Transport policy, appraisal, and decision making – is the process at the crossroads

Institute for Transport Studies
FACULTY OF ENVIRONMENT

Transport Economists’ Group 24th June 2015

Transport Policy, Appraisal and
Decision-Making – is the Process at
the Crossroads?
Tom Worsley Visiting Fellow
ITS


The Report for the RAC
Foundation - Front Cover


Context
Report commissioned by the RAC Foundation
Challenges facing transport appraisal and its role in informing
decision-makers
UK appraisal methods were (2005 HEATCO) and still are
(2013 Mackie and Worsley) technically among the leaders
and play a role in decisions
But questions raised by:
• Devolution
• Impacts on ‘real economy’ and on quality of life
• Technical weaknesses – reliability, VoTTS, etc

Method of Inquiry – interviewed 18 experts, reviewed literature

OUTLINE

How we got to where we now are?
What role has appraisal played in the decision making
process?
What are the present challenges?


Development of Transport Appraisal
Methods and Applications
COBA late 1960s
COBA plus Framework for environmental impacts and some
others – ACTRA 1977
Urban schemes – light rail, CLRS, JLE
NATA, Appraisal Summary Table, WebTAG
SACTRA 1999, Eddington, Wider Economic Benefits
Rail enhancements and HLOS 2007
NATA Refresh 2009
Transport Business Case 2010
DfT’s UVITI 2013


Assessment of 50 years of
transport appraisal
A necessary process; wide range of projects – some ranking
evidence based process required because;
• Many decisions devolved – eg to Network Rail, HA, to LAs
• Role of Treasury in spending reviews.
• PAC, Public Inquiries, framework for democratic accountability process

A flexible evolutionary process, change followed by stability
Policy responsive – eg provided ‘an integrated approach’
1997, benefits of active modes, WEBs
Many other countries use a comparable process


How influential? Marks out of 5
**** Project ranking and selection (except megaprojects)
Judgement - Effective - DfT VfM objective

*** Programmes and Plans - RIS, HLOS, 2000 TYP indicative
projects
Judgement – programme seen only as package of schemes

** Policy goals – eg cutting road deaths, liveable cities,
economic growthJudgement - works best where metrics are compatible with CBA

*? Policy levers – bus deregulation and privatisation, rail
privatisation, concessionary fares,reform of HA, road pricing
Judgement - limited use of appraisal – but some glimmer of change.


Reaching out to a wider
audience
Moving beyond the BCR
Need for a strategic narrative
fit in with objectives


Challenges and Opportunities

The TBC – an opportunity. 5 cases
• Economic case - WebTAG compliant
• Financial – funding, private sector contributions, revenues, risks
• Management – delivery, governance, assurance
• Commercial – contracting, procurement and risk
• Strategic – narrative, problems, need, strategic fit, why now, scheme in
context

TBC sets the CBA into context and provides opportunity for a
more objectives led approach


The desire for big
announcements
Eddington’s warning against ’Grands Projets’, mainly on VfM
grounds
Political commitment before robust evidence is available
Momentum created by big studies – difficult for a minister to
admit to the idea less good than first thought.
Opportunity cost of big projects unclear – probably not other
transport schemes.
Conventional appraisal challenged by the ill-specified
objectives of such schemes – rebalancing, maintaining
London’s pre-eminence.


Transport investment and
economic performance
Macro-economic relationship well established
Desire to demonstrate effect at scheme level on ‘real

economy’
Current approach (TIEP) centres around:
• First round impact through business transport cost changes
• Second round through static agglomeration in urban areas (WI1) –
transport cost reductions increase economic mass
• Further effect through firms’ and households’ responses changing the
location of economic activity – dynamic agglomeration (W!3 but with full
change in GVA). Again tends to focus on urban areas.


CBA and ‘real economy’:
which metric(s)?
BCR (a ratio)or DfT’s VfM (high, medium, low, poor) Metric
provides for:
• Go/no-go decision
• Ranking
• Documented, evidence based methods
• Accountability –eg against DfT performance objective

GVA metric
• Impressive number, though largely divorced from Chancellor’s strategy
• Evidence of ‘paying for itself’ at 35% of generated GVA
• Evidence of spatial impact of benefits


Predicting System Behaviour
and Response
CBA – a tool for bottom up national planning
Reality is different –
TOCs have some freedom to set fares

Open access operators can enter the rail market.
Interaction between national and local authorities’ objectives
Autonomous vehicles are a potential challenge to the highway supply function.
Benefits of more London airport capacity feed through into airfares, airline asset values,
airline responses.

Local funding – eg Crossrail and the London SBR – different from general
taxation?


Technical Challenges
Values of time savings – now being addressed by DfT
Resilience and Reliability – valuation less of a problem than is
modelling how an intervention changes the variable
Health impacts – physical fitness effects and values based on
limited evidence and no attempt to assess car/pt mode
choice and health
Modelling of responses:
• Firms’ and households’ responses to transport cost changes – models
exist, but few and still ‘on trial’. Freight models.
• Integrating land use change – changes in the location of economic
activity and its impact on welfare – borders on the ‘too difficult’ in
appraisal, even if not in modelling.


Devolution 1
Devolution shifts responsibility for local transport from
Whitehall to local government.
But challenges remain:
• Responsibility for objectives, for funding, for outcomes, for assurance,

for mediation (between national and local objectives on ‘shared’ links,
between planning control totals).
• Other challenges – economic impact models, mixed programmes with
some of the investment in assets or programmes with no appraisal
methodology (but good evaluation practices), capabilities within LAs


Devolution 2
Wide range of outcomes –
• London out in front – structure with GLA and TfL helps delineate responsibilities
with boroughs
• GM and Transport for the North, despite more complex structure, following
London’s lead.
• Elsewhere – ‘a mosaic’ of outcomes

But
• Ministers will still want to intervene by delivering policies that can only be
implemented through local schemes
• Ensure national objectives (transport and land use planning) are not overridden
• Be accountable for nationally raised funding


Arms’ lengthening 1
Role of Highways England (and to lesser extent of Network
Rail)
Aim- to incentivise efficient delivery of investment and
management of infrastructure.
Creation of triangular relationship between central
government, infrastructure provider and local authorities.
Whose objectives come out top – strategic traffic or

commuters contributing to local goals (eg Northern
Powerhouse)?


Arms’ lengthening 2
Targets and cost benefit analysis
Targets incentivise – simple, widely understood through
organisation – eg rail reliability
CBA’s multiple objectives and trade-offs ‘too complex’
But simple targets put good solutions at risk – eg rail HLOS
crowding target ruled out solutions which reduced time
spent on crowded trains
CBA still used to ensure acceptable VfM but targets drive
option selection.


Conclusions
Appraisal has had an essential role – in particular at the
scheme level
It has been flexible but faces new institutional framework:
• Devolution
• ‘Real economy’
• Arms lengthening

Analysis needs to extend to a better understanding of spatial
and local economy impacts
But methods for predicting such impacts require development
DfT needs to remain the guardian of good practice.

And so?

What should we be doing now to improve and
inform policy making through evidence
based methods?
Questions and discussion