Shropshire Council weighs financial risks of North West Relief Road

Shropshire Council is facing a complex financial decision regarding the proposed North West Relief Road (NWRR), the largest infrastructure project ever undertaken by the authority.

A report to the full council on February 27th will detail the significant financial implications of proceeding with, or abandoning, the scheme.

The NWRR, intended to complete the ring road around Shrewsbury, comprises two projects: the Oxon Link Road (OLR) and the NWRR itself. While planning permission has been granted, subject to conditions, the council must now consider the full business case and secure final approval from the Department for Transport (DfT).

The report highlights the substantial financial risks associated with various scenarios. If the council decides not to proceed with the NWRR, it could face considerable costs, particularly regarding the £39m already spent on the project – the "sunk costs."

A key factor is who makes the decision to cancel. If the government decides against the scheme, they are expected to cover the sunk costs. However, if Shropshire Council chooses to abandon the project, they would likely be liable for repaying the full £39m, creating significant pressure on the council's budget.

The total expected cost of the NWRR is £215m (including £53m for the OLR). While £58.6m has already been secured in funding from the government and the former Marches Local Enterprise Partnership, a funding gap of £176m remains. Potential funding sources include the Local Transport Fund, Community Infrastructure Levy, and borrowing via the Public Works Loan Board. Borrowing the remaining amount would add an estimated £6m per year to the council's revenue budget.

Even cancelling the NWRR portion and proceeding only with the OLR carries financial risks. This would still require £46m in funding, and potentially an additional £32m in sunk costs for the NWRR, bringing the total cost for the OLR alone to £78m.

Gwilym Butler, Shropshire Council’s Cabinet lead for finance, said:

“It is vital that councillors fully understand, and carefully consider, the implications of the various possible outcomes around the North West Relief Road and their impact on the council’s finances, so that no one can say they didn’t know.

“The best-case scenario is of course that the Government meets the scheme’s full costs as a previous UK Government Secretary of State had committed to because of the huge benefit the scheme would bring for local people and business in Shropshire as well as the direct impact the scheme will have on the Government’s wider drive for growth.

“This council remains clear that the case for the NWRR is strong. It underpins the future sustainability of the local economy, the move to more sustainable transport, more effective delivery of the services local people rely on, and tackling congestion. Its benefit has been recognised publicly by our NHS, police, fire and the largest bus service operator.

“Whatever decision is made after May’s election on the NWRR it should be clear to councillors what is at stake for the council’s budget.”