NAO's findings from its investigation into the Department for Transport’s (DoT) grant of £30 million towards the construction of the Garden Bridge, also concluded: "If the project continues, it is possible that the government will be approached for extra funding should the Trust face a funding shortfall. The project has faced cost increases and delays to the schedule. The pattern of behaviour outlined in this report is one in which the Trust has repeatedly approached the government to release more of its funding for pre-construction activities when it encounters challenges. The Department, in turn, has agreed to the Trust's requests."
DoT estimates the current funding shortfall at £75m, while the Garden Bridge says it is £56m, which it says it will be able to raise in time for building to start in 2017.
DoT warned on the risk that the project will not go ahead: "The Trust has still not secured the land on the South Bank for the Bridge's south landing which has affected the timetable."
Transport for London (TfL) agreed to also contribute £30 million towards the scheme. The remaining £125 million is to be funded from private donations.
Money the DoT could lose is £13.5 million in costs so far to complete pre-construction activity, and a further £9 million of cancellation liabilities.
DoT said: "In its assessment of the business case, the Department concluded that there was a significant risk that the Bridge could represent poor value for money but agreed to make the £30 million contribution in spite of its concerns. It chose to provide the contribution through an increase in its block grant to TfL which left the Department with limited oversight of its support to the Trust. This arrangement simplified the Trust’s access to public funding through a single source. It also made TfL responsible for assuring and overseeing all of the £60 million public funding and for ensuring value for money for taxpayers' investment.
"The Department sought to protect taxpayers’ money by imposing a cap on the amount of its funding that could be used for pre-construction activity. In a letter to the Mayor in November 2014, the Department stipulated that a maximum of £8.2 million could be spent on pre-construction works. Money spent before construction has started is at greater risk than money spent once a project is certain to go ahead.
"It subsequently relaxed this requirement on three separate occasions despite considerable uncertainty as to whether the Bridge would be built. In June 2015, the Department agreed to increase the cap to £9.95 million; by another £3.5 million in February 2016 and then in May 2016 Ministers agreed, following a Direction to the Accounting Officer, to underwrite cancellation liabilities of up to £15 million for a limited period until September 2016, bringing the Department's total exposure to pre-construction losses to £28.5 million. The Trust had not yet secured the land on the South Bank for the Bridge’s south landing. In August 2016 the Department subsequently extended its guarantee period indefinitely but reduced the amount it was willing to underwrite to £9 million. This reduced the Department's total exposure from £28.5 million to £22.5 million and put more of the risk onto private donors.
"The main contractor has been put on standby and construction is now expected to begin in the spring of 2017, approximately 18 months later than planned. In terms of risks to affordability, the Department's internal audit report identified a funding gap between the project's cost and levels of private investment of as much as £75 million."
The Garden Bridge Trust said: "The Garden Bridge Trust has made strong progress with its partners in discharging nearly all its planning conditions, completed detailed pre-construction work, and has nearly £70m of private money raised with more announcements in the pipeline.
"We are working hard to conclude the necessary land deals required for the building of the South Landing which has been a complex process with local challenges and negotiations which have taken time to resolve.
"78 per cent of the project cost will be raised privately. The Trust confirmed in July that it has £56m to raise. It has received an investment from government of £60m which was always intended to kick start private investment. Of this £60m investment, £20m is being treated as a loan and around the same amount will be repaid to Treasury in VAT. This means the public investment will sit at around £20m in line with the cost of the Millennium Bridge.
"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."