STRATEGIC ECONOMIC APPRAISAL OF THE A428-A1303 BUS SCHEME Wider Economic Benefits - A Critical Review

Transcription

1 STRATEGIC ECONOMIC APPRAISAL OF THE A428-A1303 BUS SCHEME Wider Economic Benefits - A Critical Review 1. Introduction This short paper critically reviews the study entitled Strategic Economic Appraisal of the A428-A1303 Bus Scheme which sets out a case for a bus scheme for the area to the west of Cambridge as part of the Greater Cambridge City Deal (GCCD) proposals. The study was produced by Mott MacDonald for Cambridgeshire County Council. Throughout this paper the critiqued report will be referred to as the GCCD report. The aim of the bus scheme, in summary, is to relieve congestion in the area and provide improved transport links between the primary growth areas of Cambourne and Bourn to the west of Cambridge and the City itself. Three busway options have been examined (using the labelling convention in the GCCD Executive Summary 1 ): Option 1. The buses on the highway with bus lanes 2 Option 4. On the highway and segregated off-road routes Option 3. Wholly segregated with new busway infrastructure the preferred option. Option 3 has been put as the preferred option by the GCCD in part based on the economic benefits. This paper seeks to examine the economic impacts as evidence for this choice. Overall the analysis in the GCCD report is complicated and not clear. There is no opportunity to assess the model used and the data and background work it draws on. This makes it difficult in places to fully understand the analysis in the report. Hence this review is interpretive and focusses on what is presented in the report and not what lies behind in terms of the sources used. 2. Rationale for the Busway Scheme and its Effects The GCCD logic map and rationale for the busway predicts faster and reliable journey times (by linking employment and housing areas), greater investment, the attraction and retention of work force skills and an increase in the size of the labour market for existing and potential businesses. This will result in employment and housing growth. While the GCCD report sets out the employment and housing areas affected by the busway it does not state what the directional flows of labour will be between them, the scale of the flows (numbers) and why the flows of labour (and other users) will result in employment and housing growth so that targets for the sites and overall growth for Greater Cambridge can be achieved. In terms of the direction of flows they will be east to west (i.e. the City to Camborne/Bourn), west to east (i.e. Cambourne/Bourn to the City and main employment sites). However, the report does not give what the origin and destination of labour will be and how these numbers using the busway relate to and influence the number of jobs at the employment sites. These need to be stated to ensure the analysis is more realistic rather than abstract. 3. The Growth in Jobs and Economic Benefits Additional jobs that arise from the busway options are used as a measure of economic benefits. The scheme options could result in some 189, 606 or 786 (c.800) direct jobs for options 1, 4 and 3 respectively (stated in Table E1 of the GCCD report). The jobs are mainly 1 A428 Cambourne to Cambridge Better Bus Journeys: Selection of a Catchment Area for detailed scheme development. Report published by the GCCD 13 th October Note a recent review of this option by the Local Liaison Forum.

2 planning use class B jobs for high tech industry and high skilled jobs. The segregated offroad scheme has the highest number. It is not stated whether these are full-time equivalent (FTE) or they include part-time jobs. From an evaluation perspective reflecting Treasury guidance we assume these are gross jobs as this is not stated in the report. However, to assess the actual net additional jobs, and reflecting the HM Treasury guidance, analysis would usually include the deadweight ratio and the displacement of other jobs in the area. Deadweight occurs as a proportion of jobs would have occurred anyway in the absence of the busway as existing employers at the sites retain and increase their labour and/or new employers locate there. This is a reasonable assumption as the sites are not brought in to use by the busway itself but already exist and are serviced by transport infrastructure. The labour supply would be just one influence on the decision to invest. There will be others including the opportunity to relocate within, or locate to, Cambridge as well as expand. The displacement occurs where the growth of jobs with some employers reduces the number available elsewhere with other employers as a result of, for example, competition and/or efficiency gains. These two factors would normally be used to reduce the gross estimates to a net additional total. This may be in the region of 50% deadweight and 20% displacement. This would reduce the gross figure for Option 3 from 800 jobs by 480 jobs to 320. This in turn would affect GVA estimates and the wider UK and welfare benefits. It could be argued that the net additional impact of the busways and employment and related GVA could be minimal because the employment sites exist anyway, they are populated by employers (especially the west Cambridge sites and the City Centre) and are not being brought into use by the busways. It could be argued that the busways could speed up the occupancy of sites to some degree and jobs but the benefits are likely to be small. Hence the net additional impact is lower than assumed in the report. 4. The Different Benefits of the Optional Routes and Time/Cost Savings There is little explanation of why the different busway options result in the four ranges of employment impacts. In particular why the favoured segmented scheme provides some 4 times as many jobs as the buses on the highway Option 1. Also why Option 3 results in 1.3 times as many jobs as Option 4. The reason for the differences in jobs for the options arguably results from the variations in travel time and costs saved for each of them. These are shown below in Table 1 (the figures were taken from Table 4.3 in the GCCD report). In terms of time/cost savings the greatest impact in 2021 as stated in the report is attributed to Option 3 at 4.1% for public transport travel with 3.7% for Option 4 and 1.9% for Option 1. Hence the differences between the option is small at 2.2% between Options 3 and 1. By 2031 the savings have reduced to 2.9% (Option 1), 2.3% (Option 4) and 0.5% (Option 3). The savings are reduced over time between 2021 and The difference between the options is still small at 2.4% between options 3 and 1. When the total public transport and highway time/cost savings are considered, the time savings overall and the differences between the options are reduced. The greatest impact is 0.8% for Option 3 by 2021 and 0.1% for Option 1, a difference of only 0.7%. By 2031 the time saving for Option 3 has fallen to 0.9% but increased for Option 1 to 0.2%, the difference between the two being 0.7% a minimal saving. It is arguable that, if the time/cost savings are important to the employment impacts, the differences in time/costs between the options would be reflected in the jobs impact for each option. The comparison is shown below for 2031 for options 1 and 4, taking the 786 direct jobs impact for Option 3 into account. If we expect the jobs ratios to reflect the time savings ratios there would be 780 jobs for Option 1 and 784 jobs for Option 4 (i.e., some 544 and 178 jobs more respectively). See Table 2. Working the calculation the other way, if Options 4

3 and 3 were compared to the 189 jobs in Option 1 as a baseline position there would be just 190 jobs in Option 4 and Option 3 (i.e., 416 and 596 jobs fewer respectively than stated in the GCCD report). The reason being that the time savings are minimal. Table 1: Time Savings for the Options against the Minimal (100) and %s Public Transport Time Time Jobs Minimum 100 Savings 100 Savings Option 1 on highway % % 189 Option 4 hybrid % % 606 Option 3 segmented % % 786 Public Transport and Highway Minimum Option 1 on highway % % Option 4 hybrid % % Option 3 segmented % % Table 2: Expected Jobs Adjusted for Time Savings 3 Public Transport and Highway Savings 2031 comparison with Option jobs Option 1 Option 4 Time loss against Option or 0.7% 0.20 or 0.2% Actual jobs Expected jobs Difference in jobs (with Option 3) 53 2 Difference in jobs (increase) Public Transport and Highway Savings 2031 comparison with Option jobs Option 4 Option 3 Time saving against Option or 0.48% 0.68 or 0.68% Actual jobs Expected jobs Difference in jobs (with Option 1) 1 1 Difference in jobs (decrease on figures quoted in GCCD report) These jobs are not scaled but show the total targets.

4 5. The Relationship between the Busway Jobs and Targets for Employment Areas The comparison between jobs generated by the busway options and the targets for key sites indicates that the contribution will be relatively small. The targets are set out in Table 2.1 and Table 3.1 in the GCCD report in terms of the Greater Cambridge area targets. They are shown below for Greater Cambridge and the key sites. Table 3: The Key Sites and the Contribution of the Busways [4] Job targets Option 1 Option 4 Option 3 Greater Cambridge 44, % 1.4% 1.8% Key Sites: Bourn 400 Cambourne west 1,500 North West Cambridge 1,800 West Cambridge 3,600 City Centre 2,800 Total Key Sites 10, % 5.9% 7.8% Addenbrooke s 2,900 The options will contribute just between 0.42% (Option 1) and 1.8% (Option 3) for Greater Cambridge. Of the target jobs taking the sites likely to be affected by the busway options the shares rise from 1.9% (Option 1) to 7.8% (Option 3) which are relatively small and confirm that many of the jobs are likely to occur anyway without the busway (i.e., deadweight). If the Addenbrooke s site was included and the jobs expected there the impact of the busway Option 3 would be significantly lower in terms of the shares. It is likely over time that these contributions will fall. 6. The Efficiency of the Three Options A key issue for public expenditure apart from the effectiveness is the efficiency and the cost of outcomes and impacts or value for money (vfm). This GCCD report provides no information on efficiency or vfm. Figure 2.4 in the GCCD report showing the logic map gives a range of 19.1m to 86.6m (at current prices) for the bus routes and associated works including, for example, the park and ride (at Madingley Mulch) and pedestrian and cycling infrastructure. However, these are not compared to jobs outcomes. If the lower cost is applied to busway Option 1 and the higher cost to Option 3 the efficiency varies. For the direct employment and GVA estimates in the report the cost per job is estimated at 101,658 per gross job for Option 1 and 110,178 for Option 3, making Option 3 less efficient. It should also be noted that repair costs are often underestimated and would reduce the efficiency probably more than Option 3 as the installation costs are higher 5. 4 This assumes the users are similar as they are not shown in the report. The very small time savings may minimise switching between options. The numbers of users will influence the economic impact but would need to be relatively large on Option 3 to create the employment differential. 5 A recent engineering report of the St Ives to Cambridge busway shows how repair costs can escalate.

5 The costs of the options were presented in the material used for the public consultation in They were summarised as 18m (Option 1), 20m (Option 4) and 67m (Option 3). Hence the cost per job would be c 95k (Option 1), 33k (Option 4) and 85k (Option 3). Again the difference between options 1 and 3 is relatively small. More recent figures 6 have been produced for the busways which comprised 42.5m (Option 1), 149.2m (Option 4) and 207.8m (Option 3) for the route between Cambridge, Madingley Mulch (park and ride) and Cambourne. These indicate the costs per job will be 224.9k, 248.7k and 264.4k for Options 1, 4 and 3 respectively, making Option 3 the least efficient route. 7. Reduction in Congestion The figures for time and costs savings shown above give some indication of the congestion that will be reduced on the roads affected by the busway. This is a major aim of the busway scheme. The figures for induced highway time savings are shown in Table 4.3 of the GCCD report as follows in Table 4. Table 4: Congestion and Time/Cost Savings Highway Do minimum Option 1 on highway Option 4 hybrid Option 3 segmented The results show a time/cost saving for Option 3 (the preferred option) of a mere 0.16% by 2021 and 0.3% by This is only slightly above Option % and 0.16% over the same time period and 0.04% and 0.08% respectively for Option 4. Apart from the absolute savings for the Option 3 scheme the savings compared to Option 1 are just 0.08% (2021) and 0.14% (2031). On this basis it is difficult to see how the overall aims to reduce congestion can be achieved in any meaningful way. Part of the reason is that the schemes only impact on a portion of all demand for the area including the trips made on the highway in any case. In addition, no indication is given of the progress buses and other traffic makes once it reaches west Cambridge, for example, the Grange Road and Queens Road areas. It is likely that the buses will run into significant congestion (especially on the segregated route Option 3) when the buses will queue to join Queens Road. 8. Indirect Wider Economic Benefits and Impacts on Unemployed This section of the GCCD report sets out how several types of benefits such as labour supply benefits and net additionality to the UK and unemployment will be alleviated. The comments are as follows based on the above analysis: (a) Labour supply benefits net additionality to the UK. This section uses the gross job totals for Cambridge not the net job totals hence the discounted rate in Table 4.10 is higher than would be expect by potentially a significant amount. 6 Table 6-10 in the Cambourne to Cambridge Better Bus Journeys: Strategic Outline Business Case, Economic Case by Atkins published 28 September 2016

6 (b) Moves to more productive jobs. These estimates could be too high if based on the gross jobs in Table 4.8 and not the net additional jobs. In any case the gain for the segregated route is merely 30.6m for the UK or 1m per annum. (c) Spatial inequalities. The report cites that deprivation is greater in the north and east sides of the City. Given the jobs that result from the busways are likely, in the main, to be in west Cambridge and further west and will be in the high tech sectors (i.e., the B planning use class) it is unlikely that the residents in deprived areas will benefit directly from the jobs i.e. they are unlikely to be able to compete successfully for them on the basis of their skills. In addition, the busways are unlikely to improve accessibility in the north and the east sides of the City to the extent of giving their residents a competitive advantage. Where employees working in or close to the deprived areas (by out-competing other residents) then leave the jobs to take up the new opportunities in the west accessed via the busways it is unlikely that those in the deprived areas will take the jobs that are vacated. They are likely to require higher skills (that the residents of the deprived areas will not have) and be taken by high skilled works from elsewhere. (d) Alleviating unemployment and welfare benefits. Higher levels of unemployment correlate with the deprivation in north and east Cambridge. The overall number of jobs in the Greater Cambridge area will increase to provide some opportunities for the unemployed. However, a high proportion of the jobs will be in the high-tech high skilled sectors, with a small absolute number attributed to the busways. However, there will be a significant increase in the labour supply in the Cambridge area because of new housing from where residents will compete with the indigenous unemployed. There will be a trickle down effect with lower skilled jobs for the unemployed but the number successfully winning the direct net additional or gross jobs stimulated by the busways will be relatively small. The report also sets out optional and non-use values for residents who have access to opportunities provided by the busway although they do not use it but could at some point in the future. This benefit, while recognised, is probably marginal and if the busway had a real value it would be used. Hence the estimates shown in monetised terms in the report are relatively small and appear to be similar for Options 4 and 3 the hybrid and segregated options respectively. 9. Conclusions This section draws on the analysis above to highlight the main conclusions. In summary, the economic impacts shown for the busways are relatively small in terms of overall potential employment growth especially when gross job estimates are converted to net additional jobs and GVA. The difference in economic benefits between the preferred Option 3 (the segmented route) and the other two options is also small taking account of the above and the time/cost savings predicted, the reduction in congestion and the contribution to the overall job targets for Greater Cambridge and the key employment sites. Based on the range of costs outlined by GCCD for the options the costs and efficiency per job generated for the preferred option is similar to the other options. It does not offer important efficiencies. Generally, the wider economic benefits do not show important differences between the options in terms of the contribution of the options to the labour supply, the opportunities for more productive jobs or the impacts on deprived areas and unemployment. For these reasons it is difficult to envisage any major advantages, or economic grounds, supporting the preferred option. There are also likely to be greater negative impacts of this option related to the environment as it runs close to residents in Coton village and across open countryside and the green belt. This countryside area provides important habitats for wildlife and is a recreational and amenity area for residents. The open area and the quality of the countryside is an important setting for the western side of urban Cambridge and the approaches to it. The preferred option would adversely affect the environment for a trade-off that has minimal economic benefits compared to the alternative busway options 1 and 4. An improved Option 1 to give the buses greater priority would no doubt narrow the gap in economic benefits and

7 reduce the other negative impacts. This is also based on the following comments related to the report. (a) The lack of clear narrative and rationale that sets out how the movement of labour between the designated employment and housing areas results in the predicted number of jobs arising from the three busway options. i.e., Option 1 with bus lanes on the A1303, Option 3 a segmented scheme and adoption of a hybrid scheme falling between the two. (b) The estimated number of direct jobs as 189, 606 and 786 for Options 1, 4 and 3 respectively by 2031 appear to be gross jobs. Potential deadweight is not taken into account as the jobs that could result anyway especially as the designated main sites are not brought forward by the busways there is significant development on them anyway which is likely to continue. Displacement of other jobs in the sub-region is not accounted for. Hence the impact could be much lower than predicted which would also reduce the GVA benefits. (c) There is little explanation of why the three options result in the different employment estimates for the options. This arguably arises from travel time and costs savings. However, the time savings are relatively small for the busways and at most 4.1% for the preferred Option 3 by 2021 and falling by When busway and highway schemes are taken into account the time savings are reduced even further to 0.9% for Option 3. (d) The ratios of time costs savings for the options are not reflected in the number of jobs predicted. If the same ratios are applied the 786 jobs for Option 3 would result in 780 jobs for Option 1 and 784 jobs for Option 4. If the Option 1 total of 189 jobs was the base position there would be around 190 jobs in Options 4 and 3. This means the time savings would be minimal. (e) The busway options provide for a minimal share of the target jobs anticipated for the key employment sites. This shows a 0.42% share (Option 1) and 1.8% share (Option 3) for the Greater Cambridge target of 44,100 jobs. On the main employment sites the shares are 1.9% (Option 1) and 7.8% (Option 3) and relatively small. If the Addenbrooke s site was included the busway contribution to jobs would be minimal. (f) In terms of the efficiency of the three options per job generated the results show there is little difference. Several ranges of costs have been put forward by GCCD which do not change this result and Option 3 can be seen as marginally less efficient. (g) The reduction in congestion on the highway are not significant i.e., a mere 0.16% (2021) and 0.3% for Option 3 the segmented option. On this basis it is difficult to see how the aims to reduce congestion could be achieved. (h) In terms of the wider economic benefits the gross labour supply benefits would be lower if deadweight and displacement was taken into account. This argument would also apply to the case put forward for more productive jobs. The impact on deprived areas and the unemployed would be minimal as the new jobs are likely to be in the high tech sectors resulting in a skills mismatch. (i) The non-use value that potentially accrues to residents because of the option to use the busways is likely to be minimal (otherwise they would use the buses) and the monetised estimates shown in the report are very small. This analysis is based on the information that is publically available at the moment. The busway options, along with other transport measures and the planning policies are potentially likely to change for technical reasons and as a result of public consultation and political circumstances. This is likely to generate new information which will allow the economic assessment to be refined. November 2016