TPS Skills Director, Appraisal Policy Lead and Chair of the new Transport Taxation Group Keith Buchan reflects on reviews, judicial or otherwise.

You know what it’s like with major transport policy consultations.  You wait for 16 years and then three turn up at once.  We’ve got the Integrated Strategy (NITS), the Transport Infrastructure Review and now plans to make it harder for people to challenge major scheme Development Consent Orders (DCOs) in the courts.

I am certainly not against keeping legal technicalities and the antiquely wigged community out of transport planning as much as possible.  But it is interesting that many individuals and established organisations well outside nimbyism have felt motivated to employ judicial review as a tactic.  In many cases the best to be hoped for is delay (the Government’s point) – so why did they bother? 

Surely part of the answer is that they hoped policy and guidance would change in line with reality (as I have done) and the schemes would not survive the new assessments made in line with new guidance.  To be very clear there are several egregious failings in the previous (still current) system of appraisal, despite a number of welcome toe-in-the-water adjustments in the last few years. 

One of the worst failings, and the focus for many judicial reviews, is climate change.  Whether a value for carbon (as a proxy for all emissions) should be included in the Benefit to Cost Ratio (BCR) of major schemes has been a matter of contention since the early 2000s.  The problem is that methods for calculating a carbon value are extremely uncertain and have severe conceptual difficulties.  For this reason I have consistently argued that failure to achieve absolute carbon reduction should be a deal breaking element of the Strategic Case for any scheme and not in the BCR.  Of course there are always exceptions but that’s what they should be, not the norm as at present.

There are two front runners for costing carbon emissions.  The first is the Social Cost of Carbon (SCC) based on predicting damage over 50-100 years (as in the 2006 Stern Review).  The second is estimating the cost of additional actions to reduce carbon – often called off-setting though economists prefer the word abatement (current UK).  In fact, the values from both approaches are subject to order of magnitude fluctuations according to modest changes in assumptions, for example about how much we succeed or fail to achieve reductions in emissions in the next 50 years and whether there is a perfect global market for carbon reduction across countries and sectors.  On the latter the Government freely admits this is not the case.  Without it abatement costs fall apart. 

What has actually happened is that official carbon values have been increased but are still extremely low and most people expect them to rise faster than the current methodology predicts.  All the BCRs produced before the major rise in carbon values in 2021 were defective and we have built many schemes which would have failed their economic test under current values.  When carbon price goes up in future, as it inevitably will, all the current BCRs will again go out of date and we will have repeated the entirely predictable large scale waste of public money.  Meanwhile transport emissions are not falling at anything like the required rate and this is simply ignored in appraisal.  At a carbon seminar held by DfT last October both these fundamental issues were raised, their importance was widely supported by the many participants but simply ignored.

This defect is common to all modes but particularly affects the schemes with big user carbon such as air and road.  I may be wrong but haven’t they been the ones most subject to legal challenge?

However, defective climate change appraisal isn’t the only reason why a change to a more evidence based approach would change our investment priorities.  Transport is a derived demand with many mode options and substitutions for travel.  Investment in capacity needs to reflect the wide range of options available to meet primary demands and this is another area of dismal failure.  At the large scale we don’t do proper multi-modal modelling, traffic generation estimates are inadequate for personal travel and for freight non-existent – a massive error for schemes on the strategic road network.  And I really hope someone will be able to find a decent options report to send me but I haven’t seen one for more years than I care to remember.  Yet this should be mainstream - optioneering is at the heart of the Treasury Green Book which understands that without it there can be no real value for money test.

So what are my headline thoughts on NITS, the Infrastructure Review and DCO High Court bulldozing?

First we need to see recognition of the need to address emissions from transport as a prime objective and not as a marginal cost calculation which can ignore the consequences. 

Second I know this is really hard for economists but DfT and others should fess up that they don’t know what the cost of carbon is but it’s really really BIG if that’s not too technical a term.  And just for you: I don’t want to see any more silly SCC/MAC intersection cost graphs until we’re actually at Net Zero.  Remember the damage from climate change is arriving and is no longer the subject of economic theory, no matter how elegant.

Third the Infrastructure Review has a tough job which I hope it will succeed in.  It’s hard to make decisions based on evidence which has some quite accurate corners but is completely inadequate in crucial areas of forecasting, modelling and appraisal.  They need to address these points as well as pointing towards what a positive investment programme would look like – not the current ad hoc rag bag.

Finally I would like to see the DCO itself reformed as a priority, and only then decide if judicial review should be moderated.  I suspect DCOs are quite varied but the last one I attended (2022) was a transport scheme, surprisingly full of lawyers but without a single CTPP in sight apart from me.  Documentation was very late and incomplete.  Carbon was ignored as being outside scope, as was the option selection which was years out of date and not subject to any scrutiny at the time.  Can we please have more transport planners involved in transport decision making and do it earlier?

NITS and appraisal reform offers long term hope but in the short run the Infrastructure Review could prevent an awful lot of damage and free up money for useful stuff like safety, maintenance and demand management.  All of which would also contribute to growth in a much more socially positive way than building things that create more problems than they solve.  Including that multi-billion balance of payments deficit associated with aviation – go check the ONS numbers.

So there’s quite a lot riding on these reviews – will they deliver or disappoint our hopes for real change?  As the reviews progress over the next few months we’ll all begin to find out.

Keith Buchan is TPS Skills Director, Appraisal Policy Lead and Chair of the new Transport Taxation Group.