Ministers twice increased the Government’s exposure to losses under the Garden Bridge project against the advice of officials, a National Audit Office (NAO) investigation has revealed.
The NAO has published its report into the Department for Transport (DfT)’s funding for the controversial project to build a footbridge across the Thames, including its pledge to underwrite cancellation liabilities incurred by developer the Garden Bridge Trust.
An artist's impression of a bridge that may not be built
The report sets out how the initial Government decision to commit £30m funding for the bridge was made by then chancellor George Osborne without the involvement of the DfT, which then concluded that there was a significant risk that the bridge ‘could represent poor value for money’, but went ahead anyway.
Although the DfT initially imposed a cap on the amount of its funding that could be used for pre-construction activity, which is more risky, it ‘subsequently relaxed this requirement on three separate occasions, despite considerable uncertainty as to whether the Bridge would be built’.
DfT officials advised ministers against increasing the Department’s exposure for both the second increase and the third, which involved an agreement to underwrite cancellation liabilities of up to £15m for a limited period until September 2016.
On that occasion, DfT permanent secretary Philip Rutnam sought a ministerial direction instructing him to increase the department’s liabilities against his advice. This instruction was given by the then transport secretary, Patrick McLoughlin.
Although the DfT reduced the amount it was willing to underwrite to £9m in August, reducing its total exposure from £28.5m to £22.5m, it also agreed to extend its guarantee period indefinitely.
The NAO report warns: ‘There remains a significant risk that the project will not go ahead.’
Meg Hillier MP, chair of the Commons Public Accounts Committee (PAC), which oversees the NAO, said: ‘It worries me that whenever the Garden Bridge Trust runs into financial trouble, the Department for Transport releases more taxpayers’ money before construction has even started.’
‘If the project collapses, taxpayers stand to lose £22.5 million. If it goes ahead, who is going to pick up the bill to maintain it?’
The NAO report also sets out how the DfT provided its funding through an increased grant to Transport for London (TfL) after the then mayor, Boris Johnson, also agreed to provide £30m in funding. It says this ‘left the Department with limited oversight of its support to the Trust’.
The NAO pointed out that it does not audit TfL or the Trust. However, last month Mr Johnson’s successor, Sadiq Khan, asked Dame Margaret Hodge, a former PAC chair, to carry out an inquiry into how public money has been spent on the project.
The DfT has published Mr Rutnam’s letter to Mr McLoughlin, dated 24 May 2016 and Mr McLoughlin's subsequent ministerial direction letter.