End in sight for A465 Heads of Valleys but costs rise again

06/01/2025 | CHRIS AMES

End in sight for A465 Heads of Valleys but costs rise again

After 23 years, roadworks on the A465 Heads of the Valleys road in south Wales are set to be finally removed this summer, although the cost of the final stages has risen by around £250m to £1.4bn.

Work to make the road, which links Swansea to Monmouthshire, a full dual carriageway began back in 2002. Now with an end in sight the price tag has risen once again, despite claims that the financial risks ‘rest with the private contractor and not with the public purse’.

The A465 Hirwaun to Dowlais project, which is due to be completed this summer, comprises sections 5 and 6 of the A465 Heads of the Valleys programme. This last leg was described by Welsh Government officials as one of the UK’s largest and most technically challenging road projects in the UK.

The scheme will deliver 17.7km of new dual carriageway, 6.1km of side roads, more than 14km of active travel routes, 38 new culverts, 30 new bridges and 28 retaining walls, The aim is to improve accessibility, reduce journey times, provide extra resilience and reliability, and enhance road safety.

The devolved administration gave the cost of the project, which has been built under its Mutual Investment Model version of private finance, as £1.4bn. This is significantly higher than the roughly £1.1bn previously quoted.

According to its Mutual Investment Model Report 2022-2024, developers in the Future Valleys consortium will receive annual service payments (ASPs) of £38.33m over 30 years, which ‘is modelled to provide for the cost of design, build, finance, maintenance, and lifecycle of the project as fixed through the procurement’.

This amounts to £1.115bn, compared to a projected construction cost of £560m. 

However a Welsh Government spokesperson told Highways that the £1.4bn for stages 5 and 6 includes the Annual Service Payment, including non-recoverable VAT and other cost included work on side roads and contract management costs.

The ASP for the next two years averages £41.5m and this figure will ‘fluctuate slightly’ over the following 28 years due to inflation.

In December 2020, the then first minister, Mark Drakeford, told the Senedd that the Mutual Investment Model would deliver the scheme on ‘a fixed-price contract’.

He added: ‘It does provide the public with that guarantee that the amount of money that has been agreed with the company is the amount of money that will be paid, and if further costs are incurred, the risks rest with the private contractor and not with the public purse.’

On a visit to the project, cabinet secretary for transport and North Wales Ken Skates (pictured) highlighted the benefits of the scheme despite an effective moratorium on similar schemes. Two years ago the devolved administration cancelled a swathe of road schemes and set out stringent new conditions for all future schemes to meet.

He said: ‘Fixing our roads is a key priority for us. We’ve spent £1bn fixing and improving our roads since 2021, including more than £250m in the past year.

‘This project is an incredibly impressive piece of engineering and a fantastic example of how targeted investment in road infrastructure can deliver on many levels, providing jobs for the local community, improving accessibility, supporting education and skills, alongside delivering environmental benefits.

‘It’s been a complex project which has not been without its challenges, and I would like to thank everyone who has played their part in helping us to deliver one of the largest road projects in the UK.’

The privately financed project has also been criticised for its environmental impact.

In 2021 Highways revealed that the Welsh Government finessed a pledge to reassess the scheme against its ‘climate change emergency’ declaration by claiming that its increased carbon emissions would be offset by other schemes.

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