New approach on funding 'vital to road and rail programmes': Promises for building projects do not clarify where the money will come from. Michael Harrison reports

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The Independent Online
The Government's pledge to stimulate economic growth through a road and rail-building programme will depend on a radically different method of funding, involving a mix of private and public money, construction experts warned yesterday.

They fear that unless ministers agree to such a change, most of the projects will never see the light of day.

At least 15 large projects costing billions of pounds are under discussion or in the pipeline but few are guaranteed funding.

They range from the high- speed Channel tunnel rail link and the Crossrail between Liverpool Street and Paddington stations in London to a toll motorway around Birmingham and a 200km (124 mile) rail metro system for the West Midlands.

Outlining his new policy for growth, John Major indicated that public spending on capital projects would be protected while the private sector would be free to finance and build schemes that would conventionally be financed publicly.

But how this will be achieved is not clear, given the tight constraints on public expenditure, the enfeebled state of much of the contracting industry and the dearth of funds available from banks.

John Fletcher, main board director of business development at the construction group Trafalgar House, said: 'I cannot see the Government putting up huge sums to fund the projects because it simply hasn't got the money and the private sector is not going to stump up everything because the sums don't work out.

'If, however, there is a change of attitude towards mixed funding of infrastructure projects, then that would be a real step forward. There are a whole host of projects . . . (that) could move forward with mixed funding.'

Mr Major's resolve is about to be tested on two fronts. In December, British Rail will tell the Department of Transport that the Channel tunnel rail link can only be built if pounds 2bn of the pounds 3bn capital cost is met by the taxpayer.

Similarly, ministers have been told privately that the proposed pounds 1bn western orbital toll road around Birmingham will need some public funding.

Under current Whitehall plans, however, both projects are earmarked as private sector schemes. Unless ministers change their minds, neither is likely to go ahead.

Among the large rail projects identified, the one most likely to proceed is the pounds 1.6bn extension of the Jubilee line to London's Docklands. Between 1992 and 1995 pounds 1.2bn has been set aside for the extension in public expenditure. Even here, however, progress is dependent on pounds 400m from the private sector.

The pounds 1.7bn Crossrail between Paddington and Liverpool Street, a joint venture between BR and London Underground, was given the go-ahead two years ago and pounds 200m has been set aside for preparatory work. But construction is not due to start until 1995 and no funds have yet been earmarked for building the link.

Beyond these, the other rail schemes under consideration have a less certain future. The first phase of the Midlands Metro is scheduled to be a 21km (13 mile) line between Birmingham and Wolverhampton costing pounds 80m. But there is no money in this or next year's Department of Transport budget for the scheme.

BR, likewise, has no funds to make its planned 20 per cent contribution to the pounds 280m express link from Paddington to Heathrow. BAA, the owner of Heathrow, says the line will still open in 1997 but it is seeking other sources of private funding.

As far as the roads programme is concerned, the Department of Transport has identified nine road and river crossings that might be suitable for private funding. Tenders have only been awarded for two of these - a second bridge across the Severn and the Birmingham Northern Relief Road, a pounds 450m toll motorway stretching 43km (26.7 miles) around the north-east perimeter of Britain's second city.

Government plans for a privately-funded toll motorway running parallel to the M6 from Birmingham to Manchester have been abandoned. The so-called east coast motorway, a 230-mile stretch from Teesside to the A11 at Newmarket, is nothing more than a paper project for which there will be no public funding. Instead, the DoT has decided to upgrade more of the A1 to motorway standard under its pounds 12bn roads programme.

The programme includes two new roads in Essex between Chelmsford and Rayleigh and the M25 and a short link between the M1 and A1 at Scratchwood in north London. But the status of all three is uncertain as the department is also contemplating private funding.

Proposals are also being examined for three new estuarial crossings - of the Mersey, the Tamar and the lower Thames, east of the M25. None are near tender stage, however.

Of the various road and rail schemes upon which Mr Major's vision of recovery through growth depends, few are assured of being built. Still less is it clear where funds would come from.

'I am sceptical because we have all been here before,' Mr Fletcher said.

(Photograph omitted)

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