Assessing the value and viability of transport schemes Transport-Led Development in the Midlands 2016 Dave Jevons Partner 19 October 2016

Overview The Midlands economy Transport as a stimulus Five case model 19 October 2016

The Midlands economy GVA per head (current prices) 19 October 2016

The Midlands economy Employment rate (%) 19 October 2016

The Midlands economy Long term economic plan Announced in 2015, six aims: raise the long term growth rate of the Midlands to at least the forecast long term growth rate of the whole UK to create 300,000 extra jobs in the Midlands put skills at the heart of the economic revival of the Midlands deliver £5.2 billion of investment into new transport infrastructure in the Midlands back science and innovation in the Midlands improve the quality of life in the Midlands 19 October 2016

Transport infrastructure as a potential stimulus New transport project Connectivity: availability of transport links Increased labour supply Increased labour productivity More international trade Cost of transport More investment Higher efficiency More innovation Enhanced competition GVA GVA/person Employment Changes to structure of the economy 19 October 2016

Transport infrastructure as a potential stimulus Existing infrastructure Investment options Growth mechanisms Demand multiplier Productivity Configuration effects Innovation Direct New networks Increases growth potential Benefit to economic growth Enhancements Maintenance Stock level, quality, spare capacity Indirect 19 October 2016

The Five case model Green Book-compliant assessment The Green Book is a set of guidelines published by the UK Treasury for appraisal of central government projects With regard to a project, the purpose of the tool is to answer these two questions: are there better ways to achieve this objective? are there better uses for these resources? These are answered by identifying relevant options, attributing monetary values to impacts, and assessing the costs and benefits of each option The principles could be applied to any assessment; not UK-specific 19 October 2016

Five case model Overview That the intervention is supported by a compelling case for change that provides holistic fit with other parts of the organisation and public sector – the “strategic case” That the intervention represent best public value – the “economic case” The that proposed Deal is attractive to the market place, can be procured and is commercially viable – the “commercial case” That the proposed spend is affordable – the “financial case” That what is required from all parties is achievable – the “management case” 19 October 2016

Five case model The process Market failure Objective Options Appraisal Decision 19 October 2016

Five case model Economic case User benefits Financial cost of scheme Environmental impact Social impact Wider economic impacts - agglomeration - competition - labour supply Benefits = BCR Costs Benefits + WEI = BCR (including WEI) Costs Note: BCR, benefit–cost ratio. Source: Oxera. 19 October 2016

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