The Department for Transport (DfT) has announced a 'complete restructure' of key aspects of the national WebTAG guidance for appraising transport schemes.
Of the major changes required by the guidance, local transport chiefs are now advised to provide supplementary economic analysis - such as using SCGE and LUTI models - where schemes could have a transformational impact.
Changes include:
- A complete restructure of the guidance to reflect the primary mechanisms through which transport influences the economy.
- Introducing an Economic Narrative to understand the context in which a transport investment occurs and inform analysis relevant to the scheme.
- Introducing an Economic Impacts Report to improve analytical transparency.
- Introducing the concept of ‘Levels of Analysis’ to highlight differences in the maturity of evidence bases.
- Allowing innovative modelling approaches to supplement WebTAG methods.
- A stronger focus on additionality and displacement in the analysis and reporting of economic impacts.
- Greater clarity on the relationship between the measures of benefit used in appraisal (welfare) and other economic metrics such as GDP and employment and how these should be reported within business cases.
The new guidance will become definitive in the May 2018 WebTAG update when units A2.1, A2.2, A2.3, A2.4 and M5.3 will be included.
Over the course of the next year the DfT plans to develop 'a new analytical strategy'. Officials said it would engage with stakeholders to define the scope of the strategy and research priorities.
The key objective of the new WebTAG guidance is to help transport officials 'better communicate and robustly appraise economic impacts in transport business cases'.
DfT officials pledged an 'external engagement strategy to publicise the guidance and support users, both in terms of its technical application and role in decision making', which would involve a series of engagement events in spring 2018, the publication of case studies and the development of an expert panel to advise on supplementary economic modelling.
A consultation on the proposals was launched late last year, which revealed various concerns the DfT said have now been adressed.
Amanda Rowlatt, chief analyst and science director at the DfT said: 'This conclusion of the consultation on wider economic impacts represents a critical milestone in the development of the Department's framework for appraising the impacts of transport investment.
'The guidance allows for a broader range of impacts, assessed using innovative modelling techniques, to be reported within business cases and the value for money assessment.
'We are pleased to be in a position to implement these changes to guidance. We will continue to work collaboratively with experts and stakeholders in order to keep the guidance under review and ensure it remains fit for purpose.'
Have your concerns been addressed?
The DfT claimed respondents welcomed 'the potential to supplement WebTAG methods with innovative modelling approaches, which attempt to model complex economic interactions, such as how the location of jobs may change in response to a transport investment'.
Supplementary analysis
However a number of concerns were raised, including whether 'supplementary analysis' would be mandatory for all appraisals, given constraints on resource and capabilities and whether business cases that did not include supplementary analysis would be disadvantaged in funding decisions.
The DfT said: 'We have clarified throughout the guidance that, in most cases, these models are not needed to build robust business cases. However, for those schemes which are expected to have transformational impacts, in other words significant changes to the spatial distribution and structure of a local economy, this type of modelling provides a way of capturing those wider impacts.'
Sensitvity tests
Respondents also raised concerns about the reporting of supplementary analysis as sensitivity tests in value for money assessments.
The DfT said: 'We have updated the guidance to state that estimates of additional welfare estimated using supplementary analysis should be reported as an indicative monetised impact, alongside the initial and adjusted benefit cost ratios, and is taken into account in deciding the value for money category. The weight attached to this evidence in deciding on the value for money category should reflect the underlying confidence in this analysis, including the level of assurance undertaken.'
Welfare and non-welfare metrics
Respondents suggested planned changes to the reporting of welfare and non-welfare metrics could create confusion with GDP and welfare estimates being construed as additional, rather than as alternative measures of economic impacts.
Within welfare analysis, economic impacts are primarily captured by the estimation of user benefits e.g. as a result of time savings.
The DfT said: 'We have changed the guidance to state both welfare and non-welfare measures should be reported in the economic case and, where necessary, cross-referenced in the strategic case.'
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