Chair of Public Accounts Committee warns of another ‘Kids Company fiasco’ after damning report by official spending watchdog
The National Audit Office (NAO) report examining the Department for Transport’s (DfT’s) initial decision to provide £30 million of grant funding to the Garden Bridge Trust found that this sum was provided following a commitment from then Chancellor George Osborne and despite the DfT’s conclusion that there was ‘a significant risk that the Bridge could represent poor value for money’.
The report also found that transport ministers had repeatedly relaxed a cap on the amount of its funding that could be used for pre-construction activity following requests from the Trust, twice against the advice of senior civil servants.
The NAO, which did not look at the separate £30 million provided by Transport for London towards the Garden Bridge, concluded that the DfT now stands to lose up to £22.5 million of taxpayers’ money should the project be cancelled.
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 £22.5 million [of DfT funding]. If it goes ahead, who is going to pick up the bill to maintain it?
‘I hope the government learned its lesson from the Kids Company fiasco, when for years it bailed out the charitable trust every time it came begging.’
The NAO noted that the DfT was not involved in the decision to provide central government funding to the project and that this had been a commitment made by Osborne to then London mayor Boris Johnson.
The AJ first revealed letters between the two men in July 2015 following an FOI request including the fact that Osborne had urged Johnson to make TfL’s £30 million contribution a grant rather than a loan.
The report also said that the DfT’s decision to provide its £30 million contribution through an increase in its block grant to TfL left it with limited oversight of its financial support because this effectively put TfL in charge of the full £60 million contribution from the taxpayer.
The NAO also expressed serious doubts that the Garden Bridge would be built and also fears that further public bail-outs would be made, given a ‘pattern of behaviour’ whereby government repeatedly agreed to requests from the Trust to release further funding when pre-construction challenges were encountered.
A spokesman for the NAO said: ‘There remains a significant risk that the project will not go ahead. The Trust has still not secured the land on the South Bank for the Bridge’s south landing, which has affected the timetable.
‘The main contractor has been put on standby and construction is now expected to begin in the spring of 2017, approximately 18 months later than planned. In terms of risks to affordability, the Department’s internal audit report identified a funding gap between the project’s cost and levels of private investment of as much as £75 million.’
Labour London Assembly member Tom Copley said the report vindicated repeated criticisms of the Garden Bridge as a ‘Boris Johnson vanity project’ and called on his successor to scrap it.
He said: ‘There was always a huge question mark hanging over the appropriateness of allocating TfL funds to a project that provides no real transport benefits. Instead of listening to these concerns the former Mayor and his Westminster colleagues chose to plough ahead with this flawed project.
‘The first step to assuring that no further public money is wasted on this shambles is a firm refusal from the new Mayor to sign the maintenance guarantee.’
Fellow Garden Bridge critic and Lib Dem Assembly member Caroline Pidgeon, Liberal Democrat London Assembly Member, said the report showed how the DfT had had its ‘arm twisted’ by Osborne.
‘From the very outset personal interests overcame serious concerns about value of money for the taxpayer,’ she said. ‘Very large amounts of central government money has been thrown at this project yet there remains a chance that the Garden Bridge Trust might still need to be bailed out.’
The cost of the Garden Bridge rose from £175 million to £185 million over the summer.
In a statement, the Garden Bridge Trust said it welcomed the NAO’s scrutiny and was creating ‘a visionary project’
A spokesperson for the Trust added that it had made good progress ‘in discharging nearly all its planning conditions’ as well as completing pre-construction work and raising almost £70m of private money with £56 million still to raise.
‘The Trust has not and is not asking for additional funding,’ the spokesperson added. ‘We are grateful for the support of both the Government and the Mayor of London as we embark on raising the final private funding.’
Transport minister Lord Ahmad said the DfT would ‘consider the NAO’s findings carefully’.
He said: ‘The government remains supportive of the Garden Bridge project and ministers took into account a wide range of factors before deciding whether or not to make funding available.
‘The taxpayer, however, must not be exposed to any further risks and it is now for the trust to find private sector backers to invest in the delivery of this project.’
A spokesperson for London mayor Sadiq Khan said: ‘Margaret Hodge’s review into the Garden Bridge is looking in close detail at the public money being spent on the project, and will take into account the findings of the NAO report.
‘Sadiq supports the Garden Bridge but he is absolutely clear that no new London taxpayers’ funds should be committed to the project, and he is determined that the project proceeds with higher standards of accountability and transparency.’