Examination of Witnesses (Questions 7880
- 7899)
7880. And there is no doubt at all that is the
material consideration as set out in the Department for Transport's
appraisal process?
(Mrs Bowkett): Yes, that is the case.
7881. It makes sense, does it not, Mrs Bowkett,
because, although it is right to say that the guidance note says
that most high-value-for-money projects will receive funding,
it is obviously the case that there will be transport schemes
with high value for money, high BCRs, which do not get funded
by the Department.
(Mrs Bowkett): Mind you, a benefit cost ratio
of 3 and above really does make people wake up to the value for
money of a scheme.
7882. But the bottom line will always have to
be: is it affordable?
(Mrs Bowkett): Yes, it has to be considered
as well, whether it is affordable in the context of the whole
costs of the Crossrail scheme.
7883. The other document I want you to look
at is what is called, "The Appraisal Process" produced
by the TAG Unit, transport analysis guidance, and that is at our
exhibits, page 108.[86]
It is the transport analysis guidance produced by the Department
for Transport, again a document I assume you are familiar with.
Is that right?
(Mrs Bowkett): Yes, indeed.
7884. Perhaps we could turn to, first of all,
the appraisal summary table at page 115.[87]
This sets out all the objectives that are considered in the appraisal
process and if we focus in on "Economy", which is half-way
down the page, one can see there "public accounts",
and that is the affordability criteria, is it not?
(Mrs Bowkett): Yes, it is under
"Economy" that you would deal with the cost of the scheme.
7885. Then two pages further on in that document,
at page 117, there is a paragraph 1.2.14.[88]
It says, "In order to make an assessment of value for money,
the assessors will need to compare their assessment of overall
net value with the cost of the project". The overall net
value there is the BCR, is it not, the benefit cost ratio?
(Mrs Bowkett): I believe so.
7886. And that has to be compared with the cost
of the project and then it says, "Because affordability to
government will often be a critical factor in deciding whether
options are realistic and practical, it is recommended that the
cost to public accounts, shown in the first sub-objective under
the `economy' objective (as well as being repeated at the top
right of the AST) be used for this comparison", so we can
see there that affordability to government is acknowledged in
this document as often being a critical factor.
(Mrs Bowkett): It is a consideration, yes.
7887. Thank you very much.
7888. Chairman: Mr Jones?
7889. Mr Jones: Sir, it is not really
a matter for re-examination, but I would just point out my understanding
of what has been said so far, and that is that the questions which
have been put by Mr Elvin only went to the assumptions that underlay
the benefit cost ratio of 4:1. My understanding is that the benefit
cost ratios of 2:1, as mentioned in paragraph 6.1 of the summary,
and 3:1, as mentioned in 6.3 of the summary, are based upon figures
that are undisputed. I will be corrected if that is wrong, sir.
7890. Ms Lieven: You will be corrected.
No, sir, that is not right.
7891. Chairman: Perhaps that probably
is a matter that should be dealt with in summing up or do you
briefly want to elaborate?
7892. Ms Lieven: I do not want to elaborate,
save to say it is not accepted, but it will be dealt with by Mr
Anderson giving evidence in chief and in the summing up as to
what level of BCR it is. As Mr Elvin said in opening, a positive
BCR clearly is accepted and the only issue on the BCR is the spectrum
of where it falls within the figures that are being put forward,
but 3:1 is certainly not accepted.
7893. Chairman: I think that is your
view and it was very interesting to see, Ms Lieven, how much more
quickly you rose to your feet than Mr Elvin who is more than competent!
7894. Ms Lieven: No, sir, I am not defending
Mr Elvin! I certainly would not do that!
7895. Chairman: I take your point that
it is probably more appropriate to be dealt with in the summing
up.
7896. Ms Lieven: It is merely the convention
that, because this is my witness in cross-examination, it was
appropriate for me to rise. Please do not feel that Mr Elvin either
needs defence or should receive it!
7897. Mr Jones: Sir, perhaps we could
just deal with what I thought was a non-controversial matter.
Re-examined by Mr Jones
7898. Mr Jones: Mrs Bowkett, 6.1, what
is the source of the assumptions which underlie the 2:1 figure?
(Mrs Bowkett): The 2:1 figure comes from Crossrail's
work using their standard base model for 2016 where they value
it with and without the station at Woolwich to evaluate the benefits
of providing the station at Woolwich and this is the benefit cost
ratio that they have provided.
7899. The source of your 3:1 benefit cost ratio?
(Mrs Bowkett): The 3:1 ratio comes from a sensitivity
test that they run. It is a standard sensitivity test.
86 Crossrail Ref: P77, DfT Transport Analysis Guidance,
The Appraisal Process (GRCHLB-3604-108). Back
87
Crossrail Ref: P77, DfT Transport Analysis Guidance, Appraisal
Summary Table (GRCHLB-3604-115). Back
88
Crossrail Ref: P77, DfT Transport Analysis Guidance, Assessing
the Overall Value for Money of the Option, para 1.2.14 (GRCHLB-3604-117). Back
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