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.
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Hi Martin, help us out with the claim about the 'additional' cost to the taxpayer. CEN reports that it's £33m. But if total final cost, before repayments, was 152m as stated in press release, then 33m repayment brings this total down to 119. Release also says 126m was budgeted for in total, in which case there should be no additional money needed over and above budgeted amounts.
ReplyDeleteIs this interpretation correct?
The trouble is,that none of this is simple. Cambridge News have done their own analysis and have suggested that the original budget was £119m. But this is the overall cost which includes land acquisitions etc, of which only £84m was the contract with BAM. Our argument is that the budget is £126m and the final cost £152m. Of which the shortfall includes £9.8m on legal costs and £9m on on interest charges because of the overpayment clause in the contract - both of which are charges that could have been avoided if the contractor had performed on time and on budget.
ReplyDeleteFor clarity though, be absolutely clear. BAM were paid £117m and claimed an additional £43m on top of that at the start of the legal dispute. But the final agreement means they will pay Cambs CC £33m in January next year.
Thanks for asking the question. I really wish the explanations were easier - but they are not and I really respect Chris Havergal of the Cambridge News for trying to get underneath them.
Tim Phillips from Cast Iron has apparently tried to comment on my blog and has had trouble. So here is a cut and paste of his comments:
ReplyDeleteI am pleased to see you taking a more pragmatic approach to this debacle (for that is truly what it has been) than some of your colleagues who, from the start back in 2003, have resorted to Orwellian tactics and language in support of CGB.
However it is disappointing to see you continuing the mantra that it is a success based merely on bums on seats.
The UK railway system is currently carrying record numbers of passengers compared with its 150-year history. The best that can be said for CGB is that it is 28% ahead of a forecast made a few years ago. That means absolutely nothing without proper analysis of costs, the nature of passenger journeys and alternatives.
Your comparison with Whittlesey is meaningless. Apples and pears.
It did not require 100,000 tonnes of concrete, £84 million and the obstruction of a viable part of the national rail network to provide electric sockets, air cooling, Wi-Fi and a service that is 'closer to door-to-door'. None of those have anything to do with the busway.
Breaking news - buses have been providing a near door-to-door service since before the First World War.
CAST.IRON's argument was never about train OR bus. If you wanted to go from Whittlesey to London, York, Norwich or even Paris, how would you go? From there to Peterborough, March or Ely, you might choose bus or train. But to Ramsay?
So, for Whittlesey, read St. Ives (or, crucially, Northstowe). None of that concrete and expense has accelerated the timetabled journey time or made any difference to the bus journey from there to Huntingdon and Peterborough - or between the Science Park and the city or railway station.
Indeed, buses have to travel two miles in the wrong direction to access the guideway, during which time they are not getting any closer to their destination - a time and environmental nonsense.
Nor has it made any appreciable difference to congestion on the A14, which strongly suggests CGB is not getting people out of the cars that clog the peaks in any significant numbers. It's great that many new journeys are being made - but what if the railway had been re-opened AND there were greatly increased-frequency, high-quality bus services serving the town and village centres (rather than so many requiring an unnecessary car ride to access the busway)?
In short, what is needed is a point-for-pound analysis of the CGB journeys - taking great care to allow correctly for free bus pass journeys - against true total costs of construction and maintenance and compare this with other transport schemes and with the rest of the country generally. Such analysis should be entirely separate from any enquiry into the contractual cock-up.
So to return to my opening comments, the lesson here is about rabbit-in-the-headlights councillors (and a few officers, to boot) grasping at a vanity project because it was the only money on the table and then virtually turning on their constituents when challenged by common sense arguments. This infected the majority of the council as a body politic, which is why I am pleased at your more pragmatic approach even though you still need to disabuse yourself of certain aspects that fall into the "Emperor's New Clothes" category. The term "White Elephant" does indeed have credence because all that concrete was unnecessary in order to achieve optimum local, regional, national and even international transport benefits yet councillors and officers resorted to telling us two and two make five to support their case.
I would invite you to consider http://www.castiron.org.uk/ - scroll down to 'So why are we getting the guided bus...' and, if you have time, http://www.castiron.org.uk/ClosingStatement.php
Tim Phillips, Chairman, CAST.IRON
These comments are also a reflection of similar comments made by Maurice Leeke the Leader of the Lib Dems in relation to the busway.
ReplyDeleteFirstly, passemger numbers are important as are satisfaction rates amongst users, both of which are high, but I accept that so is value for money. But rail and indeed tramways don't offer those either and I would at least have liked the leader of the Lib Dems at Shire Hall to have done some research before talking about how railways and tramways are a better solution.
Even at an overall cost of £152m the busway comes out at around £6m per Km. The currently under construction phase 2 of Nottingham tramway is costing £35m per km and the Oldham extension of Manchester Metrolink, which is the conversion of an operational railway is £11m per km. So it seems the Leader of the Lib Dems prefers a solution that would cost the taxpayer more.
The more I get underneath what a rail solution would mean, the less sense it makes. Another thing to throw into the equation along with a better facility (leather seats, free wifi, charging points) and cheaper ticket prices is car parking. Can anyone show me a railway station that offers free parking for customers - how much additional cost would that add to a passenger's daily commute?
A few have used the rail freight argument to promote rail - but the truth is that solution for rail is alread happening with the East West Rail upgrade which will take a level of freight off the A14 - in fact traffic along that rail route will increase by something like 155%.
Now, journey times. I occasionally use the guided bus, I did last Tuesday. To drive from my home in Whittlesey use the guided bus from St Ives and stop off at Shire Hall costs me £6 plus petrol. To do a similar journey by train, even using one of the very few direct trains that doesn't mean a change at Ely the cost, including the subsequent bus sirs in Cambridge, comes out at well over £20 and door-to-door takes longer. So, for me, the rail solution costs more, takes longer and has worse facilities. If it is true for me, I am sure it is true for many, many others. I know we will never definitely know what a commute from St Ives to Cambridge would be by train - but we can be certain it would be more that the Guided Bus. A day return by train to cover the 6 mile journey from Whittlesea to Peterborough is £4.90
Let's be honest, a rail solution would have cost more to deliver, would have cost commuters more and would have been a worse service.
The point about the A14 is well made. However, the evidence suggests that cars are being taken off the A14 (those 2m additional passengers using buses along related routes have to have come from somewhere) but the A14 is hugely busy and getting busier, so of course it is going to be difficult to see the impact.
I don't pretend that where we are with the contract is great. I do believe the fingers need to be pointed at BAM Nuttall for that and the final settlement is clear evidence of that from my perspective, but we should not use that as an excuse to take away from the fact that the guided bus is an operational success and is likely to continue to be so - and we should be assured that even at the higher cost, it has proven cheaper than the alternatives that others are so keen on.
A feasibility study published in 2006 on the Ripon-Harrogate railway closed in 1967 estimated reinstatement at £38m for 10 miles of track/signalling or £48m with electrification +/- 30%. Design speed was 90mph with a journey time of 10 minutes if electrified. Trains would have been extended beyond Harrogate to Leeds, the main commercial centre in the area 30 miles away in 40 minutes. How does that compare with CGB?
ReplyDeleteOf 12 intermediate stations between Leeds and York, only Harrogate station charges for car parking. There is your examples Mr Curtis.
Two different observations:
ReplyDelete1.) The independent review will be significantly hampered as there is no independent statement of what happened. If the matter had been decided in court there would then have been a judgement duly arrived at. As it is, there is no 'official' statement of the issues. A way to mitigate this would be for the review to be broad enough to also consider the merits of the 'case' but that would prolong it and still be hard to do.
2.) The costs per mile argument is a poor one. The difference in costs is predicated on the requirement for a 'safety case' for "rail" transport and not for "road". Given the non-zero incidence of collisions between Busway vehicles the assumption that there won't be any would seem to be invalid.
If you are saying that we should have gone to court, that is an astonishing statement. We would have just ended up throwing more money at lawyers with a less certain outcome. Yet another example of the Lib Dems' approach to manging taxpayers' money.
ReplyDeleteThe costs per mile argument is, of course, the one that matters. Whatever the reasons for the cost - the cost it is what it is. Trams, especially, but also rail is more expensive. And rail is more expensive to operate, and isn't as door to door - all of that matters, because the cost to the taxpayer of using the service is important.
It would have been interesting to see how much the actual cost would have been for the Harrogate line, rather than an early study. The car parking comparison isn't a great one. None of the operators up there would have taken on the franchise for this line. Look around Cambridgeshire and see what is being charged for parking. And, of course, parking is only one aspect of the extra cost. A return train ticket from Harrogate to York peak time is £10 a shot. With additional cost for the ongoing journeys around the Town from there. I bet the customer satisfaction rates are nothing like as high as they are for the guided bus as well.
While the entire situation has been problematic - but this is true of many large contracts. Not an excuse, but still true. Once the lawyers are called in, which can happen any time and in any contract, things get very messy.
ReplyDeleteThat said, this seems to be a fair overall result. The Guided Busway is performing well despite claims it would not. It has cost vastly less than the doom mongers declared would be the case.
Now we have closure and can move on, with a popular guided bus as the final prize.
You'll face criticism, but primarily from those with a political reason to cast shadow over the result, as you would expect.
Councillor Curtis is unfair both in capital costs and rail fares.
ReplyDeleteBuilding a busway on an existing formation versus a tramway on a completely new formation. Truth is had the railway never existed the busway would never had been built. That demonstrates that busways are only affordable (if one can claim they really are) if they are built on an existing transport formation.
Let's look at an actual rail reopening - the Ebbw Vale line, opened five years ago for £30m, similar length to the St Ives line, with a similar number of stations. Oh yes, and it's been a success.
Earlier this year I went for a drink in St Ives and took the busway bus from Histon to St Ives at about 19:40. It cost £5.40. I could have done a return journey from Cambridge to Ely for much less than that (a twice as far).
Regards
Jerry Alderson