Call for evidence: transport investment and economic performance

Sustrans submission to Department for Transport, March 2014

Summary 1. Sustrans makes smarter travel choices possible, desirable and inevitable. Were a leading UK charity enabling people to travel by foot, bike or public transport for more of the journeys we make every day. We work with families, communities, policy-makers and partner organisations so that people are able to choose healthier, cleaner and cheaper journeys, with better places and spaces to move through and live in. General comment We comment primarily from the perspective of walking and cycling Sustrans has substantial experience in trying to evidence the benefits of interventions to support walking and cycling The impact of transport investment on economic performance Sustrans (and many other parties in the sustainable and active travel sectors) feels that we have struggled to adequately make the case for investment in these areas positively influencing economic performance, given that many of the benefits we identify lie outside of the WebTAG framework There is increasing, and increasingly strong, evidence that walking and cycling can play a very significant role in optimising the contribution of transport to economic performance The extent to which the impacts of transport investment on economic performance are captured by the current appraisal framework and modelling methods The major gaps in WebTAG in terms of quantifying economic performance in relation to walking and cycling are in job creation, business growth (start-ups and increasing turnover, productivity gains), economic diversification, place competitiveness (including place branding, employment land, infrastructure, property, visitor economy, tourism offer), skills and employability (notably helping the unemployed and those at risk of unemployment, helping individuals access employment), and economic resilience (local economys ability to withstand shocks, risk mitigation, economic diversification, energy and resource efficiency and security, climate change) Other important gaps in WebTAG which have an economic bearing but which are less immediately obviously relating to economic performance include valuing children, wellbeing, social inclusion, and leisure and tourism Modelling mechanisms for walking and cycling are very deficient The burden of evidence for walking and cycling feels very much higher than that required of other modes Quantitative evidence of the relative scale of any impacts not currently captured by the DfT appraisal framework The Linking Communities programme shows a benefit to cost ratio of 10.9:1, rising to 13.8:1 when values are assigned for children The Connect2 programme shows a benefit to cost ratio of 6.3:1, rising to 8.0:1 when values are assigned for children

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The Cycling Demonstration Towns show a benefit to cost ratio in the range 2.6:1 to 3.5:1 over ten years, increasing to 7.8:1over a 30 year appraisal period Business case examples for Cycling City Ambition bids contain multiple ratios for the different parts of the programme; public realm improvements were difficult to evidence The Active Travel project shows a WebTAG compliant BCR of 7.6:1, but we are not able to capture the wellbeing component of the programme in economic terms Job creation figures for walking and cycling infrastructure are very positive, but we have not been able to effectively build them into WebTAG assessments A submission to the Scottish Government Committee on Infrastructure and Capital Investment captures the breadth of impact on local companies A programme to create employment and training opportunities in developing and improving walking and cycling facilities shows a social return on investment value of 2.06:1 Leisure and tourism by cyclists can make an important contribution to local economies, particularly in some rural areas Retail vitality research illustrates the value to local retailers of people who walk and cycle to their outlets

Summarising the extent of Sustrans knowledge of economic performance 3. Sustrans has very extensive experience of monitoring, evaluation and research in sustainable and active travel. We hold numerous large data sets relating to walking and cycling, from our own data collection and from the collation of other available data. Sustrans has a long standing interest in the demonstration of economic efficacy of interventions that support walking and cycling. Sustrans Research and Monitoring Unit was heavily involved with the drafting of the first WebTAG guidance for walking and cycling. We have also been involved in the development of other relevant tools, perhaps most notably WHOs Health Economic Assessment Tool (HEAT). Sustrans has also been engaged in other developmental work around WebTAG, most recently supporting the development of a module for assessing smarter choice type interventions. Sustrans has used WebTAG very extensively in relation to projects that we are involved with. Typically this has been in the context of retrospective economic assessment, rather than true appraisal. We have produced lots of evidence on the economic efficacy of investment in links type schemes (including DfT-funded Links to Schools, DfT-funded Linking Communities, and Big Lottery funded Connect2). We have also undertaken retrospective economic assessments of some smarter choices interventions. Sustrans has recently used WebTAG as the basis for the economic component of modelling and forecasting work. This has included commissions for Pteg and TfGM to articulate the potential for cycling with associated investment BCRs. We have also prepared business cases for several LSTF projects which express value for money using WebTAG principles. We also prepared or supported the business case for several of the successful Cycling City Ambition cities. A very current relevant activity is the development of a Copenhagen-style Bicycle Account approach for seven UK cities, for which a value for money component is also planned. Sustrans has also conducted and commissioned work to support the evidencing of the economic benefits of our work. Most recently we have commissioned Cambridge Econometrics to investigate gross value added accounting in respect of walking and cycling with a view to supporting our efforts to engage LEPs and to support partners in efforts to secure SLGF resources.

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Identifying the key areas of impact for walking and cycling 8. A recent public-facing document that Sustrans produced to articulate some of the economic benefits of walking and cycling to a wider audience highlights five main areas (Sustrans, 2014) (Growth Market). These are: Keeping people and businesses moving (congestion reduction) Supporting local businesses and high streets (quality of life and retail vitality) Improving business productivity and reducing costs (reducing business costs such as absenteeism and car parking) Improving business productivity and reducing costs (place-making) Improving business productivity and reducing costs (direct job creation, industries supporting cycling, and leisure and tourism) Sustrans is also in the process of producing a series of economic narratives that will seek to describe the evidence base for direct employment associated with construction and other delivery; retail vitality; leisure and tourism; and health economics. A series of briefing notes to businesses also seeks to further articulate the advantages to businesses of engaging with walking and cycling. Early drafts of the text-only version of these are referenced in this submission. There are numerous examples of reports that make use of economic evidence in transport from which we take learning about evidencing walking and cycling. The Cabinet Office report An analysis of urban transport (Cabinet Office, 2009) covers a broad range of aspects of urban transportation issues. A crucial point of learning is the fact that the report goes well beyond the areas that WebTAG would usually be expected to provide. Areas include employment levels, access to workforce, population change, connectivity, congestion, green space, productivity, low income inequality, house prices, place quality, etc (see p21). A recent report produced by LSE for British Cycling covers an even wider range of benefit areas. Although the report makes somewhat heroic assumptions in some areas, the breadth of scope is illustrative of the range of expected benefits.

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What is the extent and the veracity of evidence on economic performance in relation to walking and cycling 11. We are aware of a growing evidence base in respect of understanding economic performance in relation to sustainable and active travel. However, it is not yet definitive. Gaps need filling, and the data resource needs more rigour in some areas. As a case in point, a recent cross-Europe review of evidence of Jobs in Green and Healthy Transport (THE PEP, publication pending) assigns figures for job creation across a number of industries based on a limited data resource from which we infer that the state of knowledge of the economic performance of public transport, walking and cycling across Europe is relatively limited.

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Quantitative evidence of the relative scale of any impacts not currently captured by the DfT appraisal framework: WebTAG compliant examples of walking and cycling scheme appraisal 13. Sustrans has conducted numerous WebTAG compliant retrospective economic evaluations of our work. Results are consistently positive, in that the schemes tend to lie within the very high value for money band. However, there are numerous circumstances in which WebTAG compliant and WebTAG non-compliant adjustments markedly change the output values. These include the inclusion of children, judicious amendment of the appraisal period, : The DfT-funded Linking Communities (not yet in the public domain, but submitted to DfT for comment and review) shows a benefit to cost ratio over a 18m investment of

10.9:1; the ratio rises to 13.8:1 when values are assigned for children in line with those used for adults The Big Lottery funded Connect2 programme (although reports for individual schemes are available, the programme-wide evaluation is not yet fully in the public domain) investment amounting to 175m in 84 schemes to overcome severance for walking and cycling shows considerable impacts on usage and a benefit to cost ratio of 6.3:1; the ratio rises to 8.0:1 when values are assigned for children in line with those used for adults Links to Schools report - this contains data describing the impact of (DfT funded) local infrastructure projects serving schools; scheme BCRs range from 2.5:1 to 12.7:1, rising markedly when children are included on a treated-as-adults basis

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The following reports do not necessarily represent cases where WebTAG does not capture the benefits, but rather represent examples of where we have attempted to apply WebTAG in more and less conventional approaches: The published version of the Cycling Demonstration Towns economic assessment shows a benefit to cost ratio in the range 2.6:1 to 3.5:1 over ten years; subsequent amendments to this estimate to over a 30 year appraisal period give a ratio of 7.8:1; whilst this can be termed as sensitivity it reflects the knowledge gaps around appropriate benefits and rates of response attrition (i.e. should walking and cycling infrastructure be treated as realising benefit over 10 years, 30 years or a different period; what investment and response patterns apply to smarter choices measures Modelling and forecasting work for the Passenger Transport Executive Group (Pteg) investigating the potential for cycling in the city regions shows multiple possible benefit to cost ratios for different investment scenarios; again, knowledge gaps about build up and attrition limit the veracity of the work; the evidence base used in producing the forecasts may be of interest Modelling and forecasting work for Transport for Greater Manchester; the modelling work itself produces benefit to cost ratios of between 4:1 and 7:1 under different investment scenarios; the evidence base used in producing the forecasts will also be of interest Business cases for Cycling City Ambition bids Sustrans wrote and supported some of the successful bids to this DfT fund; the Newcastle case showed an overall benefit to cost ratio of 8:1; however, multiple ratios were generated for the different parts of the programme; public realm improvements were difficult to evidence using the WebTAG framework, whereas other components showed more favourable benefit ratios; the exercise of scaling up provide a case study of the challenges and added value of aggregation

Quantitative evidence of impacts not currently captured by the DfT appraisal framework 15. Each of the following documents is interesting in their own right, but a common theme they have is that most of the benefits articulated are not captured by WebTAG. Sustrans has invested heavily in time and effort to align as much of the analysis of our work as we reasonably can with WebTAG. However, we have increasingly found the need to articulate benefits other benefits. This is partly due to the nature of the metrics concerned and their nonalignment with WebTAG, but also partly due to the demands of intended audiences. From Sustrans own portfolio, the following documents were submitted to DfT as supporting evidence for the Comprehensive Spending Review of 2013: The Active Travel project report - this was a complex evaluation across 50 revenue-only projects delivered by 10 organisations under a 20 million grant from the Big Lottery Fund; the WebTAG compliant BCR is estimated at 7.6:1, the health benefit value

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forming a major part of the benefit; however, the programme was largely wellbeing oriented, and we were not able to adequately capture this benefit A note on job creation associated with building walking and cycling routes in Wales and Scotland shows that 11.0 jobs are created for every 1 million of investment in sustainable transport infrastructure, and 1.3 jobs are created for every km of route constructed; this expresses the relative effectiveness of investing in walking and cycling on job creation and protection; however, we have not been able to identify a means by which this benefit can be incorporated into WebTAG A note on economic effectiveness was submitted to the Scottish Government Committee on Infrastructure and Capital Investment - this note contains a number of bits of relevant evidence that proved useful to Transport Scotland in determining funding allocations; particularly notable is a list of all providers used by Sustrans in the delivery of a 5.5m (plus match) funded programme of activity in Scotland in 2011-12, which illustrates the breadth of impact on the Scottish economy; much of the content of this submission is not captured by WebTAG

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More recent examples of economic impact that do not align with WebTAG principles include scheme evaluations and analyses such as: Sustrans was funded by DWP and DfT to deliver a Future Jobs Fund programme to create employment and training opportunities in developing and improving walking and cycling facilities; we were not able to demonstrate a WebTAG derived benefit, but using a social return on investment approach a benefit to cost ratio of 2.06:1 was estimated The job creation document listed above was updated with new data from more schemes in 2013; this shows that 12.7 jobs are supported or sustained for every 1 million of investment in sustainable transport infrastructure, and 1.6 jobs (direct, indirect and induced) are supported or sustained for every km of route constructed; the average cost per km of construction was 103,891; the average cost per scheme was 128,199 and there were on average 0.74 FTE jobs per km of path constructed A recent narrative on leisure and tourism by cyclists details substantial values associated with some long distance cycle routes; seven routes are assessed in terms of usage and value, based on analysis using an econometric model developed by Sustrans with academic partners; for example, the C2C (northern England) carries over 240,000 trips per annum (of which 14,000 is end-to-end usage), stimulates a spend of 10.7m in the route corridor, and supports up to 173 fte posts; the Way of the Roses (northern England) carries over 130,000 trips per annum (of which 7,000 is end-to-end usage), stimulates a spend of 3m in the route corridor, and supports up to 60 fte posts Retail vitality research by Sustrans, and from a variety of other sources, increasingly emphasises the role that walking and cycling can play in retail vitality; a repeated pattern is observed that walkers and cyclists consume no less than car drivers, but make more frequent trips to more local destinations spending lower amounts per visit; retailers consistently misunderstand the transport patterns of their consumers, most often assuming that the majority come to them by car, which is rarely the case for high street settings; there are numerous additional sources of evidence of the effects of walking and cycling on retail vitality A recent submission to Committee for Regional Development Inquiry into the Benefits of Cycling to the Economy articulates the benefits of cycling in Northern Ireland across a range of areas, including many areas that do not fit in to WebTAG, recording many of the most current and most complete sources.

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A commissioned study on the articulation of gross value added in respect of walking and cycling 19. A current case in point in the deficiencies of WebTAG with respect to articulation of a message about the economic performance is reflected in the challenge of striking up a meaningful dialogue with the LEPs. Sustrans interest lies in making the case for investment in walking and cycling from the Single Local Growth Fund. Having failed to secure traction with a message about the benefits of walking and cycling through the lens of WebTAG, we sought to understand how we could articulate the message through a Gross Value Added accounting approach. However, work that we subsequently commissioned from Cambridge Econometrics dissuaded us from pursuing the use of GVA:
Applying the strictest GVA accounting framework to the direct impacts of a cycling and walking project would capture only the construction impacts and related second-order effects (i.e. the supply chain and wage impacts). This would provide a robust and transparent estimate of GVA (although the inclusion of wage multiplier effects would be driven by assumption). However it would capture only a relatively small part of the true value of this kind of infrastructure, as well as being of dubious value in a project assessment: the Green Book states that project assessments must take account of the additionality of any spending, and any investment in physical facilities of the same scale would have the same impact on the construction sector (and thus end up with the same estimate of GVA). The recommendation therefore is not to proceed with estimating GVA using this framework

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Instead, the study suggests that a better approach will be to use an input-output framework assessment, complemented by components from the existing WebTAG model. This wider assessment should seek to take account of the direct impact of the investment, the demandled impact of increased take-up of cycling and/or walking, the supply chain effects and the induced effects from additional employment. None of these are currently addressed through WebTAG. Work is underway to represent the implications of this study in the way suggested by Cambridge Econometrics. We hope to report very soon within the lifetime of this call for evidence project and we hope that a follow-up submission will be accepted by the project team.

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Observations on the perceived deficiencies in approaches to appraisal 22. We would like to take this opportunity to raise some issues in approaches to appraisal. Whilst this is not explicitly part of the remit of this call for evidence, a number of the points that are well documented by way of critique on the technicalities of the approach are relevant to the gaps in the evidence base on economic performance. Some of these issues include: The treatment of small time-savings is unhelpful The valuation of carbon dioxide emissions does not reflect the current expectation of possible impacts The treatment of physical activity in respect of non-active modes The suggested approach to smarter choices measures remains among the weaker parts of the framework Incorporation to modelling of energy price fluctuations would be more realistic On the question of recent discussions about the relative virtues of different approaches to the major component parts of the appraisal framework, we would endorse the view that small time savings are disproportionately represented in appraisal, and may not have any significant bearing on economic performance. However, the proposition that land use values is a better primary metric is also a cause for concern. The existing Wider Economic Benefits component of WebTAG is too myopic, and compromises any holistic view of benefits and impacts. A

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further consideration, and linked to the above, is the question of transport poverty, and how this can be adequately accounted. 24. We also have cause for concern about the veracity of modelling used for walking and cycling interventions. Recent exercises that have included review of the input data for Tempro and National Transport Model has exposed some notable deficiencies in the data. We are keen to work with DfT to explore whether data we hold will improve data reliability.

Contact details For further information about this response please contact: Andy Cope Director, Research and Monitoring Unit Sustrans Cross House Westgate Road Newcastle NE1 4XX email: andy.cope@sustrans.org.uk telephone: 0191 269 9370

References all or any of which can be supplied upon request: Sustrans (2014), Growth market: the role of sustainable transport in boosting local economies Sustrans (2014), Improving access for local journeys: Linking Communities 2012-13 programmewide impacts Sustrans (publication pending), Connect2 - from little things big things grow: how investment in walking and cycling transforms local economies and lives (draft comms report available; technical report under discussion; data sheets available; scheme examples available at http://www.sustrans.org.uk/policy-evidence/the-impact-of-our-work) Sustrans (2010), Links to Schools: review of the impact of interventions on school travel Department for Transport and Sustrans (2010), Cycling Demonstration Towns: development of benefit-cost ratios Sustrans (unpublished), Evidence of the benefits of investing in cycling: Cycling Demonstration Towns economic assessment (email from Andy Cope to Ben Ridehalgh) Sustrans (2011), Cycling in the city regions - modelling the impact of step changes in the delivery of measures to support cycling in PTE areas: Technical Report (http://www.pteg.net/resources/types/reports/cycling-city-regions-technical-report) Sustrans (2013), Potential for increasing levels of cycling in Greater Manchester: a modelling exercise Newcastle City Council (2013), Newcastle fit for cycling: Cycle City Ambition bid (http://www.newcastle.gov.uk/sites/drupalncc.newcastle.gov.uk/files/wwwfileroot/parking-roads-

and-transport/cycling/newcastle_cycle_city_ambition_business_case.pdf); full version of modelling report available on request Sustrans (2011), Travel Actively funded Sustrans' Active Travel projects: impacts and outcomes 2008 to 2011 Sustrans (2012), Sustrans' job creation study: Interim report Sustrans Scotland (2011), Evidence to the Infrastructure and Capital Investment Committee on the draft budget 2012-13 and spending review 2011 Sustrans (2011), Future Jobs Fund: overall monitoring and evaluation report Sustrans (unpublished), Narratives on economic impact Job creation: an overview of the evidence Sustrans (unpublished), Narratives on economic impact Tourism: an overview of the evidence Sustrans (unpublished), Narratives on economic impact Retail vitality: an overview of the

evidence
Sustrans (2014), Northern Ireland Assembly Committee for Regional Development Inquiry into Benefits of cycling to the Economy