent, this is perhaps not important – Woolwich Crossrail is a station with an excellent BCR that arguably should always have featured as part of the project anyway, and it will no doubt see excellent patronage and bring a clear economic return.

With over five years’ worth of wrangling ultimately required in order to get it built though, and on multiple occasions a very real chance that it would not have been built at all, Woolwich carries some clear lessons and warnings that need to be taken on board by all those involved in the development of transport in London and beyond.

The Woolwich experience highlights some of the potential dangers of modifying plans once an Act is already in place. Perhaps more importantly, it also highlights that developer funding should never be seen as a panacea. It is not automatically the easy option where public funds are not available, and it is not a solution without its own risks. For every Canary Wharf Crossrail, there is a Woolwich – or possibly even worse.

So whilst at Woolwich attention can now thankfully focus on getting the work done, and a station built, London’s – and indeed the UK’s – transport planners must take note of the lessons to be found in the Woolwich experience and learn from them. For as we move into a period where developer funding will be crucial for big projects like the Battersea Northern Line Extension and smaller ones as well, there are risks to be found there as well as opportunities.