Lower Thames Crossing has cost £1.2bn even before construction starts

Unlock the Editor’s Digest for free

More than £1.2bn has been spent on the Lower Thames Crossing even though construction has not started on the £10bn road tunnel project, the latest sign of the costs of the UK’s sclerotic planning system.

The outlay — which has risen from £800mn in 2023 — has been spent on planning, consultations, environmental assessments and traffic modelling as well as legal fees, land purchases and a new community woodland, according to National Highways.

A briefing document published by the agency shows that the total expected cost of the project will be between £9.2bn and £10.2bn, depending on how the construction phase is financed.

The scheme to build a 14-mile road and tunnel to connect Kent and Essex has become a totem of Britain’s snarled-up planning system, in which ventures are tied up with years of delays and mountains of expensive compliance documents.

The planning document for the project — the first wholly-new Thames river crossing east of London in 60 years — runs to 359,070 pages, while around 150 staff are employed on the project, as well as an eight-strong management team.

A decision on planning consent is expected by May 23, with a ruling on how it will be financed later this year.

Rachel Reeves, the chancellor, confirmed in January that the Treasury is considering private finance for the scheme. A proposal to have a “regulated asset base” (RAB) model — in which private investors would collect toll revenues from the road to pay back their investments over the life of the projects — is considered to be favoured by the Treasury, according to people with knowledge of the discussions.

This option would cost the Treasury £200mn more in upfront costs than if the government paid for the scheme directly, the National Highway document shows. The model, which has been used on London’s new Tideway sewer, would require nearly £2bn of taxpayer funding to attract £6.3bn of private investment, taking the total cost of the project to at least £9.4bn, the figures show.

National Highways says that there is likely to be a “market interest for the regulated private entity delivery option”, citing projects that use the same structure including the Sizewell C nuclear plant.

Under the RAB model a new company would be set up by investors to collect revenues from user charges to pay operating and finance costs.

It would also require a new economic regulator to “protect road users and guard against excessive regulated private entity profits”, the documents say. As it would be the first road to be built under the RAB model, it is likely to require new primary legislation.

The Dartford crossing on the M25 — The new project aims to relieve some of the pressure on the existing Dartford crossing on the M25 © Charlie Bibby/FT

The most expensive method of financing the crossing would involve a private finance initiative type scheme, National Highways found. This would cost taxpayers an additional £1bn, taking the total capital cost to more than £10bn.

Under this option, taxpayers would pay £4.7bn for the tunnel, while a special purpose vehicle set up by investors would draw in £4.3bn in private finance for the roads, with shareholders receiving the toll income over a licence period of 25 to 30 years.

The cost of the tunnel project has already risen from between £5.3bn and £6.8bn when it was first agreed in 2017 to a current forecast of about £10bn. If consent is given this year, construction would start in 2026 ahead of a planned opening by 2032.

Chris Todd, director of Transport Action Network, said the project needed a “fundamental rethink” and should be cancelled and replaced by public transport alternatives.

“Smaller, more affordable rail schemes could shift thousands of lorries off our roads and increase connectivity, boosting the economy and social opportunities,” he said.

The government said: “As announced by the chancellor in January, the government and National Highways are exploring options to privately finance the Lower Thames Crossing and no final decisions have yet been taken. We cannot comment further on this specific scheme.”

National Highways said: “Following a comprehensive programme of consultation and development which began in 2009 and considered a wide range of options, the Lower Thames Crossing remains the best option for tackling the chronic congestion at Dartford and unlocking growth through a new connection between the south-east ports, the Midlands and the North.”