Sept. 25 (Bloomberg) -- Terry Morgan, chairman of London’s 16 billion-pound ($26 billion) Crossrail train project, said he’s looking for ways to trim the budget to mollify critics, and warned that delays would have “horrific” consequences.

“There is an expectation we will find savings,” Morgan said in an interview yesterday. “We are looking at things we’ve said we’d like to do and asking ourselves, ‘Do we really need to do this?’”

Crossrail, Europe’s largest construction project, will connect Heathrow Airport with the West End entertainment district and Canary Wharf offices starting in 2017, relieving pressure on the aging London Underground railway. The plan was approved by Prime Minister Gordon Brown’s Labour government in October 2007, before Britain entered its worst recession since World War II.

The London Evening Standard newspaper reported in May that a Conservative government under David Cameron may scrap the project to save money. Crossrail was delayed under Conservative Prime Minister John Major in the 1990s.

Mayor Boris Johnson, a Conservative, is a staunch supporter and has said a Tory government would fund Crossrail. The opposition Conservative Party scored 43 percent support in an ICM-Guardian poll published this week against 26 percent for the ruling Labour Party. An election must be held by June 2010.

There is a “slightly better than 50 percent chance of it going ahead, rather than 90 percent,” said Tony Travers, a government expert at the London School of Economics. Its future may depend on “what happens by accident next year.”

Transport for London

The city’s Transport for London agency will raise 7.7 billion pounds of the costs, including 2.4 billion pounds from borrowing linked to future fares, while the U.K. government and local businesses will contribute the rest.

Morgan said he has met with Theresa Villiers, the Conservative shadow minister for transport, who expressed support.

“Obviously, there are going to be discussions around priorities,” said Morgan, when asked about the Conservatives. “We’ve got to make sure we get Crossrail up the priority list as high as possible.”

It would be “horrific” if the project, which would increase London’s rail capacity by 10 percent, were canceled, Morgan said.

Commercial real estate development would be slowed because the city’s rail network couldn’t support the work, London officials have said. Delaying the work would increase the project’s costs by 1.5 billion pounds a year, said Clinton Leeks, Crossrail’s director of corporate affairs.

The city forecasts that London’s population of 7.5 million will grow to 8.1 million by 2016.

Buying Real Estate

Crossrail is acquiring real estate and tunneling rights along the route at an estimated cost of 800 million pounds. Building demolition and construction will begin next year, with the digging of two 14-mile (23 kilometer) tunnels beneath central London, scheduled to take place between 2011 and 2015.

Until the construction begins next year, “it’s always possible that the project could be stopped,” said Travers.

Transport for London will select developers to finance commercial development above the stations, which include Tottenham Court Road and Bond Street in the West End and Liverpool Street and Farringdon in the financial district.

Crossrail dwarfs the city’s plan for the 2012 Olympics, which has a 9.3 billion-pound budget, and Heathrow’s 4.3 billion-pound Terminal 5. The 31-mile-long Channel Tunnel connecting Britain and France cost 9.5 billion pounds when it was completed in 1994.

Trident Debate

Britain’s three main political parties are all debating spending cuts because of the swelling budget deficit brought on by recession. The government has suggested cutting back on a 20- billion-pound plan to replace the country’s Trident nuclear deterrent.

The trains will be air conditioned and will cut the journey time between Heathrow and Canary Wharf to 43 minutes from around 70 minutes on the London Underground currently.

Crossrail and its contractors will employ 14,000 people in 2014 and generate as many as 60,000 jobs.

The tunneling by six boring machines will create 7 million cubic meters of “spoil” from underground -- enough to cover Hyde Park, in the west of the city, to a depth of 15 feet. It will be hauled out of the city by truck, rail and river.

The biggest challenge “is getting pace,” said Morgan, who is the former chief of London Underground contractor Tube Lines and an ex-automobile executive. “We are turning the team from a planning team to a delivery team.”

To contact the reporter on this story: Brian Lysaght in London at blysaght@bloomberg.net; Scott Hamilton in London at shamilton8@bloomberg.net.

Last Updated: September 25, 2009 03:30 EDT