O'Sullivan 'confident' on Stonehenge cost but warns over funding impasse

11/06/2019
Chris Ames

The most senior officials at the Department for Transport (DfT) and Highways England have warned the Treasury not to delay the mutli-billion funding decision for the Stonehenge tunnel.

The call came at a hearing of the Commons Public Accounts Committee (PAC), where DfT officials called for the cash for both the tunnel and the Lower Thames Crossing scheme to be provided in addition to the £25.3bn budget for the 2020-25 Road Investment Strategy (RIS 2).

Last month the National Audit Office (NAO), which reports to the PAC, pointed out that although the Government has repeatedly stated it is committed to the Stonehenge tunnel, the scheme is currently unfunded after the chancellor banned the private finance model that the Treasury had previously told it to use.

The same situation currently exists with the roads for the new crossing between Kent and Essex.

The DfT's permanent secretary, Bernadette Kelly (pictured below), said the department ‘will be making a strong case for the schemes to be funded outside the RIS 2 funding envelope’.

Highways England chief executive Jim O’Sullivan said a total of about £3bn to £3.5bn extra was needed for the two schemes.

In relation to Stonehenge, he said: ‘We have made it clear to the department that we need clarity on the funding before the end of the year.

‘We need clarity for two reasons. First, it is an international market for tunnelling and we have to keep the market engaged and interested. We need to go to the market with an engagement notice towards the end of the year.

‘Secondly, it is almost impossible to prepare a [Development Consent Order] without funding clarity.’

He added: ‘The only security we have at the moment is that we have £20m to develop the scheme…for this year. We have advised Treasury that we need another £50m next year, but we also need certainty of funding by the close of this calendar year. Highways England has no understanding as to where the funding is coming from.’

Sir Geoffrey Clifton-Brown MP asked how Mr O’Sullivan’s need for a decision this year fitted with a recent suggestion from the chief secretary to Treasury that the three yearly spending review might not be this year.

Ms Kelly said that although such a delay was not the formal Government position, ‘a one-year settlement is not out of the question’.

She added: ‘If it were, we would need to have a conversation with the Treasury about whether we ask Highways England to continue to make progress on the scheme to the same timeframe on the understanding that it would be funded.

‘We would need to take a separate decision about it, and that is exactly the conversation we would engage the Treasury in, which is: if we want this scheme to continue, and to continue in a sensible and efficient way to the current project timeframe, we cannot wait another year, or however long it takes to carry out a spending review.’

Mr O’Sullivan told MPs that nearly £1m costs preparing for private financing of the Stonehenge scheme will be lost.

However he told MPs that although the NAO report disclosed that the scheme could cost up to £2.4bn: ‘We intend to build it for £1.7bn.’

'Since we worked on this report, we are now even more confident of the costs. Some of the risks that are included in that £2.3bn/£2.4bn number we now know will not materialise, or they have become even more unlikely to materialise. We think that £2.4bn number is becoming less likely, as time goes by,’ he said.

Asked whether he was confident the surveys Highways England has now done are sufficiently complete to ensure it will not find any surprises that will considerably increase the cost, Mr O’Sullivan replied directly: ‘Yes.’

Speaking to Highways after the hearing, Ms Kelly and Mr O’Sullivan both defended the decision not to extend the tunnel at a cost of £540m so that its western portal is outside the World Heritage Site, as suggested by the UNESCO World Heritage Committee.

Ms Kelly said: ‘Firstly I think they might be asking for rather more than that and, secondly, what we are trying to do is to get a scheme that balances affordability, value for money and maximum heritage benefits.

‘I think that’s the scheme we’ve got. I think if we spent another £500m on it we’d have a much worse [benefit cost ratio] and value for money and we would have real affordability problems. We are trying to get this balance right.’

Mr O’Sullivan added: ‘And moving that portal outside the World Heritage Site carries its own difficulties. There are other important barrows and archaeological features outside the World Heritage Site. So we took those into our consideration.

‘And the other thing is the topography is different and not necessarily a simple place to put a tunnel through.’

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