National Highways has yet to formalise a re-profiling of spending and delivery of the Lower Thames Crossing (LTC) following delays to the scheme's launch date.
The funding of the £8bn project was a significant issue for regulator the Office of Rail and Road’s (ORR) annual assessment of the government-owned company, published in July, which warned of the need to address delays to some key projects and subsequent forecast underspends. It told National Highways to address these concerns.
The annual assessment noted a predicted underspend of £551m on a number of key schemes but this did not include the expected effect of the 12-month delay on the LTC caused by the need for Highways England (as the company was known then) to resubmit its planning application.
The document stated: ‘We are concerned that whilst the delay was known in November 2020, Highways England was still evaluating the RP2 [Roads Period 2] and total outturn impact at year-end.’
It said the underspends relate to the cost of work on other schemes deferred from RP2 to RP3, caused by planning and governance delays.
Writing for Highways in July, ORR chief executive John Larkinson said that delays, ‘coming on top of a £363m forecast total cost increase on the Lower Thames Crossing project, all mean increasing pressure on funding needed for the next road period’.
Last week the ORR told Highways that it expects the position on the LTC scheme to become clearer after the Comprehensive Spending Review this week.
In addition to delays in delivering the scheme, which could run into RP4, and increased costs, the funding profile for the LTC has been complicated and the decision to publicly finance the link roads for the scheme, which were to have been privately financed.
Highways England’s Draft Strategic Business Plan in 2019 included £2.267bn funding in RP2 and £1.244bn in RP3 for the tunnel and approach roads elements.
When Highways England published its Delivery Plan for 2020-25 in summer 2020, core RP2 funding for the LTC had increased by around £420m, with an extra £1.7bn envisaged for RIS3.
In addition to this, a specific portion of its central risk reserve was ring-fenced for the LTC, worth £185m during RP2 and expected to be £175m in RIS3.
The ORR told Highways that while these changes were largely a result of the decision to replace private funding of the link roads with direct funding, they also reflected other updates to the project’s cost estimate and schedule, as well as increased risk funding.
