Funding concerns for the £1.6bn Stonehenge tunnel and £6bn Lower Thames Crossing (LTC) have been raised by MPs due to the government’s “lack of a clear plan” for what will replace the scrapped PF2 funding model.
The concerns were raised in a Public Accounts Committee rail management and timetabling report which has been released this week.
The two mega projects were set to be partly funded using the private financing PF2 model. However, the model was scrapped by chancellor Philip Hammond in last year’s autumn Budget.
As the projects were due to be privately funded, they were left out of the Department for Transport’s (DfT) £25.3bn draft Road Investment Strategy 2 (RIS2 – which runs from 2020 to 2025), published only a day after the PF2 deals were scrapped.
Speaking to New Civil Engineer just after the announcement of the axing of the PF2 deals in November last year, Highways England chief executive Jim O’Sullivan confirmed that both schemes would now be publicly funded.
However, the committee said that, although the final RIS2 and budget was not due to be published until the end of this year, the DfT had now confirmed that the two schemes would not be included in it.
“The department [DfT] confirmed that it remained fully committed to these ‘vital projects’, but that the Stonehenge tunnel and LTC ‘sit outside’ the funding earmarked for the second Road Investment Strategy,” said the committee.
“The department told us that it understood that Treasury supported its broad spending plans for the second strategy period and the department’s aim to continue with the Stonehenge tunnel and LTC.”
On this basis, the committee said that the DfT believed the Treasury would provide funding for the project to replace the lost funding through PF2.
But the committee said it was “not convinced” by the assurances given.
“We are not convinced by assurances that the department and Treasury are fully committed to these projects without more detail on the alternative funding models that are being developed,” it said.
The committee is now urging the government to outline the range of financing structures available to fund the two schemes within three months and the impact they will have on the £25.3bn (RIS2) budget.
While O’Sullivan said in November that alternatives to the private financing model were unlikely to in place in time to be used on the two schemes, “it would be good for the market if we have some sort of decision by January”.
No FP2 replacement scheme has yet been announced by the government.
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