PUBLIC INQUIRY DOCUMENT

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1 M4 Corridor around Newport PUBLIC INQUIRY DOCUMENT REFERENCE NO. : PIQ/152 RAISED BY: The Inspectors DATE: 05/11/17 RESPONDED BY: Stephen Bussell DATE: 30/01/18 SUBJECT: Updated Economic Appraisal of Objectors Suggested Alternatives Purpose Each of the Objectors Suggested Alternatives to the Published Scheme were appraised against the Welsh Government s criteria as set out in WelTAG (Welsh Transport Appraisal Guidance). This was published in the M4CaN Objectors Suggested Alternatives Report (WG 4.7.2) in March At that time, 22 alternatives had been put forward. A cost estimate for each alternative was provided and a Benefit to Cost Ratio (BCR) calculated. At a relatively early stage of the PLI, two further alternatives were put forward. Although these were not included in the Alternatives Report (WG 4.7.2) these (alternatives 23 and 24), were subject to a full appraisal. Subsequently four further alternatives were put forward in discussions at the Punlic Local Inquiry and in late correspondence. Due to their late submission and the fact that qualitative assessments could be undertaken, these alternatives (namely alternatives 25 28), were not subject to full appraisals. WG responded to these alternatives in the following documents: Alt 25, Mr Phillips, PIQ/112; Alt 26, Mrs Picton, PID/103; Alt 27, Mr Waller, REB/0707; Alt 28, Mr McDougall, PID/165. Since the publication of the Alternatives Report, the Welsh Government updated its assessment of the Published Scheme to account for two main factors. Firstly, the Welsh Government updated its cost estimate for the Scheme to account for the costs of the proposed mitigation measures at Newport Docks. Secondly, forecast traffic flows have been revised to take account of the UK Government s announcement that the tolls on the Severn Crossings will be abolished. Details of the changes are provided in the Revised Economic Appraisal Report Supplement No.3 (WG 2.8.8). The revisions to the Published Scheme necessitates an update to the economic appraisal of the Suggested Alternatives which are still maintained and for which a BCR was calculated. This document sets out the updated results of this exercise. Alternatives 8 10 and have been withdrawn. Accordingly, this note provides results for the 19 remaining alternatives for which a BCR calculation was originally undertaken. These are as listed in Table 1. Qualitative comments on the implications of the changes for remaining alternatives have been provided.

2 Table 1 Objectors Suggested Alternatives Alternative Description 1 Blue Route 2 Blue Route (Phase 1) 3 Green Route (West of Wilcrick Route and M48 / B4245 Connection) 4 North and West of Wilcrick Route 5 Move Part of J23 between Rogiet and Caldicot 6 M48 / B4245 / Severn Tunnel Junction Station Connection 7 Direct Access to Severn Tunnel Junction Station from J23 11 J23A Westbound On Slip 12 Move Main Alignment South at Meadows Road 13 Northern Dock Route 1 14 Northern Dock Route 2 17 Remove Docks Way Junction and Link 18 Free flow J23 and Connection at J23A (2006 TR111 Route) 19 Online Widening of Existing M4 including Brynglas Tunnels 20 Tunnel from Magor to Castleton 21 South of Magor Route 22 Closure of Existing M4 Junctions 23 Blue Route & Dyffryn Link 24 Amber Route Updates to Scheme Costs Assumptions As noted, the capital cost of the Scheme has been updated to account for additional works at Newport Docks in respect of the creation of new quayside, the provision of a moveable bridge to facilitate the movement of vehicles across the Junction Cut, costs related to the relocation of tenants and other facilities and bridge protection works. Futher information is provided in the Scheme Evidence Update of the Welsh Government s Chief Witness, Matthew Jones (WG 1.1.8). Where Suggested Alternatives follow the same alignment as the Published Scheme through Newport Docks, an equivalent adjustment has been made to account for the Docks mitigation costs. For Alternatives which do not pass through the Docks, no such adjustment has been made. Alternatives 13 and 14 pass through Newport Docks but follow an alignment further to the north. For these options, an indicative assessment has been made as to the level of land and compensation costs that would be incurred in respect of ABP Newport. Alternative 17 follows the Published Scheme alignment but removes the Docks Junction. This option would require Docks mitigation works similar to the Published Scheme although an adjustment has been applied to reflect the reduced impact of this option on ABP tenants. The costs used in the economic appraisal of the Published Scheme have also been increased to reflect the extended Public Local Inquiry process. This adjustment has been applied to each of the Alternatives with the exception of the Blue Route variants (for which a bespoke assessment of design stage costs has been undertaken) and Alternative 22 (Closure of M4 Junctions) which does not involve construction of a new road. The cost estimates for the Objectors Alternatives have been derived by applying deductions and additions to the Published Scheme costs to take account of differences in design. Cost deductions include Published Scheme allowances for risk and optimism bias which are assumed to apply at a rate equivalent to the Scheme as a whole. In accounting for the additional Docks mitigation costs, the Welsh Government has undertaken a review of the risk allowances in the project cost estimate. A number of risk items, which had previously been identified in the Employer s Risk budget, have now been realised and further work has been undertaken on developing the design

3 of the proposed Scheme. This has resulted in a slight reduction in the cost deductions applied to generate the cost estimates for the Alternatives. The expenditure profile for the Published Scheme has also been updated to take account of the extension to the Public Local Inquiry process and the requirement to undertake additional works in Newport Docks in advance of the construction of the proposed Usk Crossing. To retain consistency and comparability between the appraisal of the Published Scheme and Alternatives, the updated expenditure profile for the Published Scheme has been applied in all cases. Further information on the treatment of design stage costs and Docks mitigation measures is provided in Appendix A to this note. Updates to Scheme Benefits Assumptions The UK Government has announced that the Severn Crossing tolls will be removed no later than 31 December In view of this, the economic appraisal of the Scheme has been updated such that it is based on a no toll traffic growth scenario. Each of the Alternatives has now been modelled under the no toll scenario and the calculation of economic benefits adjusted accordingly. Scheme benefits are calculated over a 60 year period from the scheme opening year. The December 2016 Revised Economic Appraisal Report assumed an opening year of 2022 and as such benefits were calculated for the period 2022 to Due to the additional works within the Newport Docks, the new section of motorway will not be open to traffic until December In view of this, the appraisal period has been revised such that it spans the period 2024 (the first full year of operation) to This change has been applied to both the Published Scheme and the Alternatives. Results The updated capital cost estimates and BCRs for the Published Scheme and each of the Objectors Suggested Alternatives are set out in Table 2. A comparison of the updated results and the results included in the March 2017 Objectors Suggested Alternatives Report is provided in Appendix B and a detailed breakdown of economic appraisal results is provided in Appendix C.

4 Table 2 Updated Capital Costs and BCRs Scheme Option Project Estimate (Q Prices) Costs for the Economic Appraisal 1 Benefit Cost Ratio Published Scheme 1,093 1, Alternative 1 Blue Route Alternative 2 Blue Route (Phase 1) Alternative 3 Green Route (West of Wilcrick Route 1,141 1,376 and M48 / B4245 Connection) 1.34 Alternative 4 North and West of Wilcrick Route 1,158 1, Alternative 5 Move Part of J23 between Rogiet 1,140 1,372 and Caldicot 1.66 Alternative 6 M48 / B4245 / Severn Tunnel 1,104 1,332 Junction Station Connection 1.75 Alternative 7 Direct Access to Severn Tunnel 1,096 1,324 Junction Station from J Alternative 11 J23A Westbound On Slip 1,108 1, Alternative 12 Move Main Alignment South at 1,095 1,323 Meadows Road 1.68 Alternative 13 Northern Dock Route 1 1,287 1, Alternative 14 Northern Dock Route 2 1,456 1, Alternative 17 Remove Docks Way Junction and 1,019 1,244 Link 1.51 Alternative 18 Free flow J23 and Connection at 1,126 1,358 J23A (2006 TR111 Route) 1.37 Alternative 19 Online Widening of Existing M including Brynglas Tunnels 0.15 Alternative 20 Tunnel from Magor to Castleton 9,810 9, Alternative 21 South of Magor Route 1,183 1, Alternative 22 Closure of Existing M4 Junctions Negative 3 Alternative 23 Blue Route & Dyffryn Link Alternative 24 Amber Route 1,169 1, Where applicable this includes adjustments for Key Stage 3 / 4 Design Stages and Statutory Processes, Reclassification and reconfiguration of Caerleon Junction, Newport Docks Mitigation Works and associated contingencies. 2 The BCR for the Published Scheme (as set out in the Revised Economic Appraisal Report Supplement No.3) is This includes impacts during construction and maintenance and accident benefits. These impacts are very slight and have not been assessed for the alternative options. For comparative purposes, the BCR for the Published Scheme when these impacts are excluded is This alternative results in an overall negative impact on transport users (i.e. negative benefits). As such the BCR for this alternative is negative.

5 As noted, quantified appraisals have not been undertaken for Alternatives 25 to 28. Instead, a qualitative comment has been made on the implication of the changes for these options. From a traffic perspective, both Alternatives 25 (an alternative to replace the Brynglas Tunnels with a cutting) and 28 (a northern loop connecting Junction 25 and Junction 27) are similar in nature to Alternative 19. Based on the results for the re appraisal of Alternative 19, whilst these options would not be subject to any Docks mitigation costs, it is considered unlikely that the effect of removing the tolls would have a positive impact on the economic efficiency of these options. The economic case for Alternative 26 (M4 Junction 24 to 26 Tunnel) would be slightly improved relative to the published scheme as a result of the documented changes, although this would not alter the conclusion that the BCR for this option would be significantly less than 1. Alternative 27 comprises a range of measures including junction closures, online widening, local road improvements and public transport measures. The results for Alternative 22 (Closure of Existing M4 Junctions) suggests that the additional traffic which would result from removing the tolls, would have a negative effect on this option. However, given the range of other measures proposed, the performance of Alternative 27 may be slightly improved relative to the Published Scheme.

6 APPENDIX A Costs for the Economic Appraisal Table 3 Cost Estimates Applied for the Economic Appraisal Project Estimate ( m Q4 2015) Key Stage 3 and 4 Design and Statutory Processes Updated Economic Analysis Allowance for Additional Works in Newport Docks Reclassification and reconfiguration of Caerleon Junction (including OB) Costs for the Economic Appraisal Published Scheme 4 1, ,321 Alternative NA NA 838 Alternative NA NA 803 Alternative 3 1, ,376 Alternative 4 1, ,393 Alternative 5 1, ,373 Alternative 6 1, ,332 Alternative 7 1, ,324 Alternative 11 1, ,335 Alternative 12 1, ,323 Alternative 13 1, ,431 Alternative 14 1, ,600 Alternative 17 1, ,244 Alternative 18 1, ,358 Alternative NA NA 743 Alternative 20 9, NA 16 9,889 Alternative 21 1, ,418 Alternative NA NA 12 Alternative NA NA 916 Alternative 24 1, NA NA 1,231 4 See Table 1 of the Scheme Evidence Update of Matthew Jones (WG 1.8.1) for further information.

7 APPENDIX B Comparison with the March 2017 Results Table 4 Comparison with the March 2017 Alternatives Report March 2017 Objectors Suggested Alternatives Report Project Estimate ( m Q4 2015) Costs for the Economic Appraisal ( m Q4 2015) Present Value Benefits ( m 2010 prices and values) Present Value Costs ( m 2010 prices and values) Benefit Cost Ratio Project Estimate ( m Q4 2015) Updated Economic Analysis Present Value Benefits ( m 2010 prices and values) Costs for the Economic Appraisal ( m Q4 2015) Present Value Costs ( m 2010 prices and values) Benefit Cost Ratio Published Scheme 1,093 1,131 1, ,093 1,321 1,822 1, Alternative Alternative Alternative 3 1,138 1,182 1, ,141 1,376 1,503 1, Alternative 4 1,155 1,200 1,361 1, ,158 1,393 1,584 1, Alternative 5 1,139 1,182 1, ,140 1,373 1,850 1, Alternative 6 1,104 1,142 1, ,104 1,332 1,891 1, Alternative 7 1,096 1,135 1, ,096 1,324 1,834 1, Alternative 11 1,108 1,146 1, ,108 1,335 1,832 1, Alternative 12 1,095 1,134 1, ,095 1,323 1,809 1, Alternative 13 1,274 1,290 1,286 1, ,288 1,432 1,471 1, Alternative 14 1,443 1,458 1,331 1, ,456 1,600 1,568 1, Alternative 17 1,017 1,055 1, ,019 1,244 1,540 1, Alternative 18 1,123 1,166 1, ,126 1,358 1,516 1, Alternative Alternative 20 9,820 9,898 1,088 7, ,810 9,889 1,177 7, Alternative 21 1,179 1,225 1,298 1, ,183 1,418 1,532 1, Alternative Negative Negative Alternative 23 NA Alternative 24 NA 1,169 1,

8 APPENDIX C Detailed Breakdown of Appraisal Results Table 5 Cost Estimates Applied for the Economic Appraisal Published Scheme (Supplementary Scheme Order No.2) Alternative 1 Blue Route Alternative 2 Blue Route, Phase 1 Alternative 3 Green Route Alternative 4 North and West of Wilcrick Route Alternative 5 Move Part of J23 Between Rogiet and Caldicot Alternative 6 M48 / B4245 / Severn Tunnel Jct Station Connection Alternative 7 Direct access to Severn Tunnel Jct Station from J23 Alternative 11 Roadchef Option 4 (J23A westbound slip only) Alternative 12 Move Main Alignment South at Meadows Rd User Benefits (Commuters) 280, , , , , , , , , ,407 Travel Time 292, , , , , , , , , ,747 Vehicle Operating Costs 11,720 20,314 16,698 20,232 20,545 11,181 10,186 12,486 11,462 12,340 User Benefits (Other) 727, , , , , , , , , ,830 Travel Time 732, , , , , , , , , ,984 Vehicle Operating Costs 4,264 52,079 37,922 14,279 30,945 2,776 5,881 3,011 1,332 5,154 User Benefits (Business) 815, , , , , , , , , ,297 Travel Time 686, , , , , , , , , ,743 Vehicle Operating Costs 128,869 32,720 35,852 84,480 67, , , , , ,554 Wider Public Finances ,845 21,567 13,879 28,927 2,191 6,975 1,238 2, Greenhouse Gases 1,234 16,381 12,765 8,662 16, , ,884 Present Value of Benefits (PVB) 1,821, , ,521 1,502,679 1,583,835 1,849,904 1,890,834 1,833,855 1,831,698 1,809,062 Revenue (Severn Crossing Tolls) Maintenance and Operating Costs 66, ,363 66,363 66,363 66,363 66,363 66,363 66,363 Investment Costs 1,008, , ,521 1,051,152 1,064,676 1,048,676 1,017,127 1,011,251 1,019,860 1,010,576 Present Value Costs (PVC) 1,075, , ,521 1,117,515 1,131,039 1,115,039 1,083,490 1,077,614 1,086,223 1,076,939 Net Present Value (NPV) 746,468 2,123 81, , , , , , , ,123 Benefit Cost Ratio (BCR)

9 Alternative 13 ABP Northern Dock Route 1 (High, no junction) Alternative 14 ABP Northern Dock Route 1 (High, with junction) Alternative 17 Remove Docks Way junction and link Alternative 18 Free flow J23 and Connection at J23A Alternative 19 Online Widening of Existing M4 Including Brynglas Tunnels Alternative 20 Tunnel from Magor to Castleton Alternative 21 South of Magor Route Alternative 22 Closure of Existing M4 Junctions Alternative 23 Blue Route + Duffryn Link Alternative 24 Amber Route (Blue Route variation) User Benefits (Commuters) 203, , , ,248 78, , , , , ,195 Travel Time 220, , , ,025 54, , , , , ,311 Vehicle Operating Costs 17,096 16,194 15,229 16,777 23,982 16,196 15,656 27,609 23,151 23,116 User Benefits (Other) 596, , , ,469 31, , , ,904 56,442 5,076 Travel Time 613, , , ,567 83, , , ,089 2,221 75,667 Vehicle Operating Costs 17,218 18,888 11,933 22,098 52,310 13,546 23,212 66,815 58,664 80,753 User Benefits (Business) 665, , , , , , , , , ,782 Travel Time 571, , , , , , , , , ,364 Vehicle Operating Costs 94,339 92, , ,865 9, , ,193 29,345 31,044 38,418 Wider Public Finances 15,925 16,487 5,661 15,104 63,059 2,218 5,043 70,511 37,060 48,718 Greenhouse Gases 9,884 10,211 4,479 9,449 33, ,249 37,420 20,558 36,616 Present Value of Benefits (PVB) 1,470,729 1,568,149 1,539,736 1,515,601 83,075 1,177,405 1,531, , , ,003 Revenue (Severn Crossing Tolls) Maintenance and Operating Costs 66,363 66,363 66,363 66, , Investment Costs 1,092,720 1,220, ,302 1,037, ,214 7,530,663 1,083,802 9, , ,294 Present Value Costs (PVC) 1,159,083 1,287,154 1,016,665 1,104, ,214 7,530,663 1,150,165 9, , ,294 Net Present Value (NPV) 311, , , , ,139 6,353, , , , ,291 Benefit Cost Ratio (BCR) Negative