Transport Insights

The Treasury has confirmed that chancellor Rachel Reeves secretly awarded the Lower Thames Crossing a quarter of a billion pounds in last year’s Autumn Budget, as the cost of the scheme are set to hit £2bn, before construction begins.

The preparation costs for the planned £10bn+ tunnel between Kent and Essex are now likely to reach two-thirds of the scheme’s projected benefits.

Labour has said it will examine using a form of private finance for the project, which it appears to consider unaffordable and which will be funded outside the usual road investment strategy machinery.

But public funding includes £250m that was allocated to the project in Labour’s first Budget, last October, but not publicly announced until the National Infrastructure Strategy was published in June.

This said the government was:

providing £590 million of capital funding to progress work on the Lower Thames Crossing, in addition to the £250 million which was provided at Phase 1 of the Spending Review.

The Treasury has acknowledged that the £250m was allocated at the 2024 Autumn Budget on a “provisional” basis as the project’s development consent order (DCO) was pending, with the infrastructure strategy being the first time the funding was revealed publicly.

The Department for Transport has confirmed that the cash was part of the capital spending total of £21.8bn announced in the Budget.

Following the Budget, the then transport secretary, Louise Haigh was forced to resign, following a leak about a criminal conviction that appeared to have come from No 10.

Her successor, Heidi Alexander, then approved the DCO in March of this year, in time for the cash to be included in confirmed spending plans for 2025-26.

The total funding of £840m referenced in the National Infrastructure Strategy can be added to £1.2bn of “historical costs” for the scheme up to the end of March 2025.

A revised funding statement, published in February, gives the total capital cost of the scheme if publicly financed as £9.2bn with capital funding required from 2025-26 onwards of £8bn, implying that “historical” costs are £1.2bn.

This compares with the £800m that the then roads minister, Lilian Greenwood, said had been spent on the project to date in a parliamentary written answer that same month:

Over £800m has been spent on the project to date. This includes the technical surveys and investigations, land purchasing costs, as well as the Development Consent Order application and the three contracts to deliver the project.

On total expected costs, she said:

The assured cost estimate in line with the 2023 baseline for the project is £8.95bn, but it is important to recognise that there is a normal level of uncertainty at this early stage of the development of a project of the size and complexity of the Lower Thames Crossing.

The National Infrastructure and Service Transformation Authority annual report 2024-25, published in August, gives the same figure for the scheme’s “whole life cost”, while confirming that:

The departmentally agreed Benefits at 24/25-Q4 remained at 3009m

This is just 50% higher than the projected spending before construction begins, and just a third of the current cost, which is expected to continue to rise. No doubt the government will invent a raft of wider economic benefits for the scheme to improve its benefit cost ratio.