No more extra funds to see through Didcot’s HIF1 project

Oxfordshire County Council has reported that measures will be taken to manage costs rather than find extra money if inflation further affects a major new roads project in Didcot.

The HIF1 programme, a combination of four projects to ensure there is a capacity to connect 12,000 houses set to be built to the south of Oxford, has been mired in controversy on environmental and cost grounds.

More than £50 million extra has had to be found, and almost £30 million of that is being borrowed by Oxfordshire County Council, with opponents questioning whether the bill could get even bigger as inflation spirals.

The council’s latest report stated that £26.653 million had been allocated to deal with inflation within the increased budget of £296.155 million.

Councillor Charlie Hicks (Lab, Cowley) said discussions with the county’s cabinet member for finance, Councillor Calum Miller (Lib Dem, Otmoor), suggested that those figures had been “put together in September 2021”.

“Since then, the Bank of England has put up inflation figures, maxing out around 10 per cent in 2022-23, which is around the time that this would go out to tender,” he continued.

“Adding to that, construction cost increases are going to be above inflationary figures. The upshot is that it looks like there may be a £30 million hole in the budget.

“Is this really fully costed if it is known that the inflation figures come from before the latest Bank of England forecasts?”

He called for the county to hold off until after its capital budget review in September and to take into consideration up-to-date cost forecasts from the building industry at that point.

Councillor Duncan Enright (Lab, Witney North & East), the county’s cabinet member for travel & development strategy, said he had been “assured this is a fully-funded project”, adding: “The argument against further delay is that we are on the clock for this project.”

Addressing Councillor Hicks, Councillor Miller said the overall budget “includes a quantified risk and contingency fund and an allowance for inflation” but added: “However, as you rightly note, this scheme, as with our other capital schemes, faces considerable inflationary risk.

“As a cabinet, in anticipating the conversation we will have in September about the prioritisation of our capital budget, we have been very clear that all schemes need at very minimum to live within their current financial envelope.

“When we discussed the grant determination agreement at our last meeting, we made very clear that this figure of £29.897 million was the maximum amount we could countenance from the council’s resources.

“We are not prepared to put more money into it, and consequently, to deliver the scheme, it will be required for us to live within our means.

“In the face of the inflationary pressures you are describing, it will require value engineering by the project team that is already undertaking that work and potentially other measures to make sure we can live within our means.”