Added; < 02-07-01, Changed; 13/05/2014, 08/10/2017
Poor return on dual A21 From The Courier, November 25, 1994
THE GO-AHEAD for the A21 dualling between Tonbridge and Pembury will bring pleasure to the road lobby. For the taxpayer it is another matter, representing a poor return on the £18.3 million investment mentioned at the Department of Transport inquiry. Readers will remember that the scheme involved building a stretch of three lane motorway, but classified as trunk road, to supplement the inadequate single lane trunk road. The economic justification for this oversize dualling is the notorious cost-benefit analysis (COBA 9 in D of T jargon). COBA consists of three principal elements:
1. Capital cost.
2. Cost benefits from an assumed reduction in the accident rate on motorways as opposed to two way traffic trunk roads. The black spots arising from eight lanes funnelling down to four lanes has been conveniently ignored.
3. Cost benefits from time saved by road users.
From the D of T’s own figures this cost-benefit analysis gives an APR of nearly 30 per cent, easily exceeding the Treasury hurdle rate of 8 per cent APR. At the inquiry and in subsequent correspondence with senior D of T officials at Marsham Street, I pointed out that a cost-benefit analysis must include all elements. In particular there would be much environmental damage to an area of outstanding natural beauty and Tunbridge Wells is trying to build up its tourist trade. The actual construction of motorways produces further damage through the digging and transportation of aggregate and spoil There is overwhelming evidence from Oslo and Australia that traffic fumes cause ill-health, particularly asthma which has a death rate three times that for AIDS. The D of T expert conceded that an honest cost-benefit analysis should include all factors. However the department was as yet unable to measure these cost penalties and therefore these factors had been left out. Imagine leaving half your income out of a tax return because you could not work it out! The D of T has a whole division (HETA) given over to the mystique of cost-benefit analysis. Surely they can get an answer that is roughly right rather than precisely wrong? The cost-benefit credits for time saving are entirely arbitrary. At the inquiry I asked if the COBA evaluation had been calibrated against a profitability measure recognised by accountants, finance directors and bankers. The reply from several levels of D of T officials was that they did not understand why calibration was necessary. Our rail system suffers because it is possible to carry out a proper economic evaluation and it is rare for transport infrastructure projects including roads to exceed the Treasury’s eight per cent profitability hurdle. At the inquiry and in correspondence with the Permanent Under Secretary (A.P.Brown) I offered to produce a framework for an honest appraisal of transport schemes so that rail, water, road and air projects could be evaluated on a common basis – a level playing field as the politicians would have it. The top man sent a sniffy letter saying that the D of T could not accept a spurious scheme, even though my scheme had not yet been produced. A surprising fact is that the Treasury has approved this deeply-flawed COBA evaluation as meeting the requirements of public sector investment.
xxxx xxxxxxxx, Tonbridge