Chancellor Rachel Reeves allocated a further 拢891m in her autumn budget to complete the publicly-funded works for the 拢9bn Lower Thames Crossing. From then on, it is over to the private sector to take forward construction and operation.
She revealed that the government鈥檚 preferred financing option 鈥渁t this stage鈥� is the regulated asset base (RAB) model. The project will be taken forward on that basis, with formal market engagement launching in 2026, she said.
The qualifier of "at this stage" indicates that plans are still liable to change pending that market engagement process.
The RAB model allows investors to receive a guaranteed return on investment for the lifetime of the asset. Traditional RAB models see investors take revenue during the operational period. However, some developments, including the Thames Tideway tunnel and Sizewell C nuclear power plant, allowed investors to take revenue during construction, lowering the cost of capital, and delivering greater value for money all round, it is argued.
Lower Thames Crossing investors are likely to seek revenue from the tolled Dartford Crossing further up the Thames, which will provide a revenue during construction of the Lower Thames Crossing 鈥� which will also be subject to tolls, it has already been established.
Whether the future project owners will want to choose their own suppliers and re-tender the project or whether they will just accept National Highways choices 鈥� Bouygues/Murphy JV for the tunnels and Skanska and Balfour Beatty for the approach roads 鈥� remains to be seen. Unless they themselves take control.
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