Department of Transport boss warned ministers about risk Garden Bridge posed to taxpayer five months ago

Getting a bit sick of this artist's impression to be honest, lads. Image: Heatherwick.

Since April 2012, Philip Rutnam has been the permanent secretary – that is, the head – of the UK Department for Transport (DfT). In that capacity, he's also the “accounting officer”, responsible for ensuring that the department achieves good value for money.

If he's worried that a project will cost too much money, or provide too little benefit, he's entitled to write to his minister to request direction. In this way he can both formally set out his concerns, and – let's be honest about this – make sure it’s not his fault if it all goes tits up.

The reason I mention all this is because, last May, Philip Rutnam did just that. The letter in question concerns London's proposed Garden Bridge, which will be a much loved addition to the skyline or an embarrassing waste of time and money, depending on whose side you're on.

Rutnam begins his letter by explaining why he's writing it in the first place, and how the Garden Bridge came to be DfT's problem. Chancellor George Osborne promised to commit £30m to the project in December 2013, “subject to there being a satisfactory business case for the project".

Rutnam makes clear he was always cynical – “After examining the business case for the project in summer 2014, my judgment was that the transport benefits of the project were limited and came with a relatively high level of risk to value for money”. But, he adds “on the balance of probabilities I considered that this risk was acceptable”.

The problem is that the risk kept increasing, because the amount of money DfT had to make available before construction started – money that would, if the project collapsed, be lost – kept on increasing, too. Why? Because the Garden Bridge Trust (GBT), the charity running the scheme, asked for it. Here's the relevant passage:

One important control on the DfT's contribution is a cap on the amount that can be spent prior to construction. This was originally set at £8.2m, but it has since twice been agreed to increase the cap following requests from the Garden Bridge Trust, and it now stands at a little under £13.5m.

The Trust has now asked for a further increase in its permitted preconstruction spending of up to £15m (across DfT and Tfl combined). This is to underwrite the potential cancellation liabilities that it now will face if the project does not proceed. The Trustees have been advised that under charity law they could become personally liable for the Trust's unmet financial obligations if they have failed to manage risk prudently.

So – to protect the GBT’s trustees, the trust asked DfT and Transport for London (TfL) to underwrite their liabilities. Except that TfL then asked to be excused, too:

Following recent discussions with the Mayor of London, DfT has been asked to increase its pre-construction exposure by up to £15m to underwrite the potential cancellation liabilities.

And, Rutnam warned, for all sorts of reasons – GBT’s failure to acquire land on the South Bank, the need to raise another £40m in private donations – “the probability of these liabilities materialising is not negligible”.

The result:

If we increase our pre-construction commitment as requested and the bridge does not proceed, there would be cancellation costs to the public sector of up to £15m. This is in addition to sunk costs of around £13.5m committed by DfT and £22m by TfL. In this scenario, around 90% of the cost of the cancelled bridge would have been provided by the public sector funders, and DfT specifically would have provided up to a half of the total amount spent. In my judgment, this represents a disproportionate level of exposure for the Exchequer to the risk of failure on a charity-led project that was intended to be funded largely by private donations.

Look past the civil service jargon, and this is quietly damning. Rutnam is saying exactly what the Garden Bridge's critics have been saying since the project began: that, even though its transport benefits are limited, the cost of the project was  falling disproportionately on the taxpayer.


And yet, ministers decided the project would still go ahead. Go figure.

We approached the Garden Bridge Trust for comment. It said it couldn't comment on internal government communications.

This morning, the National Audit Office, a government spending watchdog, published its long-awaited report on the  project. It found that there is significant risk the bridge would never be built, and the DfT stood to lose as much as £22.5m if that happened.

And if the project isn't cancelled?

If the project continues, it is possible that the government will be approached for extra funding should the Trust face a funding shortfall. The project has faced cost increases and delays to the schedule. The pattern of behaviour outlined in this report is one in which the Trust has repeatedly approached the government to release more of its funding for pre-construction activities when it encounters challenges. The Department, in turn, has agreed to the Trust’s requests.

The Garden Bridge Trust is commenting on this one. Here’s the first paragraphs of its statement:

The Garden Bridge is a visionary project, connecting the South Bank with the North Bank, Covent Garden, the city and beyond.  It is the first of its kind, a pedestrian walkway through a garden of 270 trees, hedging, shrubs and plants.  It is an asset funded primarily by the private sector and bequeathed to London, enabling 9,000 commuters each weekday to cross the Thames without having to share a Bridge with traffic.  It will be a fantastic place for people to visit for free, 365 days a year.

It is right that there is scrutiny of the project because it involves public money and transparency is good for us at an uncertain time.

Draw your own conclusions.

Jonn Elledge is the editor of CityMetric. He is on Twitter, far too much, as @jonnelledge.

Want more of this stuff? Follow CityMetric on Twitter or Facebook.

 
 
 
 

More than 830 cities have brought essential services back under public control. Others should follow

A power station near Nottingham: not one owned by Robin Hood Energy, alas, but we couldn't find anything better. Image: Getty.

The wave of cities worldwide rejecting privatization is far bigger and more successful than anyone thought, according to a new report from the Transnational Institute, Reclaiming Public Services: How cities and citizens are turning back privatisation. Some 835 cities in 45 countries have brought essential services like water, energy and health care back under public control.

The persistent myth that public services are by nature more expensive and less efficient is losing its momentum. Citizens and users do not necessarily have to resign to paying increasingly higher tariffs for lower standard services. The decline of working conditions in public services is not an inevitability.

And the ever larger role private companies have played in public service delivery may at last be waning. The remunicipalisation movement – cities or local authorities reclaiming privatised services or developing new options – demonstrates that cities and citizens are working to protect and reinvent essential services.

The failure of austerity and privatisation to deliver promised improvements and investments is part of the reason this movement has advanced. But the real driver has been a desire to meet goals such as addressing climate change or increasing democratic participation in service provision. Lower costs and tariffs, improved conditions for workers and better service quality are frequently reported following remunicipalisation.  Meanwhile transparency and accountability have also improved.

Where remunicipalisation succeeds, it also tends to inspire other local authorities to make similar moves. Examples are plentiful. Municipalities have joined forces to push for renewable, climate-friendly energy initiatives in countries like Germany. Public water operators in France and Catalonia are sharing resources and expertise, and working together to overcome the challenges they meet.

Outside Europe, experiments in public services are gaining ground too. Delhi set up 1,000 Mohalla (community) clinics across the city in 2015 as a first step to delivering affordable primary health care. Some 110 clinics were working in some of the poorest areas of Delhi as of February 2017. The Delhi government claims that more than 2.6m of its poorest residents have received free quality health care since the clinics were set up.


Local authorities and the public are benefiting from savings too. When the Nottingham City Council found out that many low-income families in the city were struggling to pay their energy bills, they set up a new supply company. The company, Robin Hood Energy, which offers the lowest prices in the UK, has the motto: “No private shareholders. No director bonuses. Just clear transparent pricing.”

Robin Hood Energy has also formed partnerships with other major cities. In 2016, the city of Leeds set up the White Rose Energy municipal company to promote simple no-profit tariffs throughout the Yorkshire and Humberside regions. In 2017, the cities of Bradford and Doncaster agreed to join the White Rose/Robin Hood partnership.

Meanwhile, campaigners with Switched on London are pushing their city to set up a not-for-profit energy company with genuine citizen participation. The motivations in these diverse cities are similar: young municipal companies can simultaneously beat energy poverty and play a key role in achieving a just and renewable energy transition.

Remunicipalised public services often involve new forms of participation for workers and citizens. Remunicipalisation is often a first step towards creating the public services of the future: sustainable and grounded in the local economy. Inspiration can be found in the European towns and villages aiming for 'zero waste' with their remunicipalised waste service, or providing 100 per cent locally-sourced organic food in their remunicipalised school restaurants.

Public services are not good simply because they are not private. Public services must also continuously renew themselves, grow, innovate and recommit to the public they serve.

The push for remunicipalisation in Catalonia, for example, has come from a movement of citizen platforms. For them, a return to public management is not just an end in itself, but a first step towards the democratic management of public services based on ongoing civil participation.

Evidence is building that people are able to reclaim public services and usher in a new generation of public ownership. The momentum is building, as diverse movements and actors join forces to bring positive change in communities around the world.

You can read the Transnational Institute report, “Reclaiming Public Services: How cities and citizens are turning back privatisation”, on its website.