Phillip Rutnam, permanent secretary at the Department for Transport, requested a ministerial direction to authorise extra funding for London’s Garden Bridge project, sparking “frustration” at the centre of government
An NAO investigation into the project, published this week says that Rutnam, who is accounting officer for the DfT, requested a ministerial direction to issue funding guarantees for the bridge in May 2016 because “he believed the department to be at the very limit of what he regarded as proportionate or prudent financial exposure to the risk of the project not proceeding”.
The report adds: “This was in the context of an email from the cabinet secretary informing the accounting officer that the then prime minister and the then chancellor felt frustration at the need for a direction.”
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A ministerial direction is the formal mechanism by which a departmental chief can raise their concerns about spending decisions before ministers decide whether to ask them to proceed regardless. Ministerial directions are scrutinised by both the National Audit Office and the Public Accounts Committee spending watchdogs and can be requested on the grounds of regularity, propriety, value for money, and feasibility.
This is the seventh direction to be issued since May 2015, compared with just three issued under the coalition government. However Gavin Freeguard, research manager at the Insitute for Government, notes that it is the coalition period which is the aberration. "Those four years are by far the longest we have gone without a ministerial direction being issued," he says.
He notes that this direction, published by the National Audit Office only yesterday, does buck a trend that has seen government publishing directions promptly after they are issued. The direction requested by John Manzoni over spads severance pay was published two days after it was issued.
"Obviously this is public money we’re talking about," Freeguard said, "and it's much better if government is transparent about letters and publishes them promptly,so that the public and parliament an be alerted at the moment it's happening."
He adds that this is the third direction issued by the transport department since May 2015, and there have also been three issued by the business department. All of the directions issued since May 2015 have been requested on value for money grounds, apart from Manzoni's letter, which wasn't clear about the grounds on which the direction was requested.
The NAO investigation into the Garden Bridge concluded that there is a "significant risk" that the bridge will not be built.
Former chancellor George Osborne initially committed £30m of central government funding to the bridge, of which £22.5m could be lost if the project is scrapped.
Another £15m in guarantees was given in May, despite concerns voiced by Rutnam.
Chris Grayling, McLoughlin’s successor as transport secretary, announced in August that the government would extend the guarantee indefinitely – but reduced its cap from £15m to £9m.
Before McLoughlin agreed to the extra £15m cancellation guarantees, the amount of the grant that the government allowed to be spent before construction began had crept up from its original cap of £8.2m to £13.45m.
Rutnam said in his letter to McLoughlin there were a “number of significant risks” to the viability of the bridge.
“If we increase our pre-construction commitment as requested and the bridge does not proceed, there would be cancellation costs to the public sector of up to £15m,” he wrote.
“In this scenario, around 90% of the cost of the cancelled bridge would have been provided by the public sector funders, and DfT specifically would have provided up to a half of the total amount spent.
“In my judgement, this represents a disproportionate level of exposure for the Exchequer to the risk of failure on a charity-led project that was intended to be funded largely by private donations.”
Transport minister Lord Ahmad said the government would consider the NAO’s findings “carefully”.
“The government remains supportive of the Garden Bridge project and ministers took into account a wide range of factors before deciding whether or not to make funding available,” he said.
“The taxpayer, however, must not be exposed to any further risks and it is now for the trust to find private sector backers to invest in the delivery of this project."