Garden Bridge: ministers overrode civil service advice, finds NAO

The NAO report finds that the Department for Transport concluded that there was "a significant risk that the bridge could represent poor value for money" but agreed to make a £30 million contribution in spite of its concerns.

According to the NAO: "In the department's view the bridge was not predominantly a transport scheme, and as such did not align with any specific transport policies."

"Wider benefits, such as those associated with tourism, were considered highly uncertain."

The Department for Transport only became involved when the then chancellor George Osborne and the then Mayor of London Boris Johnson arranged that Whitehall and City Hall would each contribute £30 million to the bridge, with the chancellor passing responsibility for the Government portion to the DfT.

The main new revelation from the NAO investigation is that a formal ministerial direction was used in May this year to extend the Government's liabilities to underwrite the bridge's cancellation costs.

Ministerial directions are formal instructions from a minister to a senior civil servant to proceed with the implementation of a policy where the civil servant has expressed concerns that the spending does not meet the tests of regularity, propriety, value for money and/or feasibility.

DfT permanent secretary Philip Rutnam warned his secretary of state of "a disproportionate level of exposure for the Exchequer to the risk of failure on a charity-led project that was intended to be funded largely by private donations".

However, the then transport secretary Patrick McLoughlin replied that "the wider benefits to the government's agenda and to the London economy are significant, and not fully captured by the department's assessment".

He wrote: "The Garden Bridge will become a key and iconic tourist attraction right in the heart of our capital city, helping the UK tourism industry to grow. It will also contribute to some of DfT's own policy objectives, including promoting walking and physical activity."

David Cameron and George Osborne – then prime minister and chancellor – were said to have expressed "frustration" at civil servants' insistence on the need for a ministerial direction.

The report adds that "there remains a significant risk that the project will not go ahead" with the DfT's putting the funding gap at £75 million – £19 million higher than the published figures would suggest.

The NAO notes that the Government stands to lose a maximum of £22.5 million of its £30 million grant, should the project not be able to proceed.

This consists of £13.5 million in costs so far to complete pre-construction activity, and a further £9 million of cancellation liabilities.

Labour's Florence Eshalomi AM – who recently called for the Garden Bridge to be scrapped and the funding to be used for the proposed Rotherhithe to Canary Wharf bridge – told the SE1 website that the whole project "doesn't stand up to scrutiny" and the NAO's findings "should set alarm bells ringing".

Lib Dem Caroline Pidgeon AM said: "This report is clear evidence that the Department of Transport had its arm twisted into supporting the Garden Bridge by George Osborne. From the very outset personal interests overcame serious concerns about value for money for the taxpayer.

"Very large amounts of central Government money has been thrown at this project yet there remains a chance that the Garden Bridge Trust might still need to be bailed out.

"The NAO have done a great job examining the allocation of central government expenditure into this George Osbourne and Boris Johnson folly project. It is now time for Margaret Hodge to complete the examination of why so much TfL funding has also been wasted on this project."

In a statement, the Garden Bridge Trust said: "It is right that there is scrutiny of the project because it involves public money and transparency is good for us at an uncertain time."

It added: "The trust has not and is not asking for additional funding. We are grateful for the support of both the Government and the Mayor of London as we embark on raising the final private funding."

• Read the full NAO report