Examination of Witnesses (Questions 7860
- 7879)
7860. Sorry, I was thinking of the latter part
of 6.3. Do you see a significant difference between 4:1 and 3.9:1?
(Mrs Bowkett): The Crossrail high growth scenario
figure is 3:1.
7861. Would you read the second sentence of
6.3 please.
(Mrs Bowkett): Using EDAW's more specific work
on the Woolwich area gave a benefit cost ratio of 4:1.
7862. Do you see a significant difference between
the 3.9:1 which was read out in the letter from the Minister earlier
today and 4:1?
(Mrs Bowkett): No, they are basically the same
numbers. Usually the difference is due to rounding.
7863. Could you read 6.4 please.
(Mrs Bowkett): The latest population forecasts
for 2016 produced by the Greater London Authority, version 8.0.7,
are substantially higher than the London Plan figures for 2016
that the Crossrail team have used in their modelling work. This
recent upward assessment of population numbers suggests that higher
benefit cost ratios calculated for the station are the more likely
figures to be achieved. There are also likely to be other substantial
regeneration benefits for Woolwich which are not included in the
benefit cost ratio calculations.
7864. Then your final paragraph.
(Mrs Bowkett): According to the Department
for Transport's guidance, the Crossrail station at Woolwich would
represent high value for money.
7865. High value for money is anything above
2:1?
(Mrs Bowkett): That is it. That is their highest
banding in their value for money categorisation, 2:1 and above,
which they call high value for money.
7866. Thank you.
Cross-examined by Ms Lieven
7867. Ms Lieven: Mrs Bowkett, I have
not got very many questions, but perhaps I could just make it
clear to the Committee that, so far as the benefit cost ratio
itself is concerned, the costs, I think, are agreed between ourselves
and Greenwich, so there is no issue on that, and on the benefits,
the actual figure for benefits is a matter which Mr Elvin has
been investigating with the previous two witnesses. You just give
evidence on the figure and how the figure should be treated? Is
that right?
(Mrs Bowkett): The benefit cost ratios which
have been given have been provided to us by Crossrail.
7868. Therefore, all I am going to ask you about
is what approach one should take to the benefit cost ratio within
the Department for Transport's guidance. In your evidence, you
refer to the guidance on value for money produced by the Department
for Transport. Is that right?
(Mrs Bowkett): Yes, that is right.
7869. In your Exhibit 4, which I think is our
remuneration page 283 and the page I want is page 285, perhaps,
Mrs Bowkett, you could turn to that please.[83]
(Mrs Bowkett): Unfortunately I
do not have the same numbering system.
7870. It is page 2, the summary page. Just to
make it clear what this guidance on value for money document is,
if we go to the fifth bullet point of the summary, the one that
starts, "Advice to ministers... "—do you have
that?
(Mrs Bowkett): Sorry, which paragraph are you
referring to?
7871. It does not have paragraph numbers. It
is the fifth bullet point and starts, "Advice to ministers
should reflect the presumption that purely on grounds of value
for money we should generally fund", and then there are sub-bullet
points, "most, if not all, projects with high VFM".
Do you see that?
(Mrs Bowkett): Yes, I do.
7872. There is no dispute that Woolwich falls
within the higher value for money if the BCR is over 2?
(Mrs Bowkett): Yes.
7873. The point I just want to emphasise here
is that the view that most, if not all, projects with high VFM
should be funded is purely on the grounds of value for money.
It does not take into account the other considerations at that
stage, does it?
(Mrs Bowkett): That is true, but I thought
it would be helpful though, as BCRs are just numbers, to be able
to put them into some form of context and I thought the value
for money categorisation helped to provide some context to these
BCR ratios.
7874. If we move on to see how you take the
value for money figure, the BCR, in the decision-making process,
further down that page we can see the heading "Purpose",
and then if we go over the page to paragraph 2 under that heading,
and this is focusing on the top paragraph, it says, "Value
for money is only one of a number of key factors which will influence
whether a proposal should be recommended for acceptance by ministers.
However, in a world of tight financial constraints, it becomes
increasingly important", so it is clear from that that it
is only one of a number of considerations, is it not?[84]
(Mrs Bowkett): It is only one
of a number, but it is a significant and important consideration.
7875. In order to find out what the other considerations
are, we need to go to the Department for Transport's explanatory
note, and I am sure you are familiar with that. It is in our exhibits
rather than yours at page 19.[85]
Do you have a copy of our exhibits?
(Mrs Bowkett): I am afraid I do
not, no.
7876. This is a document headed, "Guidance
on value for money: explanatory notes", and I assume you
are familiar with this document, are you?
(Mrs Bowkett): Yes, I am.
7877. If we look, and yet again, I am afraid,
it is not paragraph numbered, but if we look at the third paragraph
of that document, the one with all the bullets, it says, "Ministers
make decisions on the basis of a series of considerations, including
value for money", which is obviously what the value for money
guidance goes to, "practicability; deliverability; public
acceptability; distributional and equity impacts; affordability
and financial sustainability; contribution to central government,
local and regional objectives; and the amelioration of identified
problems". Do you see that?
(Mrs Bowkett): I see that, yes.
7878. You, I am sure, were here for Mr Elvin's
opening and you have read the letter from the Minister to Mr Raynsford?
(Mrs Bowkett): I have, yes.
7879. So you understand that the core reason
for not supporting the station at Woolwich is the fifth of those
bullet points, affordability and financial sustainability?
(Mrs Bowkett): I understand that is to be their
argument. The station does do well on these other aspects, but
their chief concern is the affordability of the station.
83 Committee Ref: A84, Guidance on Value for Money,
Summary , PBA Report (GRCHLB-3605-285). Back
84
Committee Ref: A84, Guidance on Value for Money, Purpose, PBA
Report (GRCHLB-3605-286). Back
85
Crossrail Ref: P77, DfT Guidance on Value for Money Explanatory
Note, www.dft.gov.uk (GRCHLB-3604-019). Back
| 
