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Award of £5bn M25 PFI contract shows "appalling judgment"

8 May 2008
Commenting today on the announcement of the selection of the Connect Plus consortium as the provisional preferred bidder for the £5 billion M25 PFI project [1], Rebecca Lush Blum, roads and climate campaigner at Campaign for Better Transport [2] said:

"The selection of Connect Plus to run large sections of the M25 over 30 years demonstrates appalling judgment by the Highways Agency. It has selected a consortium which includes two companies in the hapless Metronet tube consortium which went into administration last year, one of which is currently under investigation by the Office of Fair Trading for price fixing. If these companies cannot run the tubes, how can we trust them to run the M25?

"The Department for Transport has persisted with awarding the largest PFI road contract in the UK, despite the unimpressive history of large PFI projects and the contractors involved. Cheaper and greener alternatives are available, such as hard shoulder running. The M25 should remain in public control, and sustainable options should be investigated to reduce carbon emissions."

The Connect Plus consortium consists of Balfour Beatty, Skanska, Atkins and Egis Projects. Both Balfour Beatty and Atkins are part of the Metronet consortium which went into administration in July 2007. Metronet Rail [3] is responsible for upgrading, replacing and maintaining two-thirds of London Underground's infrastructure under a 30-year Public Private Partnership (PPP) contract.

The Office of Fair Trading launched its largest ever investigation on 17 April 2008 into price rigging amongst construction companies [4]. One of the companies under investigation is Balfour Beatty, one of the companies in the Connect Plus consortium which has just been awarded the M25 contract.

The contract to widen and maintain the M25 under a 30 year PFI deal is said to be worth in excess of £5 billion [5] – the largest ever PFI road contract. The construction costs of widening the sections in the contract are £1,913 million [6]. Hard shoulder running (ATM) is estimated to cost a quarter of the cost of widening. Keeping these sections of the M25 under public ownership, and using the hard shoulder instead of widening, could cost the taxpayer just £478 million, saving £4,522 million. Using the hard shoulder at 50mph has also reduced carbon emissions by up to 10% on a pilot on the M42 in 2007 [7].

The transport minister Tom Harris admitted on 17 March that there would be no financial penalty if the DfT decided not to award the PFI contract [8].

In the Highways Agency 2008-9 Business Plan it was revealed that two of the four M25 PFI contracts will now not be widened, with hard shoulder running investigated instead [9].

It is not known how much the contract to run the M25 has been awarded for.


Notes for editors

[1] See Highways Agency press release, 8 May 2008: http://nds.coi.gov.uk/Content/Detail.asp?ReleaseID=366964&NewsAreaID=2

[2] Campaign for Better Transport works to secure transport policies and programmes that improve people's quality of life whilst reducing environmental impact.

[3] See Metronet website: http://www.metronetrail.com/ 

[4] See Office of Fair Trading press release, 17 April 2008: http://www.oft.gov.uk/news/press/2008/52-08 

[5] See Highways Agency press release, 13 October 2006: http://www.highways.gov.uk/news/newsroom.aspx?pressreleaseid=139112 

[6] Parliamentary Written Answer by Tom Harris, 2 April 2008, Column 1018W: http://www.parliament.the-stationery-office.co.uk/pa/cm200708/cmhansrd/cm080402/text/80402w0033.htm 

[7] See Department for Transport press release, 25 October 2007: http://nds.coi.gov.uk/content/detail.asp?ReleaseID=325249&NewsAreaID=2   

[8] Parliamentary Written Answer by Tom Harris, 17 March 2008, Column 775W: "There is no contractual obligation to pay the bid costs for consortia that have bid for the M25 contract": http://www.publications.parliament.uk/pa/cm200708/cmhansrd/cm080317/text/80317w0010.htm#column_775W 

[9] Annex B of the Highways Agency 2008/9 Business Plan shows that J5-7 and J23-27 will now be considered for ATM instead of widening. However J16-23 and J27-30 will still be conventionally widened: http://www.highways.gov.uk/aboutus/18403.aspx