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Exclusive | Taxpayer to pay for £1.6bn Stonehenge tunnel after PFI axe

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The Stonehenge tunnel and Lower Thames Crossing road schemes are “highly likely” to be entirely publicly funded, New Civil Engineer can reveal.

Highways England chief executive Jim O’Sullivan confirmed that both schemes will have to be publicly funded following chancellor Philip Hammond’s decision to axe PFI and PF2 deals. Both routes were due to receive private financing under the PF2 model.

And while a new model of private financing is likely to be set up, O’Sullivan said that any alternative model of private financing is unlikely to be in place in time to be used on either the £1.6bn A303 Stonehenge tunnel or the £6bn Lower Thames Crossing.

“Both of these projects will likely end up with public money, under a traditional contracting model” O’Sullivan told New Civil Engineer. “How that will be done has yet to be worked out.”

“It would be good for the market if we have some sort of decision by January.”

He added: “Both of these projects remain on track and neither of them is affected by the announcement.”

It comes after Chief Secretary to the Treasury Elizabeth Truss confirmed that neither project would be funded under PF2, following a question by MP Stella Creasy.

“The Budget announced that government will no longer use Private Finance 2 for new projects,” Truss said. “The upgrade of the A303 and the Lower Thames Crossing will therefore not use Private Finance 2.”

The tunnel section of the Lower Thames Crossing was always set to receive public funding, with private financing originally earmarked to cover the road sections either side of the tunnel.

O’Sullivan added that by switching to a “traditional” funding method has several benefits. In particular he likened the lessons learnt on the A14 as being transferable to the Stonehenge tunnel scheme.

“[Using public money] is quicker and simpler than doing PFI so we have a couple of months to work out how exactly it will be done,” he said. “The Stonehenge tunnel is about the same size as the A14. I think there a lot of lessons learnt from that project that can be applied to the A303.”

Galliford Try boss Bill Hocking had previously told New Civil Engineer that the firm wasn’t interested in dealing with PF2 supported projects. Hocking said the risk transfer associated with PF2, “onerous” terms and conditions and variable track record meant the projects do not fit its business model.

The Planning Inspectorate is set to rule on detailed plans for the A303 Stonehenge Tunnel later this month.

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Readers' comments (2)

  • What a waste of money. How on earth can it be justified economically?

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  • The taxpayer would be paying under a PFI too. Just that this time it comes directly from HMG rather than via a plethora of banks, lawyers and accountants. Given that HMG can borrow more cheaply than almost anyone else, I suspect the only losers will be the aforesaid banks, lawyers and accountants.
    Value of the whole project notwithstanding of course.

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