Earlier this month the County Council revealed that the Ely Southern Bypass is £13m over budget. In fact, it’s £21m over its original budget, of £28m. That’s £21m the County Council will have to borrow to complete the project.
Few would claim the bypass isn’t needed. The low bridge and level crossing at the north end of Ely station have long been a cause of concern. The question is whether the councils can actually afford the bypass.
This loan will be repaid out of annual income, which is already too little to support essential public services many depend on. Annual repayments will start at £1.1m, more than the County Council sought to save by closing children’s centres (£0.9m). The County Council already has a budget gap of £4.3m to fill this year, so what additional service cuts must now be made?
Councillors were impatient to see the project delivered, so opted for faster delivery over spending more time to establish more accurate project costs. But, extraordinarily, they failed to agree a contingency to cover the inevitable increase in costs. The internal audit review must answer how it was prudent for the council to pursue a contract strategy that seems to incentivise bidders to underbid, in the certain knowledge they will be able to claw back any overspend (even if not their usual profit margin); and then to proceed with no contingency allowance.
Bizarrely, the senior project officer claimed that councillors should be happy that the true cost was not established sooner, because the Department for Transport might have considered the project too poor value, and not contributed £22m towards it. It seems that deceiving DfT is fair game.
This could happen again, and soon. The County Council has begun a project to build a bridge over the railway at King’s Dyke between Peterborough and Whittlesey. The contract cost for that too is uncapped to facilitate quicker delivery.
The Combined Authority and Greater Cambridge Partnership have many more large infrastructure projects in the pipeline. We should be extremely wary of funding these from council borrowing not covered by new income streams.
This article was first published in the Cambridge Independent on 25 April 2018.