Chancellor Rachel Reeves is exploring the possibility of seeking private investment to fund the £9 billion Lower Thames Crossing, a highway and tunnel project connecting Kent and Essex to the east of London. The move comes as part of a broader effort by the new Labour government to attract private finance for infrastructure projects while adhering to strict debt rules that limit public spending.
Under the proposed plan, investors would receive returns from the toll road in exchange for financing the project, potentially through indefinite or 125-year contracts. The Treasury has emphasised that this approach would not be a return to the controversial private finance initiative (PFI) contracts used extensively by the previous Labour government and later scrapped in 2018 due to poor value for money. Instead, the government is considering a model closer to the regulated asset-based approach used in water projects like the Thames Tideway, where users pay for the project through additional charges on their water bills. This new approach could include capped returns for investors and close oversight by an independent regulator.
Given the substantial £9 billion price tag, the Lower Thames Crossing may still require government support to underwrite construction risks and make the project attractive to investors. Alistair Watson, partner at law firm Taylor Wessing, noted that the project might need significant government funding to “de-risk” it for private investors.
The 14-mile Lower Thames Crossing, which would be the first wholly new crossing across the River Thames to the east of London in 60 years, has not yet received approval. A decision is expected in October following a delay due to the July 4 election. If approved, construction could begin in two years, with a planned opening by 2032.
Road tolls have faced controversy in the UK, with some projects proving unprofitable for investors despite their widespread use in other European countries. However, the Lower Thames Crossing is intended to alleviate pressure on the existing Dartford crossing, which was also privately financed and charges tolls. As the government seeks to balance infrastructure investment with fiscal constraints, the use of private finance for projects like the Lower Thames Crossing may become increasingly common. However, any changes in funding structure risk further delaying the project and adding to its costs.
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