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I congratulate Kate Hoey on securing the debate on this important topic. I am sorry that I am not my noble Friend Lord Ahmad, whose responsibility this is in the Department for Transport, but I understand that a meeting has been arranged and that she will be seeing him shortly.
I recognise, as do the Secretary of State and all my ministerial colleagues in the Department, that the garden bridge is a subject that divides public opinion—it is dividing opinion tonight on Benches just a few feet away from each other. Its supporters argue passionately that it will be an iconic and beautiful addition to the London cityscape, while its opponents argue that it is an unnecessary eyesore and that no public money should ever have been put into it.
Let me start by explaining why the Government decided to support this iconic and novel project in the first place. The previous Mayor of London was approached some years ago with an idea for a completely new type of bridge: a footbridge that was also a park, and a place where people could cross the river as part of their journey or stop and enjoy the surroundings and wonderful views of London and the river. The Mayor and Ministers at the time considered that this could be an innovative and iconic project for our city, but they did not—they still do not—consider that the project should be wholly funded by the taxpayer. However, they agreed to help with some funding to kick-start the project and stimulate private sector funding. The then Chancellor of the Exchequer therefore announced in the 2013 autumn statement that the Government would provide £30 million towards the project as long as the Mayor contributed a similar amount, and as long as there was a satisfactory business case to show that the project would deliver value for money for the taxpayer.
The Garden Bridge Trust and Transport for London produced a business case in early 2014, which the Department for Transport analysed carefully in exactly the same way as it does for any transport project. The analysis showed that while it was a highly unusual project and one with a wide range of possible benefit-cost ratios, there was a reasonable chance that it would offer value for money for the taxpayer. We therefore agreed to release the £30 million of funding that had been pledged by the Chancellor, but importantly we attached several conditions to our funding, including a cap of around £8 million on the amount of Government money that could be spent on pre-construction activities, which was designed to limit taxpayer exposure in the event that the project did not proceed. A requirement was also included for TfL to draw up a detailed funding agreement with the trust governing how the money would be used.
Over time and in response to requests from the trust, the cap on the Government’s exposure was increased in stages to £13.5 million as circumstances changed and as it became clear that more money was needed to get the project to the point at which construction could start. The trust then asked the Government earlier this year to underwrite the project’s potential cancellation costs. Let me be clear that that was not a request for additional funding; instead, it was a request to be able to use some of the £30 million that we had already committed to pay the project’s cancellation costs should that be necessary. Without such an underwriting guarantee, the trust said that the project could not continue. After careful consideration, the Department agreed in late May to provide a time-limited underwriting guarantee but, again, with various conditions attached, including a requirement for the trust to provide more regular reports to the Department on the status of the project and the steps that it was taking to address the risks.
Over the summer of this year, as a result of further delays to the construction timetable, the trust asked whether the underwriting guarantee could be extended beyond the September deadline. The Department agreed last month that it could, but in such a way that the risks are more fairly shared between the Government and the bridge’s private sector backers. To be precise, the Government will now underwrite £9 million of the cancellation costs, should they arise, with the private sector required to underwrite any such costs above that level. The Government therefore continue to support the project and wish it well, but we have made it clear to the trust that not only public money should be at risk should the project fail.
The challenge now for the trust is to focus its efforts on getting private sector backers to take on some of the risk. We have also reiterated that the Government have no intention of putting more than the £30 million originally pledged into the project—that is a cap.