Total cost of Silvertown Road Tunnel to Londoners

Questions to the Mayor of London – answered on 10th May 2021.

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Photo of Siân Berry Siân Berry Green

What will the total cost to Londoners of the Silvertown Road Tunnel be?

Photo of Sadiq Khan Sadiq Khan Mayor of London

Investment in the Silvertown Tunnel will bring widespread benefits to London, none of which will be realised if the contract is cancelled. Suggestions that the money being spent on this scheme could be invested elsewhere are misleading and inaccurate. The scheme is funded by private finance, which simply cannot be reallocated.

Finally addressing the longstanding issues at the Blackwall Tunnel will hugely reduce - if not effectively eliminate - congestion in the area, improve air quality overall and support economic growth in east London by transforming access to cross-river public transport. The health and economic costs to Londoners of congestion at the worn-out Blackwall Tunnel are huge. The Tunnel has to be closed about 700 times a year. If it closes for even six minutes, a queue quickly extends for three miles. Around 1 million hours are wasted each year as a result, costing around £10 million in lost time for people and businesses. These roads also suffer from some of the worst air quality in London and this is exacerbated by the congestion and regular queuing. Doing nothing is not an option.

TfL awarded a design/build/finance/maintain contract to the RiverLinx Consortium at the end of 2019. RiverLinx Ltd has secured £1.2 billion in finance to cover design, construction, risk and other expenditure on the project. Only once the Tunnel has been built and is open will TfL begin to make repayments to RiverLinx. This means that TfL is not liable for additional payments for delays in the same way as more traditional construction contracts. RiverLinx will be responsible for the maintenance and renewal of the systems and equipment over 25 years. TfL anticipates that revenue received from user charging at the Blackwall and Silvertown Tunnels will more than cover annual payments to RiverLinx, which are contingent on performance. Any surplus will be reinvested in the transport network.

Even as traffic has decreased dramatically on some roads in London during the COVID-19 pandemic, congestion has continued at the Blackwall Tunnel. In fact, the Tunnel has had to be closed over 420 times since the pandemic began. This demonstrates the importance of a reliable and resilient crossing in that part of London. This vital river crossing will reduce congestion and transform cross-river public transport connections and improve some of the worst air quality anywhere in London.

Photo of Siân Berry Siân Berry Green

Thank you, Mr Mayor. Before I start, I wanted to say from the Green Group thank you for answering - for the most part - our questions really constructively this term. We have had some good discussions and influence. When I think about the previous Mayor’s attitude to scrutiny, including and especially from some of the women Members, I wanted to highlight that I appreciate the difference.

Today might not be our most agreeable session, however, because of the topic. I really wanted to focus on costs here. I have been looking over the audit report from Ernst & Young and there are three things that I want to put to you that do still worry me about the costs that Londoners might pay out for Silvertown in the end.

Firstly, on tolls, the report says there is a deficit in the toll income right up until 2040. That is around £1 million of deficit to cover until then.

Secondly, on changes to the contract, TfL has already listed two contract variations in its transparency data, both paid to RiverLinx, totalling around £10 million. These seem to be in addition to the main contract.

Thirdly, on construction risk, I am not convinced this is covered. Are Londoners liable if this tunnelling goes wrong? It is a very high-risk project, as far as I can tell. It is wide tunnel to take heavy goods vehicles (HGVs) two abreast. It is much more serious than a Tube tunnel. It could easily hit problems.

If we are liable for construction risk, variations to the contract and this tolling deficit that is in the report, what are you telling future Mayors the total bill for Silvertown is going to be?

Photo of Sadiq Khan Sadiq Khan Mayor of London

You raise a number of points, as even you would concede, in your question and so give me a chance to respond to them.

First, we are quite clear that the benefits of using this model of design/build/finance/maintain are far better than any alternatives. You will appreciate that the normal way construction is done in transport is often by TfL having to borrow and then build. Normally ‑‑

Photo of Siân Berry Siân Berry Green

Yes, but I am aware that the Department for Transport (DfT) stopped using private finance initiatives (PFI) a while ago.

Photo of Sadiq Khan Sadiq Khan Mayor of London

I am still trying to answer the first of your questions. The advantage of this type of contract is that there is an incentive by the company constructing it in the issue of maintenance because it will be in charge of maintenance for the next 25 years. Normally, in a build/construct contract, there is only the contractual incentive to make sure it is a good product. Because it is in charge of the maintenance for 25 years, there is an incentive to make sure that construction is done well. Also, you will appreciate that the contract involves design, build, finance and maintenance. The consortium is responsible for those things. Clearly, if there is a difference of opinion, it will be resolved either amicably or, if need be, through any contractual issues through the courts. I am quite clear that by the consortium being liable for the build and construction, it takes the pressure off TfL. Clearly, we will be keen to make sure the construction is done well, but there is a self-interest in the consortium doing it well because it will be maintaining it for the next 25 years.

Photo of Siân Berry Siân Berry Green

You have not, I am afraid, answered any of those three points about the tolling deficit and the potential construction risks. I notice that TfL already has capital costs of about £200 million in there. We do not know. You will not release the cancellation costs. Looking at what I have said there, if, for example, it was to run a third overbudget like Crossrail, we would be looking at £700 million in extra costs there. There is £100 million in tolling deficit. It seems to me that even now it might be cheaper for you and for future Mayors if you were to cancel it now. I have run out of time there but I --

Photo of Sadiq Khan Sadiq Khan Mayor of London

You have asserted things that are untrue. You cannot assert things that are untrue to get a clip for social media and not give a chance to respond. A number of your assertions are simply not true.

Photo of Siân Berry Siân Berry Green

There is not £200 million --

Photo of Sadiq Khan Sadiq Khan Mayor of London

Chair, I am in your hands. If Members want to use their time in asserting things that are untrue until they run out of time, I am not sure how it makes a meaningful Mayor’s Question Time, but hey-ho.

Photo of Siân Berry Siân Berry Green

OK. I will send you the three pieces of information that I have that so you can answer then.

Photo of Sadiq Khan Sadiq Khan Mayor of London

I am sure you are going to press-release me, yes.

Photo of Siân Berry Siân Berry Green

I am out of time, though. Thank you very much.

Photo of Len Duvall Len Duvall Labour

Sorry, point of order, Chair. The Green Group is not out of time, according to my timer, so the Mayor can answer the question. The Member has put legitimate questions of concern and the Mayor should be able to respond. The Green Group is not out of time.

Photo of Siân Berry Siân Berry Green

Can the Mayor answer in one word whether or not there is a tolling deficit?

Photo of Sadiq Khan Sadiq Khan Mayor of London

Chair, the idea that I will be dictated to about how many words I can use to answer a question is ridiculous. The point is the Member has had a long opportunity to make assertions that are simply untrue. The best word that I can say is ‘untrue’.

Photo of Siân Berry Siân Berry Green

OK. If you cannot answer me succinctly in more detail than that, you have signed this contract and I do not know what --

Photo of Sadiq Khan Sadiq Khan Mayor of London

Your question was longer than the time you gave me to answer.

Photo of Navin Shah Navin Shah Labour

Look, certainly the Mayor is prepared to give details but, as you are saying, because of the time taken for all of that, we will move on now to the next question.