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Wednesday, 15 December 2010

Joint Letter to the Auditor General for Scotland


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Today a joint letter has been sent to the Auditor General for Scotland calling on Audit Scotland to conduct an urgent investigation into the background to the additional Forth Bridge and the alternatives to it before any contracts are let. It calls on Ministers to ensure that any contracts are in the public interest.

The full letter states:

"Dear Mr Black,

As you will be aware, the Forth Crossing Bill is likely to be passed by the Scottish Parliament today, and it will empower Ministers to let contracts for the construction of an additional road bridge over the Forth. This project, should it go ahead, will be the most expensive single capital project ever supervised by a devolved administration, or indeed any Ministers in Scotland, with a final cost currently estimated at over £2bn. We believe it will be essential for Audit Scotland to look urgently into the background of this project and the alternatives to it.

In 2008, the Forth Estuary Transport Authority assessed the cost of repairing the existing bridge at up to £122m [1], even assuming the current dehumidification work is unsuccessful. It should however be noted that this ongoing dehumidification work "is producing the expected slow and steady fall in the relative humidity within the cable" [2], and that a contract is currently being advertised to examine progress in this area during 2012-13 [3]. A decision to proceed with contracts for the additional Forth Crossing prior to the results of this exercise therefore looks premature.

Furthermore, the Scottish Budget is under the gravest pressure since the establishment of the Scottish Parliament, with a reduction in overall spending of £1.3bn in 2011-12 compared to the previous year. [4] Further reductions in the Scottish Block Grant are expected during the course of the next Parliament, just as capital sums of up to £400m per annum are projected to be spent on the additional Forth Crossing should it go ahead.

Scotland's recent history of capital project procurement and cost management has been mixed to say the least, and we have also seen recent examples of capital contracts signed prior to an election which ensured that future administrations would pay more to cancel those contracts than to proceed with them - so-called "poison pill" contracts. The timings currently being projected for the signing of the main contracts associated with the additional Forth Crossing are in the immediate pre-election period, and it would be legitimate to question whether such timing is in the interests of good governance. Your 2008 report "Review of major capital projects in Scotland" also notes that "Once a contract is agreed, significant changes to a project are likely to be costly and disruptive, and may not represent value for money." [5]

As that report points out, three fifths of these projects run over cost, with an average over-run of 39% against the initial cost estimate. This report, which does not consider the additional Forth Crossing project, also calls on public bodies to "prepare robust business cases for every project. These should be clear about the project aims and benefits, and include assessment of: risks; the range of options to be considered; and a clear basis for assessing, reviewing and reporting".

With these facts in mind, it is in our view essential that a full comparative audit be carried out before any contracts associated with the additional bridge are signed in order to consider the cost-effectiveness of repairing the existing Forth Road Bridge as against the costs associated with the construction of a new Forth Crossing. Both options will be disruptive, and a consideration of those consequences would also be useful. Finally, in the interests of value for money, it would be useful for Audit Scotland to provide advice to Ministers on the timing for and nature of any such contracts so that the public interests here can be properly protected.

Without such a vital piece of work, the risk is that a substantial amount of public money, even assuming no increase in costs during construction, will not be spent "properly, efficiently and effectively", as Audit Scotland's remit puts it. This project and the alternatives to it will be the most significant test of the public finances, of governance, and of the audit structures of this country for decades to come, and there are risks associated with this project for all concerned if such an audit is not carried out and its advice taken seriously. It will be too late once contracts are signed. Only Audit Scotland has the capacity and skills to deliver this work, and we would therefore urge you to consider taking on this project as a matter of urgency.

Yours

Richard Dixon, WWF Scotland
Keith Geddes, former member of the Accounts Commission (2002-2008)
Patrick Harvie MSP, Co-convenor of the Scottish Green Party
Colin Howden, Director, Transform Scotland
Lawrence Marshall, former Convener of the Forth Estuary Transport Authority
Ross Martin, Policy Director, Centre for Scottish Public Policy
Duncan McLaren, Friends of the Earth Scotland

Notes

1. Information from this Scottish Parliament's Information Centre briefing, page 6:
http://www.scottish.parliament.uk/business/research/briefings-10/SB10-05.pdf

2. See the Forth Estuary Transport Authority's February 2010 "Main Cables and Anchorages Update", page 2:
http://www.forthroadbridge.org/sites/default/files/documents/feta%2026.02.10%2010.00am%20item%2007.pdf

3. For details of this contract, see:
http://www.publictenders.net/tender/84825

4. See the Scottish Parliament's Information Centre briefing, page 2:
http://www.scottish.parliament.uk/business/research/briefings-10/SB10-67.pdf

5. Your report, page 6:
http://www.audit-scotland.gov.uk/docs/central/2008/nr_080624_major_capital_projects_km.pdf

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