Liverpool Terminal Cost Will ‘Increase Significantly’

The new ferry terminal in Liverpool will not be ready before March 2022 at the earliest and there is no confirmed price for the taxpayer funded scheme, but it will be over budget.

Infrastructure Minister Tim Baker was asked for an update on the scheme in this morning’s Keys sitting by Garff MHK Daphne Caine.

Having begun in 2019, the scheme has committed at least £38m of taxpayers’ money, which included the gov buying the leasehold of part of Liverpool. 

Completion Date

Due to be open in February 2021, the completion date for the new terminal was first put back to July next year and is now due to be completed in January 2022. This morning Mr Baker confirmed that this was now March 2022, but that further delays could not be ruled out. 

He said: ‘The department’s scheme to construct the Isle of Man ferry terminal in Liverpool will cost more than budgeted and be ready later than intended. Contractually, the completion date is early March 2022, which is a year later than planned. That date may yet change because the scheme is not finished.’

He added: ‘However, there is still much to do. Progress is being made day by day, week by week but it has been heavily impacted by the ongoing impact of coronavirus. Productivity has fallen as a result and supply chains have been disrupted, this may ease, but it will not clear. This is not unique to our scheme, it applies right across the UK’s civil engineering sector. The contractor and the team managing the scheme on our behalf are doing what they can to make sure the scheme is completed as soon as possible in difficult circumstances.’

Finances and Thrust Protection

The total cost of the scheme to the taxpayer was budgeted at £38m, which included buying the land in Liverpool. Significantly higher than the £15m quoted back in 2015, when the Steam Packet said Peel Ports, which owns much of the area, would spend £15m on a replacement facility for the Pier Head terminal, where a cruise liner terminal is being built. This was of course before the Manx gov got involved. However, Mr Baker’s predecessor, Phil Gawne did say that figure was ‘ridiculously optimistic’.

In Keys Mr Baker said there were ‘three aspects’ to consider when examining the finances of the scheme. He told members that independent costings from industry experts Aecon said the pandemic had added £5m to the cost of the scheme, bringing it to a cool £43m.

But he warned ‘we are far from finished and this figure will increase significantly’. 

Mr Baker added: ‘Under the contractual terms, we are obliged to protect our landlord’s asset. The most challenging part of that is protecting the quay wall from the effects of the bow thrusters of the Steam Packet’s vessels, known as scour protection. The fast craft do not have bow thrusters, but the berth has been designed for use by the Ben-my-Chree and by the new Manxman which do. Indeed the Manxman has much more power thrust than the Ben.

‘We have not, as yet, been able to agree a design of protection with the landlord and its appointed third party engineer. We will also need to obtain approval from the marine management organisation, the UK body which regulates marine activities in the seas around England and Wales. We believe we are close to an agreement with the landlord, but until we are in agreement, I cannot be certain about the cost. I have a range of estimated figures for the cost of this, but it is too early to be definitive on this aspect. I do not wish to mislead this honourable house, or the people of this island with an estimate which may not be right.’ 

Archaeology and the Second World War

The third aspect which is complicating the scheme, Mr Baker said, is the archaeological interest of the site, which while this was factored in, it was underestimated. Among the difficulties have been unexploded Second World War bombs which had to be made safe and removed, causing further delays to the work. 

He said: ‘We knew a site like this would contain a lot of archaeological interest and so it proved but some of it took a long time to excavate and caused delay costs that exceeded our estimate. We knew that the site had been bombed in the Second World War and we had specialist surveys but some of the unexploded bombs were in the way of key work and had to be dealt with, again causing a greater delay cost than expected. 

With delays such as this, which are not the fault of the contractor, the additional cost per day is about £8,000. Mr Baker said: ‘We think these costs will be in the order of 5% of the scheme value but again we won’t know until the final accounts are reckoned.’

If we take £38m as the bill for the scheme, 5% of that would put these costs in the region of  £1,900,000. With the additional £5m expected to be added to the cost, this rises to £2,150,000.

Mr Baker added: ‘This is another challenging but very important scheme which has been many years in its development. It was part of an approach which Tynwald court supported from policy outline to purchase of the land to final approval. The scheme was first discussed in 2014 and it was first mentioned in this House in 2016.’

Despite the spiralling cost to taxpayers, Mr Baker, unsurprisingly, said he stands by the scheme and says it is ‘still the right thing to do’ and that he will do whatever he can to speed up the scheme and cut costs, but warned it may not be possible to prevent further delays and an even greater overspend.

Questions

Following Mr Baker’s lengthy response, Mrs Caine said she is ‘still in the dark’ over the scheme. She said: ‘It’s going to be longer and later and more expensive, but there wasn’t a lot of facts in there because he says he doesn’t know them. Can he comment on an answer that was given to the member for Douglas East Mrs Barber on March 2 when the Policy and Reform Minister was explaining the green energy solutions which were looked at for all the major capital projects and that put, before it was corrected, a figure of £53.1m on the Liverpool terminal building, so is there a figure but we’re not to know it? And how does this impact services to Liverpool in the meantime? While this scheme is being pushed ever further back, rather like the promenade never finishing, what is going to happen for passengers using the Liverpool facility, will the existing terminal be able to continue?’

In response, Mr Baker said that the figure given by his colleague Ray Harmer was a ‘pure error’ which was given as part of a wider answer around green energy and had ‘absolutely no significance’. He also said his long answer was necessary as the scheme is very complicated. 

He added: ‘I am not going to apologise for the fact that this has gone on longer and is going to cost more because I have already explained quite clearly that the coronavirus is significant. I have also explained that there is a significant element to the project which we haven’t got to agreement on yet. That was a known unknown at the time that the contractual agreement was signed and it was an obligation that it be done. There is no figure you’re not being told, if you’ve got any experience of delivering complex civil engineering projects, you know that these things move over time, there is a formal management process with oversight that is monitoring this intensively as we go along.’

As for the use of the existing landing stage at Pier Head, Mr Baker said that is a matter for the Steam Packet and the Peel Group but that he understands their issue with its ongoing use.

Onchan MHK Julie Edge asked Mr Baker what type of contract the department has with the contractor, whether he would publish the contract and the costs, publish a breakdown of the delays on the scheme and the cost of these delays and what fair dealing was assured for Manx taxpayers.

Mr Baker said he didn’t have the required detail to inform Ms Edge about the type of contract and said that there were issues surrounding the contract and subcontractors.

He said: ‘This is a sensitive situation that I do not wish to play out on the floor of this honourable house because it would not be in the best interest of the Isle of Man to be unpacking detailed contractual aspects in this way.’

However he did say he would update members on the situation ‘at the appropriate time’.

Mrs Caine said she accepted that Mr Baker has a difficult job with managing the scheme but again asked him for a more definitive answer as to what the overspend will cost the Manx taxpayer and whether he will return to Tynwald to ask for more cash to finish the job.

The Minister, after thanking Mrs Caine for her sympathy, said that the £5m is the ‘current estimated cost’ of the pandemic and that the 5% extra cost is separate to that so that ‘can be added on top of that’. As well as that, the scour protection will also be paid for by the Manx taxpayer, but he was unable to give a figure on that as the details haven’t been finalised yet but warned ‘it could be substantial’. 

Mr Baker added: ‘The degree of resilience that is needed has been increased by the Isle of Man Steam Packet Company’s choice of the Manxman, which has a far more significant level of horizontal displacement of the water which therefore injects more pressure into the quay wall. So that cost cannot be clarified until we’ve got the solution agreed. If necessary, of course, the DoI Minister, whoever he or she may be, may in due course need to come back to Tynwald supplementary vote.’

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