UK Politics

M25 scheme may have wasted £1bn - public accounts MPs

Traffic on M25
Image caption Progress has been slow on the M25 widening project

A project to widen two stretches of the UK's busiest motorway could have wasted £1bn of public money, MPs have said.

The Highways Agency gave poor cost estimates for the M25 scheme and did not look at possible cheaper alternatives, the public accounts committee found.

The MPs also questioned why it had taken nine years to sign a contract with a private company to do the work.

But the agency said the project was progressing on time and under budget.

It covers 22 miles (35km) between junction 16 and junction 23 of the M25, in Buckinghamshire, Hertfordshire and Essex.

'Technical error'

The agency's cost estimates for a 30-year, £3.4bn private finance contract for road-widening had been "poor", the committee said.

It expressed concern that the invitation to tender for the contract had excluded "hard shoulder running", in which drivers are allowed to use the hard shoulder at peak times.

The committee's chairman, Labour MP Margaret Hodge, said: "The Highways Agency's mishandling of the project to tackle congestion on the M25 could cost the taxpayer an extra £1bn.

"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."

She added: "The costs of the widening project have also been driven up by 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.

"This delay exposed the project to the credit crisis, resulting in £660m of extra financing costs. And the advisers upon whom the agency spent an excessive £80m would have benefited from the drawn-out procurement."

'Learning lessons'

Roads minister Mike Penning said: "This government is driven by the need to get value for money for taxpayers so I welcome this report. It is another example of Labour costing taxpayers dearly.

"I am determined to learn the lessons of the report and we will act on its recommendations."

Highways Agency chief executive Graham Dalton said: "We note the conclusions reached by the public accounts committee and will act on its recommendations.

"Meanwhile, widening of the M25 in Buckinghamshire, Hertfordshire and Essex is progressing to time and under budget and will be completed before the opening of the Olympic Games in summer 2012."

Campaign for Better Transport roads and climate campaigner Richard George said: "It is great people are waking up to just how much money the Highways Agency wasted on this deal.

"But the problem goes much wider than the M25. We simply cannot afford to give the agency any more blank cheques to spend on ill-considered road-building plans."

Professor Stephen Glaister, director of the RAC Foundation, said poor procurement decisions seemed to be "endemic" across government.

"Next time fuel duty rises drivers will know why - to meet government costs which shouldn't have been incurred in the first place," he said.

"When the wrong decisions are made it is the tax payer who foots the bill. But for drivers, frustration will stem as much from the time it took to get this project underway as how much money was wasted. Years of needless traffic jams created misery for those caught up in them."

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