MPs have called for clarity over funding for two major road projects after the Government confirmed that the schemes ‘sit outside’ the second Road Investment Strategy (RIS 2).
The Department for Transport (DfT) has admitted that it does not yet have a funding solution for the muliti-billion pound Stonehenge Tunnel and Lower Thames Crossing schemes.
The Public Accounts Committee said it is concerned that the Treasury and the DfT's ‘lack of a clear plan’ for what will replace PF2 (private finance) funding for the projects, ‘risks squeezing funding already allocated elsewhere.'
An entrance to the proposed Stonehenge Tunnel
MPs pointed out that the DfT has delayed some road projects that should have started before 2020, ie under the current RIS, reducing the budget available for new road projects between 2020 and 2025.
They said: ‘Funding available for new projects over this period will be further squeezed if the A303 Stonehenge tunnel and Lower Thames Crossing projects are funded from this budget.'
The two mega projects were previously to be full or part-funded through PF2 but chancellor Philip Hammond announced at last year’s Budget that it would no longer use PF2 for new projects. At the same time, he announced that Highways England's budget for RIS 2 would be £25.3bn.
In its report, the committee said that the DfT had ‘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’.
It added: ‘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 Department believed that Treasury would provide funding for these projects to replace lost funding through PF2.’
Permanent secretary Bernadette Kelly had told the committee in a letter that the DfT’s ‘expectation is that public funding will need to be agreed as part of the spending review’.
MPs said: ‘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.’
A DfT spokesperson said: 'We’re fully committed to both the Lower Thames Crossing and the A303 upgrade. Development is continuing as planned and the business cases will be considered this year.
‘The schemes were not being progressed just because of a particular financing route, the funding arrangements will be considered in due course.’
MPs said that within three months, the DfT and Treasury should write to the Committee ‘clearly outlining the range of financing structures available to fund the A303 Stonehenge tunnel and Lower Thames Crossing projects, how this will affect the budget of £25.3bn for RIS2 funding, what the effect will be on other road projects in RIS2 and how it will appraise the cost and risk implications of these options to protect the public finances over the long-term’.
The MPs said: ‘The Department told us that it expected to finalise this second strategy in 2019 and was not able to provide a figure for the amount of funding that would be available for new enhancements to the road network. It did, however, state that it expected around 40% of the projects that would now be completed in the second strategy period would have started prior to 2020.’