Is the Transport Investment Strategy a road to success?

The Department for Transport’s (DfT) new investment strategy, announced yesterday by Chris Grayling, is a positive step forward and more clarity on infrastructure spending objectives is welcome. But this strategy could be improved with better prioritisation of those investment objectives and a more substantive role for the National Infrastructure Commission.

Yesterdays’ headlines focused on the proposal to set aside part of the National Roads Fund for a new ‘Major Road Network’ to expand and improve the largest of the locally-managed A-roads.

The real importance of the announcement lies, however, in its new overarching strategy for transport investment.

A recent Institute for Government report looked at what’s wrong with infrastructure decision making in the UK. Based on our research, we draw out guiding principles that could help this new strategy succeed.

Set clear objectives

There is no national strategy for infrastructure investment. The DfT strategy has not changed this as there is still no overarching strategy across sectors, but it does at least outline the government’s objectives for transport infrastructure in more detail. These objectives include a more reliable network, reducing congestion, rebalancing the economy, enhancing productivity, improving global competitiveness, encouraging Foreign Direct Investment and supporting new housing.

But this is too many objectives to sensibly prioritise against. The guidance on how the case for a transport project should be made – particularly from a strategic perspective – are not helpful as the breadth of objectives constitute almost all possible rationales for investment.

The guidance does not offer advice on what should happen when competing objectives clash – say for instance the need to enhance productivity against the need to rebalance the economy in favour of economically-underdeveloped areas.

This reduces the usefulness of the DfT strategy both for civil servants implementing the Government’s agenda, and for members of the public attempting to hold them to account.

Encourage a robust appraisal of options

Without clear high-level objectives, comparisons between different schemes is problematic. This affected the way the Government made the case for HS2. A lack of clarity on the purpose of the scheme led to confusion, delays and disputes over cost-effectiveness.

The DfT strategy commits to developing a “rebalancing assessment toolkit” to assist appraisals. Rigorous comparative analysis of how schemes can help rebalance the economy, as set out in the Government’s green paper on Industrial Strategy, is a positive development.

It is also encouraging that the strategy emphasises the importance of “being open-minded about the best way to tackle particular problems across different modes”.

Being more open-minded would help address the generic infrastructure problem of not devoting enough attention to early options appraisal, which was a problem we previously identified with the Thames Tideway tunnel.  

Be clear about the role of bodies outside central Government

The strategy is less clear about how the decisions of the upcoming National Infrastructure Assessment (NIA) will influence DfT strategy in practice. Following publication, DfT should update its strategy to indicate how it will meet the needs identified in the NIA.

The Government has restated its support for Sub-National Transport Bodies (STBs) as a way of incorporating regional perspectives in transport infrastructure. Encouragingly, the strategy also proposes formalised arrangements for how STBs will communicate regional priorities to DfT. This should make the process more systematic and open. Transport for the North, West Midlands Connect, and Transport for the South East are all seeking STB status.

Understand risk to avoid costly mistakes

The strategy also sets out how DfT intends to deal with risk, for example cost overruns or assumptions about future demand that might not hold up. The strategy draws on best practice for appraising investments through scenario-planning, which is good.

But the omission of discussion on risk in alternative financing models seems an oversight – particularly in relation to private finance.

The protracted and costly saga of securing upfront capital from the private sector for HS1 shows why properly considering these risks is important.

How the Government can best choose between different methods of infrastructure financing is another issue the Institute for Government will return to in the near future.