Councillor calls on auditor to examine Shrewsbury relief road bankrupcy risk

A councillor on the Northern Planning Committee has asked Shropshire Council’s external auditor to investigate concerns that the council is exposing itself to risk of bankruptcy over the North West Relief Road (NWRR) in Shrewsbury.

Liberal Democrat councillor David Vasmer has written to Grant Thornton UK LLP, the council’s external auditor, to raise concerns about a series of failures to follow its own proper procedures which is ‘exposing the Council to a serious risk of bankruptcy’.

In the letter Councillor Vasmer highlights four areas of concern including the council’s failure to follow its own procedure on the need for a Full Business Case to be in place before approving capital expenditure.

There are is also concern over starting construction of the NWRR before the full funding is guaranteed, which exposes the council to the risk of bankruptcy.

Committing £45m of taxpayer cash to the project ahead of the general election, which could be wasted if a new government refuses to fund the road and circulating tender documents before all the planning conditions have been agreed, which risks a serious underestimation of the project’s true costs.

Councillor Vasmer says: "I was compelled to write this letter because I am seriously concerned that this road project could completely bankrupt the council. The council’s decision to start work on the NWRR before the approval of a Full Business Case directly contravenes its own policies for the approval of capital projects.

"Despite the administration’s reassurances, the Department for Transport has not guaranteed to fully fund the road beyond the Outline Business Case estimate of £81m. This leaves Shropshire Council committed to paying the remainder of the road’s costs which could be another £120m or more.

"That would bankrupt the council immediately with devastating implications for residents across the whole county, as vital services would be lost overnight."

By proceeding before funding is in place, and in the run up to a general election that is predicted to see a Labour victory, the council is putting itself in potentially dangerous territory. A change of government could leave the council to foot the bill for the £45M spent to date on the NWRR.

This capital expenditure would then appear in the revenue budget making the council bankrupt and prompting the immediate issue of a s.114 notice similar to that recently issued by failed Birmingham City Council.

Adding to the financial pressure is the fact that there is still no up to date costings for the NWRR in the public domain. With scores of pre-commencement planning conditions in place, including those surrounding the risk the road poses to Shrewsbury’s water supply, there is a risk that costs could escalate exponentially with the council committed to paying for any overruns.

Mike Streetly from campaign group Better Shrewsbury Transport (BeST), which is crowdfunding a legal challenge to the road, says:

"If Shropshire Council was the Titanic, the NWRR would be its iceberg. BeST has been raising the alarm about this road’s spiralling costs for years now, but the Conservative administration has had its fingers in its ears.

"Far from trying to avoid the iceberg, they’re speeding up as they sail straight towards it. The government has steadfastly refused to say it will pay for the road – despite all the fake news spread by Conservative councillors and the MP for Shrewsbury – which means that Shropshire taxpayers are now exposed to huge financial risks.

"It is going to be much, much worse than the shopping centres debacle. When Shropshire hits the iceberg, you can guarantee it won’t be Conservative councillors paying for their mistakes. They’ll be the first ones in the lifeboats.

"It’s ordinary residents across Shrewsbury who will be left to pay the price for the administration’s hubris and poor financial management. We urge council leader Councillor Picton to change course before it’s too late."