Financing Implications Arising from the Economic Appraisal of the Transport 2025 ? Transport Vision for a Growing World City
C Porter, M Keegan, Transport for London, UK
The paper will briefly explain the appraisal process for the full London Transport 2025 programme.
Focus: Using the appraisal of Transport for London?s new twenty year strategy, Transport 2025, to inform discussion on the possible future financing of large scale urban transport schemes, given that potential financial returns to government through taxation could be greater than initial capital investment.
Transport 2025 is a 20-year transport vision for London which aims to address the significant transport challenges arising from the major population and employment growth facing London. It recommends the transport policies and investments needed to support the growth and development of London as envisaged in the Mayor's London Plan to support its economic, social and environmental objectives.
The appraisal of the full programme was based as far as possible on established methodology such as that developed for Crossrail and corresponded as closely as practicable to the published guidance from the Department for Transport (DfT). As Transport 2025 is one of very few appraisals to consider a whole programme of multi-modal schemes, it was necessary to innovate several new areas of appraisal, such as agglomeration and other wider economic impacts.
The paper will briefly explain the appraisal process for the full Transport 2025 programme. It will summarise the four separate measures used in the appraisal:
· A conventional transport benefit to cost ratio (BCR), based on journey time, ambience and safety benefits
· The GDP benefit to the UK economy
· A broader analysis including the wider economic benefits.
Particular attention will be paid to the investigation of the programme?s agglomeration benefits. The scale of these benefits will be highlighted both as a proportion of the total benefits and as a comparison to those achieved from a purely conventional appraisal.
The paper will show that by adding the wider economic benefits to the conventional appraisal, perceptions of who benefits from new transport projects can change significantly. It will demonstrate that the true returns from urban transport schemes accrue not only to users through time saving benefits but also to business and government through GDP growth and taxation.
Moving away from the specific example of Transport 2025, the paper will discuss how the inclusion of wider economic benefits can not only lead to a re-ordering of scheme priority but also would allow funding for many more projects. In some cases the inclusion of wider economic benefits can even demonstrate that for UK plc, these schemes can be financially positive with the tax paid on the increased GDP being greater than the capital investment.
Lastly the paper will investigate the financial implications of wider economic benefits in transport appraisal. If schemes can be considered as financially positive, might funding move away from central government and the treasury towards the City and financial institutions? Will it allow individual cities the change positively invest in their own infrastructure and better work towards planning their own development and growth with less reliance on central government funding.
Association for European Transport