NAO to probe ‘super sewer’ over funding questions

31 Aug 16

The National Audit Office is investigating London’s new £4.2bn ‘super sewer’, over concerns around the project’s structural impact and its unusual funding model, it has been reported.

Construction of the 25km Thames Tideway Tunnel, which will run underneath the River Thames, was due to start in the next few months. It will be delivered by a new private company Tideway, set up by Thames Water and the government to deliver what will be one of the country’s largest infrastructure projects.

Its designers claim the scheme is an essential upgrade to the capital’s ageing sewer system, which has not been substantially improved on since it was built in 1858. It will also mitigate the tens of millions of tonnes of raw sewage that flow into the Thames every year.

However, the risks associated with the project include possible flooding of the London Underground tube network and undermining the foundations of Elizabeth Tower, known as Big Ben.  

Over the weekend it was reported in the Daily Telegraph and Financial Times that the NAO is investigating why this specific project was chosen over several other less expensive, more environmentally friendly options.

According to an NAO briefing note, the report will “set out the risks faced by customers and taxpayers as the project moves towards completion, and how these risks are being mitigated”.

Under particular scrutiny will be the scheme’s complex funding model, which will see water consumers pay for a third of construction costs out of increased water utility bills. Meanwhile, UK taxpayers will shoulder the burden of additional costs from overrunning construction work, or, for example, shocks to global credit markets.

Tideway is financed by a consortium of investors, including German insurance group Allianz, which will provide £3bn of the total cost.  

Quoted in the Financial Times, Andy Mitchell, chief executive of Tideway, said he was confident the company was “delivering this vital project in the most timely and cost-efficient way”.

He added: “We will continue to get on with providing London with this much-needed piece of infrastructure.”

The NAO’s report will be published in the autumn, when construction is due to start on the project.

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