Transport and the economy
Note on appraisals in decision-making
1
Principles
1.1
At the Select Committee hearing on 19 October, there was substantial agreement among witnesses that:
a)
a good system of appraisal is a vital bulwark against 'pet schemes' claiming ‘transformational’ impacts; and
b)
rigorous testing of appraisal methods at Public Inquiries is a crucial safeguard.
2
The Mersey Gateway Bridge
2.1
The following day the Chancellor announced that the Mersey Gateway Bridge (MGB) was one of a handful of schemes that would be funded, ostensibly for its transformational contribution to the economic regeneration of Merseyside.
a)
The MGB scheme relies mainly on tolls funding most of the costs, with only £70m or so of public costs to set against economic benefits. Over the 60 year appraisal period the net business benefits (mainly time and vehicle operating cost savings) were estimated by the promoters to be some £222m, leading to a very favourable Cost-Benefit Ratio of nearly 4;
b)
However, the robustness of this estimate is undermined by the promoter’s own figures, produced at the Publi Inquiry and summarised in the Table below. This uncontested evidence shows that cumulative benefits to users only start to outweigh the cumulative tolls they have paid after 14 years. Until then the MGB represents a net transfer out of the local economy and to the concessionaires;
c)
98% of the net economic benefit ascribed to the MGB (£226m out of 229m) arises after 2030. The estimate depends on assuming the forecast outcome for the year 2030 applies equally to each of the next 45 years.
Economic impacts of MGB: Summary of flows of tolls and benefits 2015-2074 (£m)
Time period
|
Value to users* (£m)
|
Tolls from users (£m)
|
Net impact (£m)
|
2015-2021
|
115
|
-132
|
-17
|
2022-2029
|
145
|
-129
|
+16
|
2030
|
18.7
|
-14.5
|
+4.2
|
2031-2074
|
569
|
-343
|
+226
|
Whole period
|
848
|
-618
|
+229
|
* time-savings plus vehicle operating cost reductions
|
2.2
There are many reasons why traffic model outputs cannot be relied upon for such extended periods – this is not a matter of controversy. What is beyond question is that any figures put forward amount to little more than speculation. Thus MGB apppears a clear case of a pet scheme approved on a mistaken appraisal, without waiting for the report of the Public Inquiry that was supposed to test the case.
|
