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Added < 02-07-01, Changed; 08/10/2017, 12/05/2014
Inquiry Document No.
The Department of Transport’s Response to Representation No. 18
Mr J Mainhood xxxxxxxxxx
Representation No. 18 The Department of Transport’s response to:
Mr J Mainhood xxxxxxxxxxxxxxxxxxxx.

Summary of Representation 1.1

Mr Mainhood suggests that the improvement to the section of the A21 could be achieved by using the existing A21 for one 2 lane carriageway and constructing a new 2 lane carriageway for the other direction. 1.2 Mr Mainhood also considers the Department’s analysis of the scheme to be flawed in respect of the Traffic Forecasts and the COBA analysis. 2. Draft Orders Effected 2.1

The A21 Trunk Road (Tonbridge Bypass to Pembury Bypass Dualling) Order 199 The A21 Trunk Road (Tonbridge Bypass to Pembury Bypass Dualling Slip Roads) Order 199 The A21 Trunk Road (Tonbridge Bypass to Pembury Bypass Dualling Side Roads) Order 199 The A21 Trunk Road (Tonbridge Bypass to Pembury Bypass Dualling Compulsory Purchase Order (NO SE ) 199 3. Department of Transport’s Response 3.1 On Line Improvement 3.1 The Department could not accept the scheme suggested by Mr Mainhood in paragraph 1.1 above for the following reasons: i) The existing A21 has eight frontage accesses and two side roads connecting to it. On grounds of highway safety it would be unacceptable for them to be connected directly to the trunk road. As well, even if such connections were permitted, significant disbenefit would be incurred by these properties since only left in and left out manoeuvres would be allowed. ii) The existing A21 is substandard in respect of horizontal and vertical alignment, particularly at the Castle Hill Bend. This bend has a history of serious accidents including a number of fatalities and in the event of the road becoming one way, with increased traffic speed resulting from driver perception of a high standard dual carriageway, these substandard sections would become an unacceptable highway safety hazard. iii) The environmental benefits of removing traffic pollution and noise from properties would not occur. iv) The Department considers that the new road should be three lanes wide in each direction to cater for the predicted traffic demand. The existing road is only wide enough to accommodate 2 lanes. 3.2 Traffic Forecasts Mr Mainhood states that the Department’s traffic forecasts imply annual compound growth of up to 4.63%. It is incorrect to suggest that the increase in traffic flows are due to growth, per se, as they make allowances for transfers of trips from other routes. Taking 1986 as the base, the forecasts make allowances for transfers due to the Pembury Bypass, the Tonbridge Eastern Relief Route, as well as the A21 improvement. The Department has adopted forecasts which reflect the inevitable uncertainty involved. The “low” and “high” growth forecasts represent a range of conditions based on alternative views of the future and which indicate the widest extremes within which it is considered sensible to plan. The high growth assumption represents a growth of 2% per annum in the economy which has been sustained at least on average by the UK economy since the war. Mr Mainhood acknowledges that growth has been “a little over 2%’ since 1964. On the other hand, the alternative view is based on a very low growth economy by historical standards, equivalent to a 1% growth per annum in the economy. The overall range is intended to provide a realistic but cautious view; the centre of the range being slightly below that achieved by the UK economy over the last century 3.3 Vehicle and Road Utilisation It is acknowledged that private cars have a low occupancy. Surveys of trunk road traffic indicate that the national average is 1.76 persons per car. With regard to commercial vehicles, the nature of business implies that there will often be empty return trips. Nevertheless, it is surely in the operator’s interest to minimise the amount of dead mileage on financial grounds – an example of market forces. Mr Mainhood suggests that traffic delays are a good way of encouraging better road utilisation. Whilst this may be the case theoretically, traffic delays on trunk roads are environmentally damaging and cause diversions to less suitable roads as well as being harmful to the economy. This is contrary to the Secretary of State’s declared policy. 3.4 Cost Benefit Analysis Mr Mainhood suggests that cost benefit analysis (COBA) is discredited and a return on capital evaluation is “absolutely vital”. COBA was developed specifically to assess the economic worth of highway schemes and it is a matter of policy that it should be applied to each new project. It was developed for a sector which does not have a marketable output, and typically it is geared to measuring costs and benefits to society at large. Since users are not asked to pay directly for the benefits received, they have to be estimated on the “willingness to pay” principle, and COBA therefore uses what is technically known as a “consumer surplus” approach. It is also necessary to allow for the fact that the benefits are typically received over a long- term future period (30 years), whereas the capital cost is incurred in the short term. By stating that roads investment requires a return on capital evaluation, Mr Mainhood implies that COBA is less rigorous than the evaluation applied to other forms of investment. COBA uses the principle of discounting rather than paying interest to an investor. The discount rate principle was established in 1978 when the White Paper on Nationalised Industries (Cmnd.7131) was published. The then Chief Secretary to the Treasury announced the figure in the following terms:- “In selecting the appraisal rate [for project appraisal in the non-trading public services] account has to he taken of the special circumstances, for example the absence of market forces and the greater risk of appraisal optimism for projects where returns are primarily non-financial. The appraisal rate will generally therefore need to be set somewhat higher than the rate which reflects the opportunity cost of capital (which represents the rate which an investment would have to earn in order to justify in economic terms the commitment of national resources which could be used in other ways).” 3.5 Assessment of Benefits Mr Mainhood comments on the validity of the benefits claimed for the project, particularly the reductions in accidents and savings of travel times. He suggests there are more cost effective ways to reduce accidents than to build roads. Whilst this may be true in some cases, in the particular case of this section of the A21, being a link between two existing sections of high standard dual carriageway, it is difficult to see realistically how the hazards of under capacity, seriously substandard alignment, and direct accesses from properties and side roads, could all be addressed except by new road construction. In any event, the published scheme brings substantial other benefits, in addition to accident savings, for example, relief to the A26, time savings, and reduction in noise and improvements in amenity at residential properties close to the road. In 1987 the Government announced an objective to reduce the number of accidents by one third by the end of the century. On average, accident savings account for 18% of trunk road benefits. In particular Mr Mainhood questions the validity of time savings. Working time is valued at its cost to the employer of the travelling employee, on the grounds that the value of the output produced in working time must be at least equal to the cost to the employer of hiring labour for that time. This assumes that all savings in working time can be used for the production of output by the employee. As such it is assumed that the savings translate, in Mr Mainhood’s words, directly to the bottom line. Non-working time embraces all other purposes of travel, including travel to/from work, personal business, shopping and ‘pure’ leisure travel. There is no direct market in which non-working time can be bought and sold in the same way that the employer can buy the working time of an employee. However, it is not correct to say that it has no value. In economic terms, this would assume that there is no other activity the traveller would rather be doing (i.e. no opportunity cost has been foregone). The value of non-working time used in COBA has been derived from studies of how people choose to travel when faced with a choice The results suggested that on average people value savings of in-vehicle non-working time at a sum equivalent to 25 per cent of their gross hourly wage rates and this has been adopted in COBA. A principle of cost benefit analysis is that benefits are estimated as they accrue to society as a whole. The existence of indirect taxation in the economy means that an adjustment must be made to the valuation of benefits to avoid overstatement. Indirect taxation involves transfers between sectors of society rather than a cost to society as a whole. This adjustment is incorporated in the values used in COBA. It is, therefore, not correct for Mr Mainhood to suggest that the values of time are overstated because of personal taxation. 3.6 “Table T2 Reassessed” In his proof, Mr Mainhood has re-presented information from the COBA assessment of the Published Route (Table 2 Doc. 91) but inflated the PVC values to represent 6 and 9 lane roads respectively. He asserts that expenditure of two or three times that proposed is worthwhile, thereby calling into question the COBA assessment. This hypothetical case has some validity in that a positive NPV suggests a worthwhile project. However, in determining the appropriate scale and timing for proposed investment it is necessary to test a number of viable alternatives and select that which maximises the NPV. Clearly, a 6 or 9 lane road would indeed be ‘oversized’, and this is indicated economically (as well as by common sense) in a reduced NPV compared with the Published Scheme.