Written evidence submitted by Dr Suzanne Keene (SRI0024)
Strategic Road Investment Programme: The A303 Stonehenge improvement project
My evidence relates to this specific project.
I would like to draw the Committee’s attention to FoI questions that I have asked of National Highways regarding the costs and benefits (BCR) of this project.
Costs
Most recently (22 December 2022):
Question: “Please provide me with the latest updated figures for the cost benefit of this project”.
Response: The table supplied in our DCO redetermination response is still current
and therefore contains the latest cost benefit figures.[1]
The BCR table was first published in The Case for the Scheme, October 2018.[2] So predictable costs had fallen by 2022? The NAO has noted that National Highways is relying on their overall contingency sum to cover inflation. Evidence presented during the NSIP hearing and the subsequent redetermination is that the unstable chalk geology could adversely affect tunnel construction. Should the scheme go ahead surely costs would dramatically escalate as in, for example, Crossrail and HS2.
In the 2019 NAO report[3] the maximum cost is twice the minimum cost, £1.1-£2.4bn (2016 figures) both higher than that in the 2022 table above which NH maintains is the current calculation.
In National Highways’ explanation costs have reduced partly due to lower inflation, yet in evidence to the Transport Committee they said that rising inflation costs are covered by the contingency fund (para 1.1 3):
A reduction in the Present Value Costs (PVC) of the Scheme - from£1,206 million, as previously presented in the DCO application Case for the Scheme and NPS Accordance [APP-294, see Table 5-6], to £959 million. This cost reduction is due to the application of revised inflation rates as confirmed with the ORR for the Road Investment Strategy 2 portfolio, together with the removal of historic sunk costs as directed by government guidance.
Question: “Please provide me with the cost benefit table(s) that provide the figures in the NAO report”.
Response: The range quoted in the NOA report was taken from earlier stages in the
scheme’s development and we do not hold cost benefit tables for the
figures in the NAO report.
Perhaps the Transport Committee find this response as baffling as I do.
Question: “Please explain why the range of total costs is so wide - the maximum cost is twice the minimum cost”.
However, the recent report from the NAO, p.23, Fig 7, uses the A303
project to illustrate holdups due to challenge to the approval process.
The cost of the project is shown in this report as between £1.1-£2.4 bn.
Response: It is standard National Highways practice to present scheme costs within a statistical probability range that takes into account numerous variability factors, such as:
• Scope – uncertainties that can impact the extent of the works and
therefore the cost of the scheme.
• Risk – the lowest range figure assumes minimal risks materialise,
whilst the highest range figure assumes all risks materialise.
• Inflation – different possible inflation forecasts are applied
to determine the range of costs.
These differences and others, account for the range of possible outturn costs.
This was in 2022, before serious inflation set in. So National Highways is saying that they have no real idea of how much the scheme would cost. They cannot fall back on the contingency sum since this has been taken up by inflation.
Major benefit item invalid
At least 63% of the value of the scheme is from a contingent valuation survey (Heritage Value survey). The validity has been repeatedly challenged.
- Respondents were not shown images of the cuttings through the landscape, only of the monument with and without the road.
- The sample of respondents was drawn predominantly from people living nearby yet it was claimed that it represented the views of the whole population.
- The Inspectorate concluded that the heritage value would be seriously damaged by the cuttings – and the SoS accepted that that would be the case, so where is the heritage value?
Without that claimed benefit the BCR would be a net cost for every £ spent.
February 2023
Endnotes