New priorities need new delivery frameworks

IN JUST OVER A WEEK’S TIME, the Chancellor will be delivering his Autumn Statement. In this, he will update MPs on the country’s finances and the Government’s tax and public spending plans, based on the latest forecasts from the Office for Budget Responsibility, and no doubt include a good dose of pre-election political positioning.

There could be a number of significant transport implications of what the Chancellor says – particularly in the light of the major re-shaping of the transport spending equation occasioned by the cancellation of the Northern HS2 extensions, and the reallocation of the £36bn budget to alternative transport schemes.

He might hopefully further indicate what should be the guiding principles behind this redistribution, as they are an important requirement to make sure that things are now done more effectively at a local level than they were at a national level in the HS2 project.

One of the key arguments for the abandonment of the HS2 plans was that the project was bringing limited benefits to a narrow geography and demographic, taking a very long period to show any real deliverable impacts, and bedevilled by cost overruns and delays. The Benefit Cost Ratio, always marginal, had fallen to almost negative territory.

Now there is a new agenda for the same expenditure, surely there is a case to do things very differently. More can be achieved for the areas being promised the additional funds to make a real difference on the ground in terms of local transport quickly, cost effectively, and for a much broader set of beneficiaries and policy outcomes.

For this to occur, it is crucial that the approaches to developing and delivering schemes should be fit for purpose, and not just more of the same in both preparation and appraisal. One significant element is that the former HS2 money is effectively now pre-allocated to both areas and projects, and therefore should not be subject to a new set of tests, hoops, and hurdles to jump, and impenetrable and interminable procedural complexity to get things underway.

This, in turn, raises the question of how the Treasury will want to supervise the release of the earmarked money, and whether there are better ways of doing things than having to submit to the labyrinthine business case and investment appraisal process traditionally required.

To secure funding that delivers ‘value for money’ transport interventions, the conventional Treasury rules assert that it is necessary to submit a robust case for investment. Also required is an evidence base to support that decision making, with appropriate models, methods of cost and impact assessment and benefit cost ratios. These business cases have to be in line with best practice guidance as advised by the Treasury and the Department for Transport. In particular, this includes successfully applying five-case business model approaches to developing Strategic, Economic, Financial, Commercial and Management cases.

These, in turn, mean gathering data, developing the evidence, identifying alternative options, and then analysing and evaluating the impacts and presenting the results and findings to ensure value for money interventions to support local and regional economic, social and environmental goals.

Recent years have seen more opportunity for establishing the case for transport investment where the traditional benefit-cost ratio might not stack up, typically re-focusing the case for change on improving connectivity and socio-economic issues, and supporting Levelling Up and Transformational outcomes.

These depend on supporting visions and aspirations expressed through local political processes, which effectively capture broader outcomes than simply a financial or even classical economic returns.

Achieving strategic objectives is now often overtly stated as the reason for significant major investment interventions. Recent examples have included holding the 2012 Olympic Games in London, to deliver a strategic aim of regeneration in East London and increased participation in sport and Crossrail’s strategic goal to increase transport capacity and connectivity to match expected population growth and changing economic activity in London.

These projects obviously drew heavily on the public purse, but their benefits can now be felt in other, non-financial ways. Admittedly, the narrative for building HS2 was couched in similar terms, but both the original logic and implementation failures on the way left questionable potential benefits for the huge and mounting costs.

A clearly defined strategy is still critical to the success of strategic projects, of course. But, much better to be one which has got genuine buy-in from stakeholders and broadly based political endorsement, as part of a pre-existing wider vision.

This could logically mean that a detailed options analysis and business case evaluation is not always essential for a project that has clear community and local political support. And in the case of reallocated HS2 money, where the project has been clearly identified as deserving of the investment that otherwise could not have be provided.

A number of major strategic plans at local and regional level fall into this category of directly named deliverables. They include the Midland rail hub, the Leeds rapid transit scheme, and the East Anglian rail upgrade to serve freight to and from Felixstowe. Indeed, these prospective projects and others are both listed in the Government’s Network North strategy document and strongly advocated in the recent Second National Infrastructure Assessment published by the National Infrastructure Commission.

So, given the overt commitment to them, by both their local proponents and now the Government, what should be the speedy project definition and detailed design steps to get them underway as soon as possible without effectively pointless extensive business case preparation and assessment?

Interestingly, the professional responses to the HS2 cancellation have varied in this regard between mourning the loss of the rail project itself, to recognising the opportunities in the new funding distribution that came with its abandonment.

A greater focus should now be on how the released resources will be distributed, their deployment prioritised, and their spending authorised and managed in the areas of the North and Midlands to which they have been promised. What role will the DfT play, what level of Treasury control will be exercised, and what procedures will be required to get projects under way are therefore most important, but not yet very clearly indicated matters.

It is to be hoped that the case-making and regulatory processes – including the arcane Transport and Works Act submissions and public examinations – might be streamlined for projects that have widespread political and public support. In its five-point manifesto submission to the political parties ahead of the general election, just made by the Transport Planning Society, and reported in this issue of LTT, it calls for “in-principle approval for projects that deliver against agreed national outcomes to speed up delivery, such as tackling safety, air quality and decarbonisation”.

By contrast, the Chartered Institute of Logistics and Transport want something rather different in their post-HS2 10 point plan, which we also report, stating that “candidate investment schemes should be prioritised objectively and ranked by their Benefit Cost Ratio, which should be calculated using an internationally approved cost of carbon to ensure maximum decarbonisation is delivered”.

Either way, a better pathway to achieving more local versions of the ‘transformational’ impacts that were argued for in the HS2 plans is now an urgent need.

The key considerations to address must logically be:

• Best value network coverage of new schemes and their local impacts through social and economic development and improved connectivity

• Best available design, construction and operating technologies

• Optimal flexibility in evolving longer-term network development;

• Net Zero compliance for both construction and operation

• Whole life costing and maintenance and renewal/resilience strategy

• Establishing a sustainable operating cost/revenue equation, and the provision of any necessary ongoing support

• Best possible cost control and progress management processes.

These practical matters are arguably of more importance than polishing up a theoretical business case or fitting everything into the complex methodology of the Transport Appraisal Guidance.

What is now required is a pragmatic new way to get things done usefully, on time, and within budget.

As well as the major strategic infrastructure-led schemes that have been now made possible by the HS2 funding reallocation, there are other smaller, but equally locally significant transport improvements that should usefully follow a similar fast-track path. Where large scale infrastructure is not the best solution, other excellent value measures can be readily justified.

Improving local bus networks is a prime example, and there is no better model to follow than the achievement in Leicester under the impressively created and delivered enhanced partnership involving the city council and six different operators. The city’s lead in improving provision for buses, achieving efficiency operationally by partnership working, and its all-electric vision and strongly customer-facing operating and ticketing model are an exemplar for others to follow. As reported in this issue, this is a fine example of a locally implemented formula that could be copied in many other areas under a general approval process rather than requiring detailed assessment in each case.

There is now a £36bn opportunity to make a major impact on the transport system in conurbations, cities, towns and local neighbourhoods. It deserves an implementation plan that is fit for purpose and not just a repeat of existing unsuitable practice.

Peter Stonham is the Editorial Director of TAPAS Network

This article was first published in LTT magazine, LTT880, 13 November 2023.