Planning transport for future city regions – do we have the tools we need

The Genesis of Strategic FitHM Treasury Public Sector Business Cases – Using the Five Case Model Supplementary Green Book Guidance on Delivering Public Value from Spending Proposals Depa

Institute for Transport Studies

FACULTY OF ENVIRONMENT

Planning Transport for Future City Regions – Do

we have the tools we need?

UCL 24th September 2015

New Approaches to Appraisal –

Addressing Strategic Fit

Tom Worsley Visiting Fellow

ITS

The Genesis of Strategic Fit

HM Treasury

Public Sector Business Cases – Using the Five Case Model Supplementary Green Book Guidance on Delivering Public Value from Spending Proposals

Department for Transport

Transport Business Case 2010

The 5 Transport Business

Cases

Financial: affordability, funding, financial risks, contributions Management: governance, risk management, stakeholders Commercial: procurement, capability, risk allocation

Economic: Green Book/WebTAG Cost benefit analysis

Strategic Case: Fit with policy, need for the scheme, timing

Financial, management and commercial cases largely a set of yes/no decisions

Economic case both yes/no (BCR>1.0) and ranking with

constrained budget

Role of Strategic Case not specified

Refresher: Economic Case

Economic, environmental, social impacts, using monetised, quantitative and qualitative assessment and public

accounts

Concept of economic welfare, using willingness to pay and other methods for valuing non-market impacts Dominance

of time savings

National interest – a BCR– for go/no-go and ranking decisions Standard documented methods – consistency across a wide range of decisions

Dependence on a transport model, showing how people

respond to changes in networks and changes over time

Content of the Strategic Case

Complementing the economic appraisal – making it more meaningful/accessible:

• Case for change,

• Why now

• Drivers of change

• Options considered

Contribution to wider transport and government policy

objectives

Who/where are the beneficiaries?

Note:5 pages of text on Strategic Case in DfT Guidance – contrast with WebTAG’s detailed coverage

Strategic Fit- the Issues

Economic case is not the only influence on decision-makers:

• Wide range of BCRs for approved schemes eg RIS BCRs range from 2

to 14

Other considerations

• “Arms’ lengthening” of decision-making to Highways England and to Network Rail – 5 year budget has put an end to ‘chasing the BCR’

• Devolution has made ‘place’ matter more – what will the scheme do for Grimsby?

• Scepticism about welfare economics, time savings

• Modelling and appraisal challenges – eg changes in reliability

• Policy priority of the economy, productivity and growth

Strategic fit – the

Opportunities

To “market” the economic appraisal story – much of the

Strategic Case is about explaining the costs and benefits

To focus on the things that matter most to policy makers

To extend the appraisal and modelling to cover:

• “GVA effect”

• Place – where are the benefits most likely to occur?

An opportunity, not a watering down of evidence based

analysis

Strategic fit – the challenges 1

Estimating the local, regional or national GVA effect – is there

a cookbook?

• DfT’s Transport Investment and Economic Performance sets out

framework – business cost savings, static and dynamic effects – but no usable DfT endorsed model.

• Several methods exist – consultants’ initiatives – risk of ‘black box’

• Most are based on agglomeration – improvements in connectivity in a well connected place increase productivity

• Models struggle with gains from trade – each Northern city’s growth

increasing because of better transport between them

• How robust are the models – where do they fit in DfT’s assurance

framework? Is narrative enough?

Strategic fit – the challenges 2

Whose policy objectives should the scheme fit?

• Arms’ length transport providers’ or local objectives?

• Allocation of rail capacity – local or intercity?

• Highways England roads – local employment creation near an

interchange?

• Devolved City Region decisions – competition or national controls?

• Should cities with growth ambitions be constrained by DfT planning totals when making the case for investment?

• Does a scheme which is ‘good for Sheffield’ have to demonstrate a good BCR?

Strategic fit – the challenges 3

Role of the Strategic Case in the TBC – overarching summary

or new information?

Double counting – additional benefits in the strategic case or different ones from the economic case?

Relationship between economic benefits and GVA effects – are big differences plausible?

Metrics and counterfactual pose problems – a present value of GVA? What other policies or programmes grow the

economy?

How to judge strategic fit – what constitutes ‘good’?

Strategic fit - assessment

Few transport business cases are published, either as a whole

or in part

DFT has to date shown reluctance to set any rules – contrast with economic case

Opportunity to extend the role of evidence based analysis

beyond the cost benefit analysis and meet policy objective Progress has been made in estimating impacts, although

focused on intra-city rather than on inter-city connectivity

Some rules might be needed about control totals – where do the ‘new’ jobs come from ?– and about methods