Our local engineer Rob Hossell has prepared this summary of a recent NAO report. To see the full report click here.
As suggested, I thought it best to pull out the key facts and provide an analysis of this National Audit Office (NAO) Report, as they are the public spending watchdog, and this is the only indication of what IS happening within Highways England (HE) during this period of assessment before the Preferred Route Announcement expected by 21st June 2019.
- To keep the costs low, it took only the cheapest option to public consultation. However, respondents wanted to see more options for connecting the A358 to the M5 and it had to consult the public a second time.
- This confirms our original concerns that decisions were driven by cost alone, not value for money.
- Highways England undertook its second public consultation in 2018, presenting three of the previous options. The public preference was for the highest cost option at £452 million.
- This confirms the PINK option was the public preference, which also provided the highest value for money of the 3 options (£2.08 of benefits for every £1 of project cost). A Benefit to Cost Ratio (BCR) between 2 and 4 provides “high value for money” according to the Department for Transport (DfT).
- This [£452M cost] is significantly above Highways England’s operational planning budget for this project [£251M], meaning it may be required to consider lower cost alternatives which could result in fewer benefits.
- The report highlights that the budget cost of £251M was “immature” at the time of the first Road Investment Strategy, hence this poor estimate is still being used to drive down costs.
- Early assessments of the lower cost alternatives indicate that it may only generate 97p in benefits for every £1 spent, which the Department for Transport considers poor value for money.
- The Orange option had the lowest BCR of 1.64, with the Blue option showing 1.87, both classed as medium value for money. The report now highlights that other alternatives are being considered that were not consulted upon, which are classed as poor value for money (BCR < 1). We do know from a previous Freedom of Information request that in February 2017 HE were desperate to find an option that met the original £251M budget though none were compliant, with only parts of the scheme constructed for this reduced cost. It suggested the following upgrades, “Henlade Bypass, A378 Junction upgrade, Online dualling of some of the existing A358, Offline dual carriageway Capland to M5”. In Figure 8 of this NAO report the “current benefit-cost ratio” is actually listed as 0.97:1 which would imply that HE proposes a cut-down option with greatly reduced benefits. Please note that there may have been amendments since some of the report was compiled in Feb 2019.
- Ultimately the NAO Report highlights their two main measures for judging a scheme are public preference and value for money. In order to achieve these objectives then re-timing the project should be the priority to ensure HM Treasury funding is achieved.
- CONCLUSION – While the report confirms that public preference and best value for money would suggest HE should select the PINK option, they are now considering an alternative un-consulted poor value option to meet their original immature cost estimate.
I hope this helps all understand what is hidden within the facts of the NAO Report ahead of the Preferred Route Announcement.