Tuesday, November 20, 2007

Darling's new northern bail out

In tonight's BBC Look North item on the Tyne Tunnel we witnessed the BBC becoming PR company to the second the Tyne road tunnel. Even the lead-in had a 'dynamic' soundtrack like some crappy company presentation. In this Tunnel-friendly puff piece, brought to us by reporter Damien Lewis, the BBC painted the tunnel as the only possible solution to crossing the Tyne and failed to mention anything about the opposition to the tunnel, the noise and particulate pollution and extra CO2 emissions.

So much for journalistic balance at the BBC.

There was however a startling revelation - that 50% of the money will come from government borrowing. The last press release from the Tunnel chiefs said that the 50 per cent borne by the PTA would be through so-called "Prudential Borrowing", which is a nice way of giving plain and simple borrowing a somehow less offensive appearance. If the new funding arrangement announced by the BBC is true, and not a journalistic error (what's the chances?), this means that the Tunnel may become another beneficiary of Alistair Darling's largesse, and in more ways than one.

When Alistair Darling was Secretary of State for Transport, he gave the go ahead for the tunnel, and in his justification he commented:

"...the Secretary of State is satisfied that the NTC scheme is reasonably capable of attracting the funds necessary to secure its implementation by means of the concession agreement proposed by the TWPTA."

No doubt based upon what the Inspector said in his final report:

"There is an active market for road and crossing PPPs [public private partnerships]. On this basis, and assuming that market conditions remain favourable for this type of project and that contractual negotiations proceed successfully, then the NTC is reasonably capable of attracting the necessary funding."

So the Inspector and Darling both agreed, even falling for the PTA's line that the tunnel would even make so much moolah that the Tunnel could also fund public transport initiatives elsewhere. So now we get to a sticky situation where things are not as rosy - a concessionaire which won't take the full bill, as first presented to the Inspector, and now a chill in the lending markets. Darling gave the go ahead for the tunnel, and if the report is right, he's going to be writing (at least) a £130m cheque for it too.

1 comment:

punkscience said...

Its not the first road transport project to fall foul of private financiers who refuse to foot their contractual share of the bill.


Sadly, I doubt it will be the last either.