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Tue June 18 2019

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DfT's cost benefit methodology puts Stonehenge tunnel at risk

20 May If the Stonehenge tunnel project gets the axe it is likely to have more to do with the Department for Transport's short-sighted cost-benefit methodology and Treasury u-turns than any environmental concerns.

A report frpom the National Audit Office says that the proposed road tunnel at Stonehenge may not offer value for money but it acknowledges that the heritage benefits are ‘inherently uncertain’ and it is being judged in isolation rather than as part of a wider strategic package of road measures.

The Highways England project to improve the A303 between Amesbury and Berwick Down involves building a 3.3km tunnel beneath the Stonehenge World Heritage Site.

The government’s spending watchdog says that at this early stage ‘there are risks and uncertainty around it being delivered on time and achieving the benefits government hopes it will bring’.

The Department for Transport wants the entire A303/A358 to dual carriageway by 2029 to improved links between the southeast and the southwest of England.

The Amesbury and Berwick Down section is forecast to cost between £1.5bn and £2.4bn, subject to funding approval from the Treasury and the outcome of commercial negotiations with contractors. The current most likely cost is around £1.9bn (including VAT), with completion by December 2026.

The project is only estimated to deliver £1.15 in benefits for every £1 spent, in part due to the high cost of building the tunnel. 73% of the total benefits are ascribed to cultural heritage benefits from removing much of the surface road from the World Heritage Site. However, this value is ascertained by asking the public how much they would pay to have the road removed from the World Heritage Site and is this inherently uncertain, the National Audit Office (NAO) says.

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Highways England argues that the benefits of the Amesbury to Berwick Down project increase when it is judged in the context of all eight projects along the A303 corridor and not just in isolation, since much of the traffic expected to use it will be long-distance rather than local.

However, the Department for Transport (DfT) intends to approve each element on its own business case. On this basis it has committed to start two other dualling projects alongside the Amesbury to Berwick Down project by March 2020 (Sparkford-Ilchester and Taunton-Southfields) but it considers the remaining five projects to be low to poor value for money. Highways England may therefore struggle to justify future investment if each element is assessed on an individual basis. If it does not upgrade the whole corridor, it will not be able to help unlock the full growth potential in the southwest, the NAO says.

The Amesbury to Berwick Down project has been delayed because of decisions about how it will be funded. It was initially going to be publicly financed, but in October 2016 HM Treasury instructed the DfT to use private finance, delaying the planned start of construction from March 2020 to December 2021. In October 2018, the chancellor of the exchequer scrapped all future private finance deals, which included the Amesbury to Berwick Down project. As of February 2019, Highways England had spent £53m on the project. HM Treasury has granted it a further £21.5m of funding for pre-construction works. The government says it remains committed to the project, but it is not clear how the project will be funded. 

The NAO says that there are risks that Highways England and the DfT will need to manage to ensure that the project has a realistic chance of delivering value to taxpayers. Highways England is still working to an open date of December 2026 despite delays to the project, resulting in a very tight construction timetable. There are also geological and archaeological risks. While Highways England is working to lessen these risks, it also needs to make sure it can support the project throughout its life; the operation, maintenance and renewal costs are expected to be £524m (2016 prices) over 60 years.

Previous attempts to construct a tunnel have been cancelled due to escalating costs and disagreements between stakeholders. Highways England has managed to gain agreement in principle from key stakeholders such as the National Trust and Historic England but other bodies, including the UNESCO World Heritage Committee, have raised concerns.

Amyas Morse, the head of the NAO, said: “The tunnel at Stonehenge is currently only just value for money by the department’s own business case. Based on experience, project costs tend to grow rather than fall, at least in the early years. It will take a very special effort by the department to protect public value up to completion.”

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