I hosted a press briefing today to advise the press of the details of the final settlement that signals the end of the dispute between the County Council and BAM Nuttall over the costs of constructing the guided busway. It wasn't easy because the details of the settlement are complex, but all of the media that were there, without exception were challenging but fair.
The position as we entered mediation was that the contracted price for the busway was £84m. The terms of the contract meant that as BAM overspent we were obliged to pay them up to £117m and then claim it back. BAM's legal claim on the council was for an additional £43m on top of that £117m.
We have always been adamant about the robustness of our claim and we entered into the mediation attempt and the subsequent negotiations on that basis. The result of which is that in the final settlement, far from paying BAM money they will be refunding us £33m.
Of course things are not quite as straightforward as that and the truth is (and even the facts underneath this are complex) we have occurred an additional £26m of costs to get to that position. But we have moved from a potential cost of £160m back to £84m as a result. The biggest part of that additional cost is £9.8m in legal fees. A huge amount of money which are, in effect, costs incurred because we have had to make a robust case to move to a position where we recouped £33m instead of spending an additional £43m.
Another huge cost is £9m in interest charges because of the additional money we had to pay BAM under the terms of the contract and which we are recouping. This concerns me hugely - I have announced that we will carry out a review into the guided bus project and I want this aspect of the contract to feature in the review.
It is worth saying at this point that all but £8m of this cost has been included in our budget forecasts and that this £8m will be paid for over 25 years through the Councils capital programme - so this is nothing like the financial armageddon that the Lib Dems have forecast.
I want to pre-empt the criticism I am going to make of the Lib Dem stance on the guided bus in this blog by complimenting all group leaders at the County Council for the way they have maintained confidentiality as the details of the agreement emerged and were shared with them. Not respecting that confidentiality could have harmed our case and cost us money and for that reason I genuinely appreciate their conduct. It is worth saying that when the settlement was put to them, there was no dissension to the idea that we should settle.
However, last year the Liberal Democrats were making real hay out of selling the worst possible scenario to residents of Cambridgeshire - this press release is one example of the way they continuously sold the worst possible scenario to the Council Tax payer, paying no credence to the clear message that we were confident of our position, nor of the evidence we presented at numerous cabinet meetings that showed where fault lay. Here are some questions that residents must ask of the Lib Dems:
- By continuously selling the worst case scenario to residents, do you think they gave succour to BAM Nuttall in what I believe was their intention to get Cambridgeshire to blink first in the legal argument?
- By taking the overly pessimistic line - one that was never going to come to fruition - do you think there is a likelihood that they cost Cambridgeshire more in the overall settlement, certainly in the process of arguing a robust legal case against BAM Nuttall?
It is for others to come to their own conclusions, but I am clear that the Liberal Democrat position served them well in terms of the publicity it gained, but served the people of Cambridgeshire badly in terms of giving creedence to BAM's negotiating position - which I think the final settlement makes clear was never credible.
The final settlement confirms that whilst the financial agreements in the contract and the performance of the contractor has cost us, the reality is that the final situation is not even close to the worst case scenario the Lib Dems tried to sell to Cambridgeshire voters.
Let me make it plain though. I am not happy with where we are today - I would have preferred something that was much more straightforward in terms of meeting the agreed cost and tomescales that were in the contract, I am convinced this is the right point at which to settle. To not have done so would have meant a court case with an uncertain outcome and even more money in the hands of lawyers. I do not think that would have been in anyone's interests - even though there is a chance we would have got an even better settlement.
From this point on we need to start focussing on the guided bus and how it performs. I have seen words floated around on comments pages on other websites such as "white elephant"; the reality is anything but that. The guided busway carries 28% more passengers than was projected. Before the busway was developed 1m passengers a year were travelling on the related bus routes. Today that is 3m passengers a year using the guided bus, with high satisfaction rates amongst users.
Further to that, for those arguing that this should have been a rail project, there is some challenging reflection too. The one day travelcard formthe guided bus that I bought from St Ives last Tuesday cost me £6. Travelling from Whittlesea to Cambridge (which I accept is further) by train costs me three times as much as that. Do you think you would have got a train service for that price? Let alone one that offered electricity charging facilities to the extent the guided bus does, free wifi and something much, much closer to a door to door service? I am typing this blog on a train that offers nothing like the same facilities.
My position as Leader of the Council is that we all need to reflect on this whole process - and we will have a review which helps this - but we also now need to move on and build on what, from an operational perspective, has so far been a really successful project.
If you read this article, please ost and challenge. The debate and the comments will be interesting.