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Making the Economic case for Investment Philipp Thiessen, Head of Appraisal scrutiny.

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Presentation on theme: "Making the Economic case for Investment Philipp Thiessen, Head of Appraisal scrutiny."— Presentation transcript:

1 Making the Economic case for Investment Philipp Thiessen, Head of Appraisal scrutiny

2 Overview Background Existing Evidence base What does all that have to do with Growth? Practical demonstration Discussion

3 Background Cycling Delivery Plan published in October for consultation Ambition for cycling and walking to be delivered through cooperation of local and central activity and funding. Under LGF major source of funding now under local control Want to ensure capability for making the case is maximised.

4 Background: Five Case Business Case The Green Book recommends that business cases are structured according to its best-practice Five Case Model: Management FinancialCommercial Strategic Economic Applicable – a strategic fit Appropriate – optimum Public Value Attractive – to supply side and feasible  Affordable – within the budget Achievable – can be successfully delivered UNCLASSIFIED

5 The Existing Evidence base In support of the plan, the department recently published three reports on benefits of sustainable and active travel: –Value for Money assessment of the large LSTF schemes –Value for Money assessment for Cycling Grants –Claiming the Health dividend

6 The Existing Evidence base Other relevant studies include –Cycling Demonstration Towns –Sustainable Travel Demonstration Towns –Sustrans Linking Communities Fund –TfL’s Cycling Vision

7 The Existing Evidence base Typical BCR’s from these studies Sustainable Travel Towns4.5:1Decongestion benefits only Cycling Demonstration Towns2.59:1Health benefits only Local Sustainable Transport Fund5.1:1Based on 12 large schemes business cases Cycling Ambition Grants5.5:1Based on business cases for 12 funded schemes Linking Communities Fund10:1Based on eight representative schemes Literature Review5.6:1Average BCR for UK case studies, overall average 6.3:1 Transport for London Cycling Vision2.9:1Very large programme - conservative BCR

8 What do those BCRs do for Growth? Benefit Cost ratios represent the quantifiable transport benefits per pound invested Time Savings Health Journey Quality Air Pollution Reliability

9 What do those BCRs do for Growth? E.g. LSTF – over 80% are time and operating costs for road users – from mode shift and decongestion – At least half of those are time savings to business – staff and goods spend less time stuck in traffic. Road safety – less time loss from absenteeism, less disruption from clear up…

10 What do those BCRs do for Growth? E.g. Cycling ambition grants – around 60% are physical fitness benefits. These are the benefits of reduced premature mortality. At least 30% of the value is from avoiding the loss of productive output that occurs when employees die prematurely. Further benefits to business are reduced absenteeism, higher staff productivity, motivation and retention.

11 What do those BCRs do for Growth? Other growth impacts: Air quality – in areas of exceedances Journey Quality – more satisfied workforce – esp highly skilled often demand good travel facilities General well-being: growth is ultimately a means to the end of well-being – so why discount this? In summary: the traditional transport appraisal accounts for the majority of economic impacts – even if it does not present jobs and GVA…

12 Working through an example Based on the worked example in WebTAG A5.1 Active Mode Appraisal…

13 Conclusion These three papers reinforce the existing evidence that sustainable and active transport investment can have very high value for money. Local Authorities should refer to this when making their case for investment to local decision makers. /347894/vfm-assessment-of-lstf.pdf /347894/vfm-assessment-of-lstf.pdf /348943/vfm-assessment-of-cycling-grants.pdf /348943/vfm-assessment-of-cycling-grants.pdf /371096/claiming_the_health_dividend.pdf /371096/claiming_the_health_dividend.pdf A fuller summary of the evidence is due to be published in the near future.

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