Government watchdog warns taxpayers stand to lose £22.5m should Garden Bridge project collapse
The National Audit Office (NAO) has announced the findings of its investigation into the use of public funds to pay for one of Boris Johnson’s projects as London Mayor: the Garden Bridge.
And it’s not impressed.
Meg Hillier MP, chair of the committee of public accounts, 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 £22.5m. If it goes ahead, who is going to pick up the bill to maintain it?”
Labour MP Hillier also cautioned on the "pattern of behaviour" whereby the Trust repeatedly asked the DfT for more money when it encountered challenges, and was granted it, to the collapse of the Kids Company charity. "I hope the government learned its lesson," she said.
The investigation found that there still remains a significant risk that the project won’t go ahead as the Garden Bridge Trust charity that’s in charge of building and maintaining the bridge, hasn’t yet secured the land on the South Bank for the Bridge’s south landing. Construction is expected to begin 18 months later than planned in the spring of 2017.
The independent government watchdog has been examining the Department for Transport’s (DfT) decision to commit £30m of central government cash to the £175m proposed pedestrian bridge and garden. It also looked at the decision to increase the amount that it was willing to commit on three occasions, before construction started.
George Osborne made the initial decision to help finance the scheme (Source: Getty)
The NAO noted that the initial funding commitments to the project were made by the former Chancellor George Osborne to Boris Johnson, without the involvement of the DfT. Osborne then nominated the department to administer the government’s contribution.
While assessing the business case, the DfT concluded there was a “significant risk that the Bridge could represent poor value for money” with minimal transport benefits and uncertain tourism ones, but agreed to make the £30m contribution in spite of this.
The National Audit Office said that the department initially sought to protect taxpayers’ money by issuing a cap on the amount of its funding that could be used for pre-construction activity, but on three occasions relaxed a 2014 requirement it had issued to Boris Johnson that a maximum of £8.2m be spent on pre-construction works.
The DfT’s total exposure to pre-construction losses came to £28.5m, before it extended its guarantee period indefinitely but reduced the amount it was willing to underwrite to £9m. The NAO said this reduced the department’s total exposure to £22.5m and passed more of the risk onto private donors.
Read more: Margaret Hodge to chair Garden Bridge procurement probe
In terms of other sources of funding for the project, Transport for London (TfL) agreed to contribute £30m, while £125m was to be funded by private donations.
The Garden Bridge Trust said in a statement that it welcomed scrutiny as the project involves public money and the trust was not seeking additional funding. "The Trust confirmed in July that it has £56m to raise," it said. "It has received an investment from government of £60m which was always intended to kick-start private investment. Of this £60m investment, £20m is being treated as a loan and around the same amount will be repaid to Treasury in VAT."