Revealed: Fears over £1.2bn bill for just 12 miles of dual carriageway
TAXPAYERS face a £100m bill for every mile of the next phase of a project to turn a busy Welsh road into a dual carriageway.
The Welsh Government is considering using a public private funding deal to pay for the next 12-mile section of the A465 Heads of the Valleys road enlargement scheme.
Such a partnership deal could see the long-term cost of the project soar from £428m to more than £1.2bn and rival the cost of building an M4 relief road, which is estimated at £1.1bn.
A similar funding arragement used to pay for the A55 dual carriageway on Anglesey is set to see the £100m road cost the public purse a total of £400m by the time it is repaid after 30 years in 2028.
The A465 widening project first began in 1995 and the only sections that have not yet been started or completed make up the 12 miles between Dowlais in Merthyr Tydfil and Hirwaun in the Cynon Valley.
THE Welsh taxpayer faces a £100m bill per mile for the next phase of widening a major south Wales valleys road into a dual carriageway.
We can reveal that the Welsh Government is proposing to use a Second-Severn-Crossing-style deal with a private sector investor to fund the next stage of the widening of the A465 Heads of the Valleys road.
The cost of widening the A465 from Dowlais to Hirwaun was previously estimated at £428m – or £39m per mile – excluding VAT and inflation.
However that was based on it being funded directly from the public purse – which is no not possible if the Welsh Government is also going to build the £1.3bn M4 Relief Road around Newport.
It is therefore preparing a Public Private Partnership (PPP) through which a A “private partner” will convert the three-lane road to a four-lane dual carriageway, as well as financing the scheme and maintaining the road for the concession period. It will receive annual fees from the government.
The government does not yet know how much the fees will total, but previous PPP deals for the Severn Crossings and A55 Expressway on Anglesey involve the private contractor collecting approximately three to four times the construction cost during the long-term concession. A portion of the revenue covers the roads’ maintenance.
If the A465 deal is struck on similar terms, the eventual cost to the taxpayer could be at least £1.2bn, which would equate to well over £100m per mile of widened road.
The government has not assessed any cheaper potential alternatives because they would not be consistent with the overall A465 dualling scheme announced in 1995 by Conservative MP John Redwood, who was then Secretary of State for Wales.
Official analysis of the widening is based on the estimated construction cost – not the cost to taxpayers of the PPP deal. It shows that for every £1 spent on the scheme, there would be benefits of £1.05. This is just about enough to classify the scheme as “low” value for money, according to Treasury rules on managing public money. Any scheme with benefits below £1 for each £1 spent is classed as “poor” value.
The government confirmed that the cost to the taxpayer of financing the road through a PPP is excluded from the Benefit: Cost Ratio (BCR) analysis.
The new A55 dual carriageway on Anglesey cost approximately £100m to construct, or £4m per mile. The shadow tolls, paid by the government, are on course to total £400m by the end of the 30-year concession in 2028.