Financial impacts of options around North West Relief Road
Shropshire Council, as part of its capital strategy, must consider the financial implications should the Shrewsbury North West Relief Road (NWRR) scheme not progress.
Some of the various scenarios under which the scheme is not progressed could have very significant financial implications for the council. These risks are set out in the council’s medium term capital plans.
The council’s planning committee resolved to grant the scheme planning permission in 2023, subject to agreement of section 106s and satisfactory discharge of planning conditions. Once these conditions are complete, the planning notice can be issued and the Full Business Case for the road can then go to Full Council to be considered. If approved by councillors, it can then be shared with the Department for Transport (DfT) for final approval.
The NWRR would be the largest infrastructure scheme ever undertaken by Shropshire Council, which after more than 30 years would complete the ring road around Shrewsbury.
It comprises two separate road schemes the Oxon Link Road (OLR) and the NWRR, which for efficiency and practical delivery reasons, have been combined into one overall project referred to as NWRR.
To help inform any future decisions, the Medium-Term Financial Strategy report to the meeting of Full Council on 27 February 2025 sets out the financial implications for the council of any future decisions it may take on the scheme.
It gives the current predicted costs for the OLR and NWRR, options for how these could be funded and any associated costs, as well as the likely impact on the council’s finances of the NWRR not progressing, if the council were to make this decision.
If the NWRR were cancelled, the council could however still progress with the smaller Oxon Link Road which supports growth on the western side of Shrewsbury.
By April 2025, the scheme will have had £39m spent on it – so-called “sunk costs”, made up of direct grants for this purpose from Government and regional bodies solely for this purpose. This has covered work since 2019 and includes preparation of the plans, scheme design, site investigations and surveys to enable the scheme to be ready to build when appropriate. The cost reflects the complexity and value of the scheme.
The scenarios make assumptions using established practice. The assumptions are clear that if the scheme does not progress due to a decision that the Government makes, then the Government would meet the £39 million spent to date – known as the “sunk costs”. However, if it is the council that makes a decision not to progress the scheme, then the council would need to repay the £39 million to Government.
If the council has to fund the £39m “sunk costs” bill, this would immediately create a new revenue pressure on the council’s budget for day-to-day services, on top of the £22m of new savings that need to be found next year due to a range of budget pressures.
North West Relief Road key financial figures (£m in brackets is OLR cost. This is included in overall NWRR figure)
- Total expected costs of NWRR – £215m (OLR £53m).
- Funding already received from Government and the former Marches Local Enterprise Partnership (LEP) – £58.6m (OLR £4.2m).
- Spend to date on NWRR – £39m (OLR £7m).
- Funding gap to be met – £176m (OLR £46m).
- Possible funding sources – a combination of confirmed Local Transport Fund (LTF) Government funding, Community Infrastructure Levy (CIL) paid through developments in Shropshire, and other grant sources and/or borrowing through Public Works Loan Board (PWLB).
- Annual revenue cost of borrowing of funding gap via PWLB – £6m/year (OLR £1.9m).
- Cancellation costs to the council from revenue budget – £39m (OLR £7m). This assumes the council is responsible for cancelling the project and Government does not meet these costs.
- Cancellation costs to the council from its revenue budget – £19m (OLR £7m). This assumes the Government meets their share of cancellation costs.
The council could cancel the NWRR part of the scheme and continue with the OLR only. This would require a further £46m to fund the OLR (or greater as efficiencies in delivering as part of the larger scheme would be lost), with the likely addition of £32m in sunk costs for the NWRR having to be repaid to Government. This liability would give a total cost of £78m to deliver the OLR alone.
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.”
The two elements of the NWRR scheme include:
The Oxon Link Road
A one mile road which will help enable the Shrewsbury West Sustainable Urban Extension (SUE) which is proposed to be mixture of new homes and businesses, at Shelton on the outskirts of Shrewsbury.
Work to develop the project began in 2014.
The former Marches LEP committed £4.2m of funding for this road.
The North West Relief Road
A four mile road that would link the existing Churncote and Battlefield roundabouts on the A5 outside Shrewsbury, helping to reduce traffic in Shrewsbury town centre and improving journey times on the A5 trunk route around. The Department for Transport committed £54.4m towards the cost of the road in 2019.
Work to develop this began in 2019 and since then the council has been through a very thorough planning process during which the plans have been subject to very detailed public scrutiny.
NWWR and OLR costs
