Taxpayers could be forced to cough up another £3million for the construction of the Luton-Dunstable Busway, the Gazette can exclusively reveal.
In the original business case for the £89.2million busway a signed agreement was included from the owners of Napier Park, Luton, who agreed to kick in £3million.
But a report issued by Luton Borough Council indicates that the investment has fallen through – leaving taxpayers in Dunstable and Luton with a bill in the millions.
It states: “The Full Approval Business Case (FABC) included a £3million contribution from a future development site as part of this local contribution, but given the current financial environment this cannot be assumed to be guaranteed funding.
“The loss of the £3million contribution means that each council will need to pay at least £1.5million more each than was estimated in the FABC.”
The £3million commitment from Southside & City Developments Ltd was more than a third of Luton Borough Council’s and Central Beds Council’s “local contribution”, which was added to £80.3million in government funding to get the project off the ground.
The agreement, which was signed on October 19 2006, included promises of further funding for sustainable transport measures (£1.4million), education in Luton (£750,000) and waste disposal (£60,000).
It is not known if those contributions have been provided by Southside & City Developments Ltd.
The credibility of the busway’s overall business case was previously placed into doubt when LBC executive member Dave Taylor said that passenger forecasts has been “pumped up”.
He later withdrew comments suggesting that the figures were embellished.
The report issued this week by LBC transport manager Keith Dove indicates that not only has £3million in contributions been lost but also that an expensive legal battle over the cost of the busway is edging closer.
Both councils claim that they are still owed repayments by the construction company, which is holding firm.
The report states: “Unless a satisfactory agreement (supported with evidence) can be reached with BAMN it is probable that a process of adjudication will follow to seek to recover further costs.”
The dispute first kicked off in 2013, when BAM Nuttall indicated that it could submit supplementary claims for costs.
LBC and CBC rejected this and the case went into mediation.
According to Mr Dove’s report this “was successful in terms of ensuring the successful opening of the Busway and also allowing a better understanding of BAMN’s position and arguments on various claims”.
However there was no financial closure and the mediation process was stopped in March 2014.
A Central Beds Council spokesman said: “Central Bedfordshire Council has been kept informed of negotiations between Luton Borough Council and the contractor regarding costs.”
A Luton Council spokesman said: “Luton Borough and Central Bedfordshire councils remain in a process of confidential negotiation with the Luton Dunstable Busway scheme’s main contractor so cannot reveal details of payments made, or the sums in dispute, as this is commercially sensitive information which would potentially prejudice any settlement.
“At such time as the matter is concluded, or it otherwise becomes appropriate to do so, the financial details of the contract will of course be made available to the public.”