The Public Accounts committee of the House of Commons has issued a damning report on the way that the Highways Agency managed the widening of the M25.
In May 2009, the Highways Agency (the Agency) signed a 30-year private finance contract for widening two sections of the M25 motorway, and maintaining the entire 125 mile length of the road, including the Dartford Crossing, and 125 miles of connecting roads and motorways. The contract has a present value cost of £3.4 billion. The Agency mishandled this project to address congestion on the M25 at a potential extra cost to the taxpayer of around £1 billion.
The committee found that the costs of the widening project escalated over the nine years it took to conduct the procurement process, from the first commissioning of consultants in 2000 to the signing of the private finance contract in May 2009.
The delay meant that the deal was not signed until after the credit crisis, resulting in £660 million of extra financing costs. The committee also found that £80million was spent on consultants throughout the course of the project.
Thurrock MP Jackie Doyle-Price who is a member of the committee said,
“We believe that the way the Highways Agency has mishandled this scheme could have cost the taxpayer an additional £1billion pounds.
We know that much needed improvements at Junction 30 of the M25 have been postponed due to lack of finance. More efficient use of that money could have funded this important project. As it stands we have greater capacity as a result of the widening scheme, only for the traffic to end up at a bottleneck at the Dartford crossing.
“Overall this deal has delivered very poor value for money for the taxpayer.”
The committee also criticised the decision-making process which ruled out hard shoulder running as an alternative to the widening scheme without full assessment of the costs.
The Rt Hon Margaret Hodge MP, Chair of the Committee of Public Accounts, said:
“The Agency should not have focused just on widening but also have given proper consideration to a much cheaper alternative, hard shoulder running. A private finance project intended to transfer risk to the private sector should not have restricted innovation by ruling out this alternative solution.
“The decision to stick with widening was also substantially influenced by a technical error in the Agency’s cost estimates. Had the error not been made, hard shoulder running would have been shown to be the cheaper option.”
Jackie Doyle-Price added, “our enquiry raises serious questions about how the Highways Agency has managed this vital project. The Highways Agency needs to be subjected to more scrutiny about how they spend our money.”