When chancellor of the exchequer Rachel Reeves expressed her support for the Lower Thames Crossing she spoke with a forked tongue. She supported the idea of the project and wants to see it go ahead, but is not prepared to stump up the £9bn that is (or was, at last count) the estimated cost.
She said of the proposed easterly Kent-Essex link road: “To drive and deliver value for money for taxpayers we are exploring options to privately finance this important project.”
The Department for Transport confirmed that both its own officials and National Highways had now begun assessing options for privately financing the project.
It could be that they are just seeing if they can squeeze a few bob out of a utility company to run some pipes or cables through the tunnel.
However, as an estuarial crossing, the Lower Thames Crossing is an absolute sitter for proper private finance. There is already a commitment from the government that it will have tolls, so a genuine revenue stream is there, unlike the bogus revenue streams that were manipulated for most private finance initiative projects and led to crippling 30-year costs for revenue budgets just to get projects off capital expenditure balance sheets.
The Queen Elizabeth II Bridge at Dartford and the Second Severn Crossing carrying the M4 between England and Wales stand as proof of concept. Unlike so many PFI prisons and hospitals, they replenished the nation’s coffers rather than depleted them.
With the right terms, any investor would jump at the chance to take over the Lower Thames Crossing project. The £9bn price tag (if that be the real cost) is a hefty capital outlay but so long as the toll revenue is guaranteed for a sufficient length of time, an eventual healthy payback seems inevitable.
It may require the existing Dartford crossings (two tolls and a bridge linking the M25 across the Thames) to be thrown in as part of the mix, enabling a single operator to offer dynamic pricing perhaps, to manage traffic flow. That way, the payback would be quicker. On expiry of the term contract, once a suitable profit has been made, the government can choose either to lift the tolls, as it did on the M4, or lie and cheat, like Tony Blair did on the Dartford Crossing. There had been a commitment that the Dartford tolls would be lifted once the concessionaire, Trafalgar House, got back its money (plus gravy). But the Transport Act 2000 reversed this, and the revenue reverted to the Treasury so a precedent has been set that would prove useful to future governments.
Unfortunately for Rachel Reeves, however, rational private investors are unlikely to be interested in a project about which the government talks fondly but keeps kicking into the long grass.
National Highway’s application for a development consent order (DCO) for the Lower Thames Crossing project was accepted for consideration by the Planning Inspectorate (the statutory planning process that such major projects must go through) in October 2022. An earlier attempt in 2020 was thrown out. National Highways was not going to make that mistake again; the 2022 application ran to nearly 360,000 pages.
The Planning Inspectorate’s report was submitted to the transport secretary, Mark Harper at the time, on 20th March 2024. Under the Planning Act 2008, he had until 4th October to either sign or reject the DCO application.
But by then a new Labour government was in place. (Harper was one of the many Tory MPs to lose his seat in the July 2024 general election.) On 7th October the new transport secretary, Louise Haigh, (until becoming Kier Starmer’s fist cabinet casualty the following month) said that she was not yet ready to make a call on the controversial project. Haigh extended the deadline for making a decision to 23rd May 2025.
The Lower Thames Crossing is without doubt fiercely controversial politically, largely because of its inevitable environmental impact and likely propensity to generate more motor traffic. It is not a given that the new transport secretary, Heidi Alexander, with say yes to the project in May. Certainly National Highways says it is taking nothing for granted, and is handing out bungs to 55 local charities and planting a million trees in a bid to appease dissenters.
The government has already cancelled several large road projects – including the £1.7bn A303 Stonehenge tunnel, the £350m A27 Arundel bypass, the £390m A1 Morpeth to Ellingham dualling and the £335m A5036 Port of Liverpool access road – so it would be true to form if it scraps the Lower Thanes Crossing too. But if that is the intent, why waste resources on investigating private finance options?
Reeves says she is behind this project. It is not her decision to make, but chancellor trumps transport secretary. If she loses on this one, she would lose any remaining credibility and perhaps her job as well.
All this uncertainty is unlikely to lure private investors before that 23rd May sign off/cancellation date. The real appetite of potential investors can only be gauged if and when the DCO has been signed – after 23rd May (assuming no more kicking the can down the road).
What then?
Well, if private investors do take over the project and replace National Highways as project client, they will surely want to re-tender the project. In all previous PFI schemes, the funders have determined the contractors. Why should LTC be any different?
Lower Thames Crossing is perhaps the most shovel-ready public infrastructure project of its size – it is an over-used cliché, but apt in this case. Re-tendering would push the start date back by at least a year – and the delay would push up costs further.
And would a private sector client be quite as keen on environmental mitigation as National Highways presents itself? If the HS2 rail line has been accused of gold plating, with its £100m bat tunnel, then the Lower Thames Crossing is at least silver-plated, with National Highways’ ambition to make it “the greenest road ever built in the UK”, with all small plant powered by electricity and large plant by hydrogen, with special wildlife bridges, three miles of footpath for every mile of road, and an architectural design competition for a footbridge in Essex.
Can these commitments survive a transition to a new client, or has it all just been an extravagant waste of money for political posturing?
Three main contracting groups have been working for the past year or more on the project on an early contractor involvement (ECI) basis, specifically so that they will be able to hit the ground running the moment the DCO is signed (which is rather optimistically assuming they won’t be delayed by objectors seeking injunctions).
It was back in December 2023 that National Highways awarded a £1.34bn contract (on an ECI basis) to BMJV a joint venture of Bouygues Travaux Publics SAS and J Murphy & Sons to build what will be country’s largest bored tunnels (if the project happens). At 2.6 miles the twin tunnels will be the longest in the UK and at more than 16 metres wide (to enable three lanes of traffic) they will be among the widest in Europe.
BMJV is supported by consulting engineers Mott McDonald and Ove Arup &Partners. It saw off competition from Dragados-Hochtief JV and BFV (Bam Nuttall, Ferrovial and Vinci), who were also shortlisted for the contract.
Five months earlier, Skanska Construction UK got the ECI contract for the £450m Kent roads part of the scheme, to build four miles of new road to connect the southern portal of the tunnel with the A2/M2 in north Kent.
Other shortlisted bidders were BFV JV (Bam Nuttall, Ferrovial and Vinci Construction Grands Projets), Kier Eiffage JV (Kier Highways and Eiffage Génie Civil) and Costain
And it was more than two years ago, in January 2023, that National Highways awarded Balfour Beatty a £1.2bn contract to build the link roads in Essex – more than 10 miles, connecting the M25 at Junction 29 and the A13 with the tunnel at Tilbury. This contract includes 49 bridges and viaducts. One other bidder was shortlisted for the job – a joint venture of Kier and French contractor Eiffage.
One would hope that National Highways had the foresight to make these huge contracts watertight against project cancellation but should the project go ahead under a different client, the involvement of lawyers and a search for compensation seems inevitable.
Would BMJV, Skanska and Balfour Beatty have the appetite to go through the whole bidding process all over again, since they are already in the driving seats, or would they rather just take the compensation and go home? They are not saying at this stage. In fact, amid all the anxiety, no one is saying anything publicly.
Opening up the Lower Thames Crossing to private finance, as Reeves has done, has just added to the uncertainty surrounding the project.
There is, it seems, only one clear route out of this chaos. And that is for the contractors themselves to join forces and take charge of the project. They will need to go over the heads of National Highways (who will be threatened) and the Department for Transport (which clearly lacks the wit or would have privatised the project from the start) and take its plan straight to the Treasury. Give us the Dartford Crossing and the Lower Thames Crossing for 30 years [Dartford generates about £200m a year currently] and we will design, build, finance and operate your Lower Thames Crossing.
The contractors might even have the foresight to commission the necessary wording for the enabling legislation that would be required, tacking a paragraph onto the forthcoming Planning & Infrastructure Bill perhaps to speed things along.
Not even the combined might of Bouygues, Skanska and Balfour Beatty will be able to find £9bn down the back of their sofas, but with their experience of managing PFI projects and with the assurance of Dartford revenue from day one, it offers the simplest, cleanest and probably most cost-effective way to save the project. And Rachel Reeves.
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