Transcript Document

Institute for Transport Studies
FACULTY OF ENVIRONMENT
Appraisal Practice; The Crossrail
Approach
Tom Worsley
Crossrail – the scheme
Crossrail map with connections
Journey time savings Liverpool St - Heathrow 23 mins(55 now),
Paddington - Canary Wharf 14 mins (30 now)
Addition to London’s rail capacity – overall 6%, C.Area 10%
-
Crossrail – from first
proposal to start of works
1944
Abercrombie Plan
1987-9 CLRS
• E-W and N-S Crossrail – best options
• Docklands - a different type of scheme – referred to ELRS – JLE 1999
1990
Decision deferred – recession and decline in demand
2002
CLRL established by SRA and TfL
2005
Montagu review of 2003 Business Case
2005
Updated business case – WEBs
2007-10 Supplementary Business Rate – 2007-10
2005-8 Crossrail Bill/royal assent
2009
Start of works
Standard Appraisal and modelling
practice - CLRS 1987-9
Models and appraisal – (required to follow DfT guidance)
• LTS and RAILPLAN – Fixed employment, fixed trip totals - route, mode and
for non-work trips destination choice allowed to change. Delta GC for
appraisal.
• Conventional benefits plus weights on time savings for interchange, walk, wait
and crowding. Road decongestion externalities.
• BCRs of between 1.6 and 1.9 for the better options – E-W and N-S Crossrail
Unresolved
• Funding
• Institutional arrangements/governance
• Scheme champion
• Labour supply effects – zonal job totals fixed
Exogenous – recession and decline in demand – Crossrail proposal
deferred.
Links to Docklands 1987-92
ELRS – Jubilee Line Extension
• Modelling and appraisal as for CLRS – extreme crowding in do-minimum
• BCR<1.0 but scheme approved – completed in 1999
• In place
• Funding (subsequently unravelled)
• Institutional arrangements to deliver scheme and land use changes (London Transport,
LDDC) and measures to induce development
• Scheme champion (PM’s support, private developers and LDDC)
• LDDC’s forecasts shifted jobs to Docklands zones, but no overall effect on labour
supply
• Modelling and appraisal methods failed to capture regeneration effects
• Very different circumstances from C. London proposals
Transport and the Economy
1999-2005
Increasing policy focus on transport and the economy - DfT and HMT
interest
•
SACTRA 1999 – identified links, focus on imperfect markets in transport and
land use
•
Eddington 2005 – Noted good BCRs for transport, changes to DfT delivery
processes recommended
Well established appraisal and modelling methods – incremental changes
Dependence on data, evidence and models to capture wider benefits
Main developments
•
Economic Impact Report – regeneration in policy priority areas
•
Wider Economic Benefits
Wider Economic Impacts in
DfT Appraisal Guidance -2005
Wider Economic Impacts – extension of standard CBA
• Agglomeration
• Increased competition between firms (not applicable in England)
• Imperfect competition
• Labour supply
• Increased participation
• Move to more productive jobs
Now used for most larger schemes – requirement from 2012
Agglomeration Benefits
• A measure of the proximity of businesses and of workers to each other
resulting in external benefits
• Based on evidence of effective density and productivity by sector
• Delta ED as estimated from transport model’s delta GC for commuting
and business and zonal employment data/forecasts
• Data /forecasts of value added per worker in DfT guidance
• Coefficients defined in guidance
• Distance decay parameter
• Productivity wrt ED
• Requires multi-modal model compliant with DfT guidance
Labour Supply Effects
Increased participation
• Labour supply elasticity wrt post tax wages plus change in
generalised cost of journey to work
• Welfare benefit – additional tax receipts
• GDP effect – gross output from increase in numbers working
Move to more productive jobs (sensitivity test)
• LUTI model to estimate changes in location of employment
• Data on output per worker by zone
• Welfare and GDP effects as above
Appraisal and decision rules in
DfT
No absolutes, but the Department has;
• Published a definition of value for money
• Provided categories based on adjusted BCRs which define poor, low
medium, high and very high vfm
• Made use of these categories for ranking and sifting out all poor, most
low and many medium schemes
• Adopted HM Treasury’s 5 case business model, setting the economic
case into context
Crossrail and Wider Economic
Benefits
Proposal reviewed in 2003 following upturn in commuting and
approved in 2008
• All the now standard transport user benefits plus (post 2005) WEBs
adding around 50%+ to user benefits
• No LUTI model – delta capacity constraint redistributed workers to C.London
• What had changed since CLRS?
• Institutions/governance – Montague
• Funding – WEBs helped
• High vfm – new DfT guidance includes WEBs
• Champion – changed institutions
Composition of Crossrail
benefits
Category of benefit
£bn 2002 prices
DfT
Public transport users; commuting and
leisure
6.1
Public transport users - business
4.1
Road users; commuting and leisure
1.6
Road users; business
0.6
Indirect tax change
-1.4
Total transport user benefits
11.0
Agglomeration
3.1
Move to more productive jobs
2.0
Labour force participation
0.8
Imperfect competition
0.5
Total Wider Impacts
6.4
TfL
15.5
7.0-18.0
Alternative metrics/objectives
GDP per £’s worth of public spending
• GDP defined as PV of generalised cost savings for ‘productive’ trips,
defined for this purpose as commuting, freight and business
• Used by DfT ministers but
• Not a pass/fail test – at the best sets priorities
• Identification of GDP/non-GDP very crude
• Impossible to audit/evaluate
• Not in line with National Accounts
An alternative approach –
GVA effects
KPMG approach makes estimates of
• Productivity effects of increased agglomeration
• Changes in the distribution of employment in response to
increased accessibility
• Wage equation – elasticities of 0.11 business to business and
0.09 labour to business for wage rate wrt generalised cost
• 80% of this productivity gain explained by changes in sectoral
mix; 20% changes in productivity within sectors
• Redistribution through an elasticity of employment density wrt
labour and business accessibility – some allowance for intraregional shift.
Conclusions and Challenges
Is CBA plus WEBs an adequate guide for decision-makers?
Issues
•
Translating time savings into real effects
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Is the BCR/VfM the right metric?
•
Appraisal of land use and other changes to deliver the overall outcome
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Identifying beneficiaries – potential funding sources
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Optimism bias in forecasts
•
Does it come early enough to influence decisions?
In support of CBA plus WEBs
•
Has worked for most schemes – exceptions – JLE, HS2
•
Provides consistency between schemes and between forecasts and of appraisal methods
•
It relies on the transport model and so has low costs