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London Assembly to call for Mayor not to sign Garden Bridge guarantee
London, United Kingdom
8 Feb 2017 — Judging by the Evening Standard and ITV’s most recent poll of several thousand people, up to 71% of Londoners would support London Assembly members Tom Copley and Florence Eshalomi’s motion to the Mayor today, urging him not to sign a guarantee to underwrite the estimated £3m annual running costs of the Garden Bridge. A few reasons include:
• The Garden Bridge Trust’s (GBT) own Business Plan, which is unbalanced and unrealistic (with 70% of income coming from voluntary sources, for example) with a high fixed cost base, and reveals that even on the most optimistic assumptions the project will be in deficit once the loan repayments to TfL kick in after 5 years. With a more realistic scenario consultant Dan Anderson has shown that they would need to call on between £500,000 and £1m annually from the Mayor’s guarantee
• The problem of ‘moral hazard’ – that once the Mayor has guaranteed underwriting the running costs there is a disincentive for people or institutions to contribute voluntarily which will increase over time, putting 70% of the GBT’s income in jeopardy and forcing them to call on the guarantee
• The TfL Business Case provides a rationale for contributing £60m of public funds to the project, in order to secure a much greater amount (£125m) of private funding; a guarantee would put further public funds at risk to the point that it threatens to overtake the amount of private funding, thereby undermining the rationale for putting public funds in in the first place! This would be prima facie an unreasonable or irrational decision by the Mayor, and on such a basis could be legally challengeable.
• TfL did not commission even a rudimentary business plan to even consider the running costs of this project when first providing disastrously uncritical support and resource from 2012, with a first ropey draft only appearing in 2014, by which time TfL had spent £10m and committed £60m of public funds to the project. This is one reason why the wonkiness of the original procurement of the project is so important, with huge mistakes made at an early stage which we are now being asked to pay for or underwrite
• TfL have never commissioned an independent review of the GBT Business Plan – the minimum any potential underwriter would normally do in such circumstances.
The project is now two years behind schedule and with a host of problems including:
• a funding gap of £55m (which appears to be widening with £20m of pledges falling away last summer), and threatening to begin construction without all of the funds in place, and potentially relying on the state stepping in if the funding gap is not closed
• without a land interest on either side of the river after two years of negotiations, and with the GBT currently requesting Westminster Council to use its CPO and other powers to over-ride the threat of injunctions by adjacent residents and landowners with covenants and rights-to-light issues; Westminster Council’s Scrutiny Committee last month asked for greater safeguards, including, incredibly, a guarantee that they will be recompensed for all costs, something which the GBT themselves are unable to provide
• Without an implementable planning permission (since no s106 can be signed without the land interests secured), and which itself runs out towards the end of 2017
• Rising costs as yet unquantified by the GBT, mainly due to the numerous delays which are the result of the lack of proper planning by TfL in 2012-14, and for which the GBT now needs to take responsibility
We hope the mayor has the good sense to listen to fellow Labour party members who have cross-party support on this motion throughout the London Assembly.
Also: Treasury slams Garden Bridge business case