Time for a re-appraisal

IN THIS ISSUE, two thoughtful TAPAS contributors challenge conventional thinking on the role of economics in transport decision-making from both a technical and more philosophical perspective. What they both share is a frustration that a full discussion of the implications of looking at things through different lenses seems hard to get, as ‘the system’ just grinds on with handle turning on processes that provide required justifications, and that at least some parts of society (perhaps best called the political, industrial and administrative establishment) remain comfortable with.

In this context it is interesting to reflect upon how new ways of looking at values and objectives actually emerge, and lead to change in processes and outcomes, and how radical they can be.

We are currently in the midst of a period in which the new Government links everything it is doing to the idea that it is part of a ‘Plan for Change’, though few are entirely clear what that overall plan amounts to in terms of outcomes. There are certainly some very interventionist steps in what it is doing — for example in terms of consequential changes to processes and regulation that it believes frustrate achieving the economic growth it desires, the latest being those embodied in its planning and infrastructure bill.

A key question in any discussion of values and objectives, and how they are reviewed, evaluated and implemented, is where and how fundamental fresh looks at the decision-making and appraisal process should come from, and what the best expertise suggests the process should ideally technically contain.

Both our contributors, Professor Phil Goodwin and Emma Woods, are seeking at least a conversation about how things might be approached in new ways and where that discussion might be permitted, if not embraced, within government.

Interestingly, within the government machinery, there is actually a little known centre of activity with the apparent responsibility of supporting such analytical review and reflection. Known as The Government Analysis Function, it sits within the Civil Service’s functional model and brings together all members of the analytical professions across the departments of state,as well as anyone or any team that produces analysis, evidence and research to support decision making in government.

Head of the Analysis Function is the National Statistician, currently Professor Sir Ian Diamond, who took on the role in October 2019 as Head of the Government Statistical Service. He is also a member of the UK Statistics Authority Board as Chief Executive and Permanent Secretary.

In his role as Head of the Analysis Function, Sir Ian advises ministers, the Cabinet Secretary and senior officials on the production, dissemination and use of analysis across Government. He has stated that he is very keen to promote and support the use of innovative analytical capability, and that the Analysis Function vision is ‘Delivering better outcomes for the public by providing the best analysis to inform decision making.’ His reports say that his objective is ‘world class analysis that has driven decision making and supported government and society in understanding the most important topics and challenges of the day.’ His foreword to the Analysis Function Strategy, published in 2022 for the period up to this year, set out aspirations to deliver ever more innovative and impactful analysis that changes society for the better.

‘Never has there been a more important time to reach out across our analytical community – and far beyond – to collaborate, share knowledge and seize new opportunities, to ensure that analysis really is the best it can be.’ Sir Ian said.

Good analysis is one thing, how it is used, presented and applied, of course another. Unfortunately, there remains the fundamental issue of purpose in the way analysis is approached, and of course, the intrinsic significance and value of different input and output elements that any analysis must embrace.

Which brings us back to the economic dimension. As Oscar Wilde put it in his play Lady Windemere’s Fan, through Lord Darlington’s famous quip, a cynic is ‘a man who knows the price of everything and the value of nothing.’ As with so much of what Wilde wrote or said, this is more than just a nice turn of phrase – it hits at the heart of the problems of society. The price of a product is generally the same for everyone, but value is subjective, and open to question, as both Goodwin and Woods explore in their articles.

In the world of transport, there has been a journey of exploration and examination about the constituent parts of the equation that make up the ultimate value ( or benefit) of any scheme, policy, or service, for the past sixty years in terms of the application of the technique of cost-benefit analysis. Though that has given economists and statisticians a framework to play with, the political dimension in setting the all-important objectives (and arguably values, too) has become more and more apparent.

In the modern era, the need to make and justify politically challenging decisions has led to innovative pieces of analytical work ranging from the pioneering Foster and Beesley 1966 study that supported investment in London’s Victoria Line, the Roskill Commission charged with identifying the best site for London’s third airport between 1968 and 1970, the Standing Advisory Committee on Truck Road Assessment between 1986 and 1999 and the work that formed part of the last Labour Government’s transport policy framework under Deputy Prime Minister John Prescott, between 1998 and 2007. Named the New Approach to Transport Appraisal, this led to the elaboration of a new set of analytical principles within the Department for Transport, though there has been criticism about whether those principles were applied in practice or eroded by caveat and reinterpretations.

Since then, no deep and questioning new thinking, beyond technical issues and input values, seems to have been applied to transport project analysis other than perhaps that prompted by Ken Livingstone when he was Mayor of London, in respect of the use of road space and the justification for charging for it, and the political mission of Welsh Transport Minister, Lee Waters, between 2022-2024, with the Roads Review led by Lynn Sloman. This led to the consequent revision of the Welsh Transport Appraisal Guidance intended to reflect the objectives of the ‘Well-being of Future Generations Act’ 2015. This included a reduced priority to values of time savings in appraisal, and the presentation of two versions of an appraisal: one with, and one without time-saving/costs, prompted by the issues raised by lowering speed limits to achieve better road safety outcomes. In Wales, and also in Scotland, (but not in England) the need to reduce traffic levels was included as a policy aim for climate objectives.

Some hope for similar change was invested in the arrival of Louise Haigh as Transport Secretary with the election of the new Labour government last year, and the appointment of a Roads Review panel within her Department, but that seems to all intents and purposes to have been snuffed out by her departure from office within just a few months.

There have not obviously been any other recent trigger points or prompts to bring genuinely substantive change to either the process of transport project analysis or decision-making. In fact, the over-riding quest to achieve economic growth, whilst potentially down-playing environmental and social goals, has sometimes been interpreted as increasing the case for conventional expansion of road capacity, though the Treasury Green Book on investment appraisal and business case - and indeed the DfT’s own advice in the TAG guidelines - should not necessarily lead to this conclusion.

Even the work on NATA initiated in the Prescott period seemed not to live up to its early promise and by October 2007, Prescott was gone, and the DfT published a consultation document – The NATA Refresh: Reviewing the New Approach to Appraisal – alongside, and as part of, its new transport strategy document ‘Towards a sustainable transport system: Supporting economic growth in a low carbon economy’ under a new Transport Secretary. It is strange to read that document now. At least that Labour government, in its final years, recognised a link between Economic Growth and the quest for Net zero, something that is far less articulated now, and the strategy also accepted demand management and a level playing field between modes as core elements of project appraisal.

There was even interest in extending the Environmental Capital Approach to valuing the natural environment in NATA at that time, a perspective embraced by Natural England in considering the valuation of the impacts of transport schemes on landscape, biodiversity, heritage of historic resources and water environment, and make recommendations as to how WebTAG might be amended to improve the application and effectiveness of ECA.

Looking back, it very much seems that the general principles of NATA included some good suggestions, but these became undermined by exceptions, caveats, reinterpretations and resistance. The ‘refresh’ could have been the opportunity to correct these and return to the original 1998 intentions, but this was not how it turned out.

NATA advocated a broad multi-modal approach including demand management. But appraisal has in practice been generally confined to narrower calculation of benefits of road projects providing small time savings or increased car travel whilst consideration of walking, improving public transport quality, cycling and land use planning measures, especially favouring settlement patterns which reduce car dependence, have been largely marginalised. Meanwhile pricing systems reflecting full external costs, and street management measures including the reallocation of scarce road capacity are well outside the TAG formulations and choices. Yet these are precisely the most critically important issues for sustainable transport systems.

Nor does current practice often include realistic and well-conceived alternative options to the project being presented, generally involving major infrastructure provision, or a full range of potential future scenarios beyond what amounts to ‘business as usual’. And as Goodwin explores in his article this issue, how people with higher incomes spend more money than poor people to secure time savings, life, comfort and quality of life, but that does not mean their time, lives, comfort and quality of life are worth more. Then there is the often under recognised reality that time spent on good quality public transport can be used for productive work, relaxation and thought. This ‘reduces the value of time’ which should be treated as a benefit, not a loss. Whilst the treatment of very small time savings remains a matter of contention.

Commitments to make very large reductions in carbon emissions remain almost invisible in most transport schemes, something justified by assumed success in meeting carbon reduction targets from other policy measures and sectors, when they should sensibly be an instrument in achieving them in transport itself. In contrast ‘Agglomeration’ calculations are used to suggest improving transport facilities for the more prosperous areas, and ‘regeneration’ outcomes expected for the poorest ones, though the evidence base for both is still very weak.

With 60-year appraisals and around 20-year forecasting ability, discounting is all very well, but the impact of air pollution, climate change, or deaths due to traffic accident may not be less important to future generations than to the present one. An hour saved from travel will not be of greater use to future generations than to us, just because they will be richer.

With today’s concerning horizons regarding Climate Change, a greater degree of possible adaptation of behaviour must surely be considered, with diverging scenarios of what may happen, across a range of policy areas including economic growth, climate resilience, traffic policy, energy prices, demographic structure, and car dependence.

We seem to be at the point where a single BCR is almost always highly fragile, which is why there has been a move to develop a range of future scenarios. However even an assessment summary table can never provide a full description of all the outcomes, whilst all aspects of input and output which depend on research for their verification should be open to scrutiny and challenge. Matters of theory and evidence must not be treated as ‘policy and therefore unchallengeable’, as any circumstances in which scheme promoters are able to claim that they were simply ‘following Government advice’ is placing the achievement of policy goals beyond the commitment to ‘ensure that analysis really is the best it can be’ as set out as a key aim for the Government’s Analysis Function.

Appraisals should recognise that policies and projects are contested, and research and evidence are debated. Peer review and professional audits should reflect the full range of professional thinking, not be confined to rather similar consultants approving each others’ reports. Objectors may be an irritant, but they are not lesser beings than promoters: and on some occasions, they have been a truer voice of the future than has been offered by received wisdom.

A new Department for Transport Appraisal and Modelling Strategy is set to be published during 2025, reflecting the mission priorities and economic and social values of the new Government. It will also indicate the direction being set by the DfT’s New Chief Analyst and Economist Ian Mulheirn, who also heads the department’s Transport Appraisal and Modelling Section (TASM). Mulheirn took up his post last autumn after the General Election in succession to Amanda Rowlatt and may have expected to work as part of Louise Haigh’s reformist agenda. The Chief Analyst must now be sitting in an interesting place between the detached civil service position, and immediate political pressures on delivering government priorities. We must wonder what his agenda is now on these matters, and if there is any scope at all for even a discussion of possible better ways to look at crucial strategic transport decision-making, and the issues now being raised by the likes of Phil Goodwin and Emma Woods.

Some hope was invested in the arrival of Louise Haigh as Transport Secretary last year, and appointment of a Roads Review panel within her Department, but that seems to have been snuffed out by her departure from office within just a few months.

Peter Stonham is the Editorial Director of TAPAS Network

This article was first published in LTT magazine, LTT911, 19 March 2024.